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WORLDPAY EDITORIAL TEAM
May 15, 2020
Today there are more ways for shoppers to pay than ever before. Credit cards, debit cards, and cash continue to serve as the primary payment methods for most parts of the world. Newer options like digital wallets, peer-to-peer apps, and buy now pay later add to a variety of choices that make payments easy for businesses and consumers alike.
Among those payment options are prepaid cards. Prepaid cards are popular with consumers while offering small and growing businesses a wealth of benefits. They also deliver utility and value for consumers, businesses, governments, and financial institutions everywhere. Let’s take a closer look.
A prepaid card is a way to pay for goods and services just like a credit or debit card. The major difference between prepaid cards and credit and debit cards is that prepaid cards aren’t dependent on a link to a savings, checking, or credit account with a financial institution.
Prepaid cards work like credit and debit cards (hence they’re often called “prepaid debit cards”). They’re also called “stored value cards” since they act as a wallet of sorts that can receive money from a variety of sources, storing it for later use.
Prepaid cards are usually aligned with a branded card network like Mastercard or Visa and they can be used in-store, online, and in-app.
Prepaid cards are used in a wide variety of contexts and settings:
Prepaid cards are popular with consumers because they offer the utility of credit and debit cards without the commitment of setting up an account with a financial institution.
Prepaid cards occupy a much smaller piece of the payments pie than traditional credit cards or debit cards, but they’re far from a niche. In fact, prepaid cards are big business. In 2019, Mercator Advisory Group projected that open-loop prepaid cards in the US will grow by 2% per year through 2023, with load on Health Savings Accounts representing the biggest growth segment.
The short answer is yes. For merchants, accepting prepaid cards is easy. There’s often no additional hardware or software required to accept prepaid credit cards since they’re usually issued by the major card brands. The process of accepting prepaid cards can be the same as taking a credit or debit card. You may already be set up to accept prepaid cards. Consult with your payments provider to see just how easily you can accept this payment method.
Prepaid cards offer a wealth of benefits to consumers: there is less risk of overspending, they’re safer than cash, they’re easy to use and reload, and they’re a viable alternative to using traditional credit or debit cards.
Offering prepaid card options can improve customer loyalty and help capture customers who want a dedicated card to use at your business. We deliver everything your business needs to generate new revenue, increase brand exposure, and easily manage your card program. We have the experience you need to helping you set up prepaid and stored value card solutions. Contact one of our payment experts today to learn more about how we can help your business simply and flexibly connect to the future of commerce.
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