General purpose reloadable (GPR) cards are seeing increased use by consumers, especially among “unbanked” cardholders who tend to use those cards like checking accounts.
That’s among the findings of the Pew Charitable Trusts, which released a report Tuesday (June 30) titled “Banking on Prepaid,” in which research showed that 23 million adults regularly use GPR prepaid cards nationwide. Those cards let holders load funds using either cash or direct deposit activity as their source. Then the cards can be used at ATMs or at retail locations to make direct purchases.
Those surveyed by Pew totaled 587 respondents who use those cards at least once per month. The respondents were questioned late last year on various attitudes towards, and use of, the cards.
Pew said its findings reflect an increased use of prepaid cards, with a 50 percent jump logged between 2012 and 2014. Key drivers came from a growing use of the cards among those respondents with bank accounts; they tended to get their prepaid cards at either banks or credit unions. Demographically speaking, Pew noted, these users had higher incomes than did unbanked prepaid cardholders.
The survey found that unbanked users tend to treat their cards virtually as traditional checking accounts — and check their balances more frequently than their banked brethren. Of the unbanked, statistics from the survey showed that more than eight out of 10 cardholders have annual household incomes lower than $50,000 and roughly one-third of that number have incomes below $15,000. These users treat cards as a budgeting aid, with an eye on controlled spending and avoiding debt.
Pew’s report also states that a majority of prepaid card users do not in fact know if their cards have protections in place, such as an arbitration clause, or whether the funds tied to the cards are FDIC insured. Yet Pew’s research shows that roughly three quarters of cards do actually have such a clause, though many cardholders do not know if they are covered by liability protection; however, the cards must be registered for the clause to be in effect.
Noting that the Consumer Financial Protection Bureau had proposed a number of safeguards to boost consumer protection on prepaid cards, Pew stated that those rules should be finalized quickly.
Source: PYMNTS.com
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KATY LASEE | MARKETING DEPT.
651 554 8533
KRLasee@traveltags.com
Travel Tags’ 2015 Gift Card Fulfillment Study observed the online gift card presence and fulfillment of 100+ merchants across 14 industries. An archive of the webinar is now available for you to view. We hope you find it valuable information as you develop and review your own gift card fulfillment. As mentioned during the webinar, we encourage you to schedule a FREE consultation session to review your current fulfillment program and develop ideas on how to increase Giftability and decrease lost-in-mail rate.
To truly garner the most from this study, we encourage you to conduct a self-audit with the help of Travel Tags’ Design Team. Contact your Travel Tag Sales Representative to discuss opportunities on delivering the best every single time.
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KATY LASEE | MARKETING DEPT.
651 554 8533
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With a little more marketing oomph behind it, the gift card market rebounded in 2014 after a down year in 2013, according to a report released Wednesday by Mercator Advisory Group. Virtual gift cards, a small but key segment of the market, held their own and may soon benefit from the emergence of more digital wallets, a Mercator analyst says.
Overall, gift card load volume grew 9% last year despite what retailers reported as a slower holiday season. “The big thing was the growth vs. 2013,” Ben Jackson, director of the prepaid advisory service at Maynard, Mass.-based Mercator, tells Digital Transactions News. “There was almost double-digit growth. Issuers were able to turn things around.”
Driving that growth was stronger marketing, including efforts to promote gift cards in connection with more holidays and special occasions, Jackson says. While birthdays and Christmas have always been obvious occasions for the cards, now merchants are pushing them for graduations, Mothers’ and Fathers’ days, and other lesser holidays throughout the year.
“There was more of a marketing effort, more of a push to say gift cards are worthwhile around more holidays,” Jackson says.
Another key driver last year was the market for so-called consumer-incentive cards. These are prepaid cards handed out to consumers as a reward for some desired behavior in a store or online, such as trying out a product. “There was some good growth in consumer incentives that helped the overall market,” Jackson notes.
Perhaps the most interesting segment of the market is that for so-called virtual cards, or cards that exist digitally on a mobile device rather than as plastic. Issuers like Starbucks Corp. and Dunkin Donuts have been especially successful with such cards in recent years.
Jackson estimates virtual cards accounted for 3% to 4% of all gift card loads last year. That’s a small chunk of the market but one that could grow dramatically in coming years with the advent of mobile wallets, Jackson says. “We’re still not seeing digital take over the market, but it’s very valuable for some retailers and popular with digital natives,” he says.
Wallets like Apple Pay and Android Pay have already launched or are expected to soon, and they are expected to be followed this summer or fall by products from Samsung and MCX, a consortium of major retailers. If some or all of these products integrate virtual gift cards, that could boost the market by providing a ready-made platform for more retailers, Jackson says.
Indeed, the wallets could prove to be the best of all worlds for virtual-card issuers, Jackson says. That’s because they are usable across multiple merchants but any single gift card loaded in them can only be used at the issuer’s stores, eliminating the possibility of so-called customer leakage.
On top of that, the platform comes built and tested, which means merchants don’t have to assume the development costs of building their own. “Now I’ve got MCX to do it for me,” says Jackson.
Source: Digital Transactions
MEDIA CONTACT:
KATY LASEE | MARKETING DEPT.
651 554 8533
KRLasee@traveltags.com
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