News

Prepaid card market grows with PayPal in the lead

October 13, 2016

Prepaid cards continue to gain in popularity with low-income consumers, tech savvy millennials, and the unbanked and underbanked, according to "Prepaid and Gift Cards in the U.S.," a new report from market research firm Packaged Facts.

"Increasingly competitive on everything from fees to safety and security to transparency, prepaid card accounts have become real alternatives to traditional bank accounts," David Sprinkle, research director at Packaged Facts, said in a press release.

Now in its fifth edition, the report identifies PayPal as a major industry player. Almost half (48 percent) of prepaid card users surveyed had a PayPal prepaid card — well above the numbers for Green Dot, NetSpend, American Express, and the Walmart MoneyCard.

Additionally, 28 percent of survey respondents said that use their PayPal prepaid card "the most," a far higher rate of response than for other cards. The results suggest that PayPal has become a significant player among consumers seeking alternatives to traditional banking, the release said.

One reason: PayPal prepaid cardholders can link their card to a PayPal account — and, in fact, must do so in order to access any of its online features. Once linked,PayPal cardholders gain access to an online bill payment service, the option to open a tiered-rate savings account, PayPal person-to-person transfers, and the ability to instantly fund the card from account funds.

PayPal prepaid card users can also earn cash back rewards, still a relative novelty in the prepaid space, according to Packaged Facts.