Study: Prepaid cards gradually catching on

Oct. 29, 2012

A study of 66 countries shows that the number of prepaid cards increased by 32 percent to 321 million between 2009 and 2011 — healthy, but not spectacular, growth given their low base. Analysis of the sector indicates potential, but prepaid cards will likely represent no more than 5 percent of all cards worldwide by 2017, just 1 percent more than today.

In its new report, "Global Payment Cards Data and Forecasts 2011–2016," research and consulting firm RBR found that six countries — the U.S., Iran, Russia, Brazil, Indonesia and Italy — together make up 87 percent of the worldwide total of prepaid cards.

In the U.S., the cards are mostly used to make welfare payments; in Iran, they are available primarily as gift cards; in Italy, they are typically used by those who have limited access to traditional banking.

Until recently, prepaid cards had not moved much beyond certain country-specific niches. But now, it is beginning to look as if they will become more common worldwide.

The most dramatic increase in prepaids has occurred in Russia, whose total rose more than five-fold between 2009 and 2011 — from seven million to 37 million. However, the total volume and value of payments on these cards fell during the same period, RBR found.

Asia-Pacific has also seen rapid growth. In Indonesia, the number of prepaid cards grew by 81 percent, to 14 million in 2011. In India, the number of prepaid cards increased from 700,000 to 1.9 million in 2011, a rise of 171 percent.

The study found that while prepaid cards are unlikely to fulfil the exuberant predictions of some analysts, their role is becoming clearer: Increasingly, communities are using them to reach the unbanked or those who do not qualify for traditional credit cards. 

For more on this topic, visit the trends/statistics research center.

Topics: Asia, Australia & Pacific , Central and Eastern Europe , Latin America , Prepaid / Stored Value / Gift Card , Trends / Statistics , Underbanked / Unbanked

Companies: Retail Banking Research Ltd

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