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2011 Prepaid Cards and Products: Expanding and Innovating for Mass Market Appeal
Javelin Strategy & Research, April 2011, Pages: 31
In today’s volatile economic and regulatory environment, prepaid cards have become increasingly popular among both industry members and consumers, especially the underbanked and young consumers. Regulations such as the Durbin Amendment, the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 and Regulation E have the potential to severely limit the amount of revenue collected from traditional payment options, encouraging a shift in direct deposit account (DDA) economics and likely making these accounts more expensive for consumers.
In addition, because of a confluence of regulatory and economic factors, many consumers are no longer eligible to use some forms of payment. Prepaid cards, especially general-purpose reloadable cards, are unique in their ability to fill a void in both the payments and DDA markets.
They bring distinct solution sets and financial inclusion to targeted populations, such as college-age students and their parents who want an affordable, secure way to pay for the students’ needs without running up debt; government benefits recipients who need a safe, easy way to receive their unemployment benefits, support payments and other federal or state disbursements; and the underserved who would otherwise not be able to access the card-based payments grid.
Primary Questions
- How has the market for prepaid products changed in recent years?
- What are the key regulations that have led to the growth of the prepaid card industry? What other market changes have contributed to the growth?
- In what key demographic segments has the prepaid market seen the greatest growth? How are prepaid products positioned to meet the needs of these unique demographics?
- How do prepaid products compare with checking accounts in features, fees and other aspects? What are some of the key differences between checking accounts and prepaid accounts?
- How can prepaid issuers successfully market their products? What marketing strategies can be used to increase consumer adoption? What features can be added to increase adoption?
- What are some of the potential areas for growth in the prepaid market?
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