Of Special Interest


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17th June 2011

US prepaid card usage may approach $500bn this year

The United States has surprisingly low bank penetration for one of the most developed countries in the world, at around 80%. Those who have resisted banking have discovered a new powerful tool, the pre-paid card. By loading it up, sometimes with employers paying their wages directly to the crd account the cardholder can do many of the same transactions as with a check/current account without some of the downsides.

Statistics are limited although one estimate from Mercator Advisory estimates that money loaded on to prepaid cards may hit $550bn (€390bn £342bn ¥44.4tr Y3,561bn) by next year. Prepaid cards are neither covered by bank law or credit law although there have been few problems reported to date. Charges for loading the cards vary enormously by issuer - but there again in many cases the charges are less than many of the unbanked are used to for having a check cashed.

A number of government departments are using prepaid cards for employee expenses and social security payments. The Internal Revenue Service, not known for radical ideas, paid some tax returns by prepaid card for the last tax year.

The prepaid card is only one product for the unbanked. See the connected article:

[Newslink: Financial services for the unbanked in the US ]