Survey shows banks offering prepaid cards to serve low-income customers
WASHINGTON — Prepaid cards are one of the fastest growing segments of the financial services industry, but bank attitudes towards them vary, according to a new study by Mercator Advisory Group and the American Bankers Association.
“Prepaid Cards: A Survey of Bank Attitudes, Adoption Rates and Deployment Plans” asked banks of all sizes about their use or planned use of various prepaid financial services products such as general purpose reloadable (GPR) cards, gift cards and payroll cards.
Key findings show that of banks that currently deploy prepaid products:
- 58 percent currently offer or plan to offer prepaid gift cards;
- 52 percent currently offer or plan to offer GPR cards; and
- 85 percent say they view current demand for prepaid products as favorable or highly favorable.
And, of banks who chose not to deploy prepaid products:
- 34 percent say the primary reason was concern about regulatory compliance requirements; and
- 26 percent say the reason was concern about profitability.
However, the survey found that the more a bank researched prepaid products, the more likely they were to report satisfaction with them. The survey also revealed that while banks’ top reasons for deploying prepaid cards were to add value to existing customers and attract new ones, other important reasons included creating a new account type to serve low and moderate income customers as well as those who cannot qualify for a checking account.
“This survey will help banks see how other banks are approaching the prepaid market and where opportunities may lie,” said Christopher McClinton, vice president of ABA Payments Solutions. “It will also show prepaid suppliers the key challenges they need to address if they want to sell their products to banks that are currently on the sidelines.”
The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $14 trillion banking industry and its two million employees. Learn more at aba.com.
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