Signifcant Growth for Prepaid Products

Friday 21 November 2003 11:08 CET | News

Prepaid payment applications - the third leg in the triad of bankcard products, which offers consumers the option for pre-payment for goods or services - are on the cusp of break-out into the broader payments marketplace.

New research from TowerGroup finds that this rapidly evolving payment category is in the early stages of a long-term expansion that will impact consumer, business and government use of cash and check payments. TowerGroup believes the early success of prepaid applications in closed environments like telecom and retail gift cards will lead to a new variety of opportunities over the coming decade - particularly where enhanced user convenience and control are key, cash and checks can be displaced, or existing credit and debit card products are a poor fit. Highlights of the research include: - For the first time in 20 years, a new product type is making significant inroads in consumer payments. This area furthers the evolution of the card payments business: from the pay later of credit, to the pay now of debit, to the pay before of prepaid. - Prepaid payment applications accounted for over US$240 billion in payments globally in 2003. TowerGroup expects that all prepaid applications will exceed US$500 billion worldwide by 2007. - The emergence of prepaid offers financial services institutions new opportunities to expand their customer base - through deepening their relationship with present customers and entering new markets like youth or the unbanked (consumers with no banking relationship). - These early prepaid products have also found greater utility in chip based card products. Prepaid phone cards have used contact-based chips for over a decade, while tolling and transit applications have been almost exclusively been rolled out used contactless chip cards. Prepaid products will continue to lead the innovation of card technologies.

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Keywords: ,
Categories: Payments & Commerce | Payments General
Countries: World
This article is part of category

Payments & Commerce