The latest reports on prepaid card use indicate that consumers are warming up to the payment method. In 2011, prepaid card use increased 18 percent, according to Bloomberg. Gains in consumer acceptance and use could be the result of growing fees for checking accounts that have turned customers away from traditional banking products.
“People used to think of (prepaid cards) as cards for people who didn’t have a lot of money, whereas today they’re becoming much more common for a variety of uses and a variety of demographics,” said Beth Robertson, director of payments research for Javelin, as quoted by the news source.
Generation Y – which is made up of younger, tech-savvy consumers – is one of the demographics in which this emerging payment method has gained traction, according to ZDNet. The increasing popularity of ecommerce has helped drive up prepaid card use among members of the generation. Consumers have started to use the cards for online bill pay and transactions in place of online credit card payment processing.
Currently, prepaid cards only represent 8 percent of total online payments through virtual credit card terminals, the source reports. However, that number is expected to grow from $21 billion last year to $32 billion in 2016 as populations that are typically underrepresented in banking communities catch on.Back To Blog