WHY PREPAID?

Prepaid card solutions provide excellent money distribution systems for organisations of all sizes, as well as allowing businesses to improve the way they manage payments to their customers.

Prepaid cards differ from other payment cards (credit, charge, and debit) in that the funds are paid into the card account prior to the purchase of goods and services. This process can be done centrally or independently (in the case of consumer cards). Once credit is received and the card activated, it can be used much like a debit or credit card at ATMs or to make transactions online, in a shop, hotel etc.

Prepaid cards provide a number of benefits for corporations, public sector organisations and consumers (Source: American Express, Aite Group)

For corporate and public sector organisations prepaid cards and their transparent account management systems provide the opportunity to:

• Improve controls via real time management and control of funds and visibility over spend
• Reduce costs through greater control over employee spending, removal of aggregate credit liability associated with corporate credit and charge cards, improved purchasing power as well as reducing the time spent by employees collating expenses at the end of a project and the administration time to review this
• Increase flexibility through the ability to add or remove funds as required, and vary card functionality as required
• Simplify administration of existing payment processes with a comprehensive account management tool

Prepaid cards provide opportunities for businesses to improve their interactions with their customers by using prepaid cards to:

• Taking advantage of new markets and developing new revenue streams, e.g. by launching new products such as currency cards
• Improving service with existing customers and attracting new customers by improving existing payment processes and / or providing a superior method to deliver incentives. For example, using prepaid cards to disburse compensation.

For consumers, prepaid cards provide the following opportunities:

• Provide a budgeting mechanism; in the same manner in which many consumers have used prepay mobile telephones.
• Facilitate financial inclusion by providing new opportunities for an estimated 42% of UK consumers who cannot access credit or have a compromised credit history, as well as the providing an entry point into banking services for the UK's growing migrant population
• Improve security by replacing cash for retail purchases as well as replacing debit and credit cards for e-commerce purchases.

The prepaid card sector is one of the fastest growing segments of the payment card industry. Estimates of the market size vary, but the consensus is clear that the market for prepaid products is large, diverse and growing rapidly.