The pre-paid card market is set to see significant growth in the UK, Austria, Germany and Italy over the next 12 months as people look to control their spending, according to research from First Data.
I would tend to disagree with the last comment about online channels merely being an educational channel for prepaid card knowledge and "bricks and mortar outlets" being the focus.
Whilst this may be true for certain european countries where Internet Access and the concept of the web itself and its reach is still growng, in developed markets such as the UK, Internet sales rival those of offline channels and in many cases far exceed
Gift cards tend to be the exception but this is definitely true of open loop scheme branded prepaid cards.
The First Data survey findings signify a further step change in the move away from traditional payment methods. Whilst the demise of physical cash isn't going to happen overnight, the technology involved in making cash-free payments has advanced significantly,
with pre-paid technology coming to the fore in Europe. Although the First Direct survey findings primarily focus on consumer appetite for pre-paid, there is also a strong call to action for businesses and banks, and in agreement with Aashish Sharma, this
is especially prevalent in the online arena.
As the online market continues to grow, virtual prepay enables not only consumers but also busineses to avoid the costs traditionally associated with plastic cards and distribution. For example, consumers can cost-effectively send payments to businesses
around the world, whilst also benefiting from protection against ID theft and fraud, which have become a cause for concern for many when purchasing online.
Virtual prepaid solutions also offer a highly secure alternative to credit or debit cards for banks. UK banks are liable for any losses to a customer's bank account resulting from fraudulent activity, which is especially rife in the online arena. By adopting
prepaid, this risk exposure can be lessened, posing an attractive prospect for banks in today's market environment. In addition, the competition between retail banks and Payment Institutions, as a result of the PSD coming into fore last month, will further
drive the need for retail banks to consider more innovative services and solutions in order to maintain their competitive position.
© Finextra Research 2013