Should you be taking advantage of a GPR prepaid card?
The general purpose reloadable (GPR) prepaid card of today differs substantially from the past. In its previous role, GPR prepaid served mainly unbanked consumers who could not afford or obtain a checking account. With amped up features and benefits, prepaid has extended its reach beyond unbanked and underbanked segments deep into the millennial generation, which taps into financial instruments differently from older cohorts.
What makes GPR prepaid attractive?
Some consumers prefer GPR prepaid cards over a checking account. Why? One important reason is the easy access that prepaid cards provide to consumers. People don’t need to go into a bank to acquire an account. They can simply pull prepaid cards off the shelf of the retailer where they shop anyway and enroll online.
With broadened offers such as debit and credit card features, GPR prepaid cards have become more competitive with traditional checking accounts. Consumers can set up direct deposit to their cards and pay bills from their prepaid accounts. Such easy access to basic financial instruments means some consumers don’t think they need checking accounts at all.
Prepaid cards provide benefits for banked consumers who want to:
- Secure funds online, eliminating checking account or credit card exposure to potential fraud
- Give cards to family members and divide funds in a way that traditional banking cannot facilitate
- Use cards to pay for services, such as housekeeping, lawn maintenance, and caretaking
Banked consumers: an expanding part of the prepaid market
Banked consumers represent a growing part of the prepaid market. Twenty-five percent of banked young millennials (18-25 years old) have paid a bill from a prepaid card in the past month, according to a soon-to-be-released FIS’ PACE survey.
Source: FIS PACE survey results 2017.
Are financial institutions losing out by not offering prepaid cards?
More than 40 percent of prepaid spending is done by millennials, according to FIS’ platform data. And financial institutions need millennials. Their numbers surpassed the size of the baby boomer generation in 2015, according to the U.S. Census Bureau. Prepaid cards can serve as a stepping stone to traditional financial products for blossoming millennial generation members who aren’t yet banked.
But getting millennials to use banks in a traditional way is counter to where the market is heading. Millennials aren’t particularly attracted to brick-and-mortar when they have digital as an option. Just look at how traditional brick-and-mortar retailers are suffering and trying to figure out to do with all their excess physical facility capacity these days.
The good news is that you don’t need millennials to walk into a bank branch to sign up for your prepaid card product. Now, banks can offer mobile capability for prepaid cards and enrollment through their websites, giving these customers what they need, where they want it.
Growth of GPR prepaid is forecasted at a five percent compound annual growth rate through 2019 by Mercator Advisory Group. Financial institutions have the opportunity leverage prepaid cards to grow and retain market share from consumer segments who don’t use traditional financial products currently as well as desirable niches, such as banked consumers who want the additional access. Both of those segments include millennials, whose members should be the primary focus of marketing efforts for the new, more fully featured and easier-to-access GPR prepaid cards.