Reloadable prepaid cards could be the things of the future with millions of customers getting fed up with banks and financial institutions for spurning them. After millions of consumer complaints and the financial meltdown, politicians in Washington have woken up to banking reforms.
Now the best alternative is the reloadable prepaid card which is easier to manage and one does not have to deal with the banks. Consumers are using these reloadable cards and even recommending it to their friends. The usage of these cards are increasing everyday and it is likely to grow from $8.7 billion reloaded in 2008 will now grow to $118.5 billion in 2012.
Markets are opening to this new trend in the US and it is likely to expand. These reloadable cards work very well as all that is needed is to put cash into the card and then use it like a debit card. They normally bear the MasterCard or Visa logo and can be used at any of the outlets. Users are also allowed to withdraw cash through ATMs, do online transactions, and pay utility bills by using them.
They were initially issued by banks but now they are marketed by other institutions. Visa as well as MasterCard sees these reloadable cards as growth drivers and both the card majors don’t feel threatened by them. Instead these card giants get a little bit of every transaction by licensing their brands. Hence along with Western Union both companies have the potential to buy this trend.
The popularity of these prepaid cards has risen due to the growing resentment for banks and banking procedures and consumers want no more of it. The exorbitant fees are another put off for many customers. Although prepaid cards do charge fees they are much lower and come with fewer nasty surprises. The charges on prepaid cards are between $3 to $5 every month on a card.
Prepaid card users may not be able to avail credit cards due to the poor credit scores. Since we live in a cashless society not having one of the branded cards could make the going difficult in the long run.
Prepaid cards are increasingly used for direct deposit by employers to pay workers. The pay is deposited directly on to the prepaid cards. Visa and MasterCard also make money when transactions are made.