Study finds changes in prepaid card use, user demographics
U.S. consumers who purchase general purpose reloadable prepaid cards and those who pay using a smartphone or other mobile device are four times more likely than the average American to have been turned down for a new bank account in the past year, according to data from Mercator Advisory Group.
Moreover, young adults — especially 25–34-year-olds — are more likely than older adults to have been turned down for a new checking or savings account in the past year.
In all, 9 percent of respondents in the Mercator CustomerMonitor Survey Series conducted in June said they had been turned down for a new account. This may be the reason for some of the growth in prepaid cards, a new Insight Summary Report says.
"Consumers and Prepaid: Young, Mobile, and Affluent Drive Growth," examines a demographic shift in prepaid card and virtual card buyers and a change in their use and recalled loads. The report reveals that within the past 12 months:
- 61 percent of U.S. adults bought prepaid cards, up from 56 percent in 2014;
- 77 percent of 25–34-year-olds bought some type of prepaid card in the past year;
- 71 percent of households earning $100,000 a year bought some type of prepaid card;
- 91 percent of mobile payers bought some type of prepaid card in the past year.
As they become more available and accessible online and by mobile device, prepaid cards are becoming a primary payment tool, not just a gift, the report finds.
"With the flurry of data breaches, consumers are becoming more security conscious, and prepaid cards are a way of limiting exposure when more transactions are made online and by mobile," said Karen Augustine, manager of the CustomerMonitor Survey Series and author of the report. "The young adults are leading this mobile revolution and, to the extent that prepaid cards and virtual cards facilitate mobile transactions, prepaid cards will continue to gain importance as a money management tool."