April 11, 2012 12:43 PM Eastern Daylight Time
Javelin Investigates Growing Prepaid Card Use Among Underserved and Gen Y Consumer Segments
SAN FRANCISCO--()--Javelin Strategy & Research’s latest report - “Prepaid Cards and Products in 2012” – identifies that prepaid cards are particularly attractive to underserved segments—young consumers (notably Gen Y) and underbanked consumers (those who are not actively engaged in the use of traditional banking products) who want to build financial independence. Prepaid cards are held by one in six underbanked consumers and Gen Y, respectively.
“Providers offering integrated mobile tools are well positioned to deliver high value to young and underbanked prepaid card owners.”
The use of prepaid cards has increased, while ownership of other traditional financial products –including checking accounts, savings accounts, credit cards, and debit cards – has noticeably decreased. The growth of prepaid products has been propelled by a flurry of innovative features such as advanced online and mobile account management, rewards programs, and credit history development. Financial institutions (FIs) can leverage prepaid cards to establish relationships with young and underbanked consumers, transforming them into loyal customers who can become more profitable as they engage with additional banking products such as checking accounts, credit cards, and loans.
“Today’s prepaid features match and even surpass the features of many checking accounts, said Beth Robertson, CCM, Director of Payments Research at Javelin. “ Functionality that can enable consumers to manage their account using their mobile device or social media account, establish and build a history that can be used for credit-issuing, or enable person-to-person transfers provide high value to underserved consumers.”
The growth of the e-commerce and mobile markets has added to the value proposition of prepaid for underserved consumer segments. The online environment is a critical driver for underbanked consumers, as nearly three-fifths of this group regularly uses prepaid cards for online purchases. New mobile services are also generating high value for young and underbanked prepaid users who commonly have access to mobile devices, including smartphones.
“Mobile alerts, mobile rewards delivered via geolocation services, and mobile account management are some of the many features now incorporated into prepaid products," said Jim Van Dyke, President, Javelin. “Providers offering integrated mobile tools are well positioned to deliver high value to young and underbanked prepaid card owners.”
Javelin’s Prepaid Cards report explores how FIs can leverage the innovative features of prepaid cards to attract mobile, underbanked, and Gen Y consumers and transition them to loyal banking customers. The report is based on survey data collected online from more than 3,200 consumers.
Selected Key Report Findings – Prepaid Card
- Prepaid cards are more commonly owned by underbanked and young consumers (18% respectively) versus a tenth of all consumers
- Fifty-six percent of underbanked consumers report that they use their prepaid card for an online purchase, compared to 46% of all prepaid owners. .
- Underbanked consumers report higher average prepaid reload amounts than do other consumers.
- Rewards drive payment use: 53% of Gen Y and 47% of underbanked consumers report that rewards would encourage their adoption and use of prepaid cards.
To learn more: Prepaid Cards and Products in 2012: Enabling Financial Access for Underbanked and Gen Y Consumers
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