More than half of all adults in the United States bought prepaid cards last year, according to Mercator Advisory Group. Their 2014 survey showed that 56% of people bought prepaid cards during the previous year, including two out of every three young adults ages 18 to 34.
Mobile payments helped push prepaid popularity as well, with two out of every three smartphone owners, three out of every four smartphone and tablet owners, and nine out of 10 people who have used mobile phone payments having bought prepaid cards last year. Mobile payments can be made from smartphones or tablets, and are increasingly popular as more merchants adapt the technology to accept them.
Prepaid card popularity is rising steadily. Looking at the previous years, in 2013 53% of adults in the U.S. bought prepaid cards, up from 47% in 2012. In 2013, three out of five people ages 18 to 34 had bought a prepaid card in the preceding year.
Not just gift cards anymore
The 2014 Mercator survey findings showed that prepaid cards are no longer used as just gift cards. People are increasingly receiving rebates, refunds, paychecks, money transfers, and monetary incentives on prepaid cards. Survey respondents indicated a desire for prepaid products that allow them to pay bills electronically, reload cards easily, and have many of the conveniences traditionally associated with bank checking accounts.
Fraud protection is an ongoing concern with prepaid cards, and folks said they want better safeguards against possible theft and fraudulent use when it comes to prepaid cards. They also want to earn rewards for using their prepaid cards, and to have access to mobile apps to manage their prepaid card accounts. Other customer priorities for prepaid cards include low fees for both setup and maintenance.
Higher income households getting on the prepaid bandwagon
Not only are prepaid cards becoming more popular, the demographics surrounding who uses them are changing. The survey showed that households earning six-figure incomes were more likely to buy reloadable prepaid cards this year than in previous years.
This is significant because prepaid cards have often been thought of as tools for the unbanked consumer who might have had trouble opening a traditional bank account. Mercator Advisory Group said they predict prepaid cards will continue to become more popular across all demographics as a money management tool, even if people already have checking accounts.
Karen Augustine, manager of the Mercator survey, explained that having a prepaid card “lets the cardholders control their spending and make electronic payments from funds they set aside, without accruing debt from credit cards or attaching their bank account to the transaction.” Augustine also said that prepaid card customers “are more likely to be younger, mobile-enabled, and more attracted by enhanced security and mobile banking features.”
Mercator Advisory Group’s report, Consumers and Prepaid: Rising Use, Especially by Mobile, surveyed 3,002 adults in the U.S., using an online form. The report studied the demographics of prepaid card buyers and looked at the way customers use prepaid cards. The survey findings included usage, frequency, distribution, desired features, fees, brand awareness and current or previous use of certain brands of prepaid cards.