Global prepaid card market size to reach over US$ 2 trillion by 2020

Posted by paynxt360 on December 26th, 2016

Global Open loop Prepaid cards have gained considerable traction among not only the unbanked consumers but also with banked and higher income group consumers primarily due to the convenience they offer, enabling consumers to ring-fence their expenses. Over the next four years, PayNXT360 expects global prepaid card market to cross US$ 2 trillion in transaction value terms. Banks as well as non-banking companies such as telecom operators and digital wallet providers are venturing into this space to create an additional revenue stream. Retail customers are the primary target group for card issuers, especially the millennials. Card companies are trying to increase their market share and create differentiation by adding new features to GPR cards, such as mobile integration, designing reward programs similar to credit cards, and leveraging technology to maximize reach.

For developing countries in Asia, Africa and Latin America, where a large portion of the population continues to be digitally and financially excluded, card issuers are rethinking their distribution strategy to reach the prospective consumers. GPR card issuers are collaborating with banking agents to reach the unbanked population at locations most convenient to them. Governments and central banks of emerging economies are encouraging creation of banking agents to reach customers in rural or remote areas to foster greater financial inclusion in their countries.

In an emerging trend, in United States Prepaid Cards are being utilized by governments to distribute aid to asylum seekers in an effective and cost efficient manner.  European governments struggling with the escalating migration crisis are looking for new and innovative ways to efficiently deliver humanitarian aid to refugees and help their integration into the society. Distribution of huge amounts of aid in cash is creating a logistical and operational challenge for government agencies. Additionally, benefit disbursement through cash makes it virtually impossible to monitor how the money is being utilized and to track immigrants once they enter the EU. With the growing concern that terrorists are entering the EU under the cover of migration crisis, tracking of immigrants has become a major challenge for European governments. For refugees as well, carrying cash around is not an optimal solution as there is always a threat of theft and losing the money. Furthermore, with prepaid cards refugees are more in control of their finances and can easily budget their spending. With these factors in mind, governments in EU are showing increased interest in disbursing aid to refugees through prepaid cards, which allows them to make aid disbursement process efficient, ensure that the funds are being distributed as per regulations, monitor the spending pattern of users, as well as track refugees’ journey in the region. Furthermore, prepaid cards help in automating the process of reporting and auditing of benefit fund disbursement.