In a recent webinar hosted in partnership with FIS and Aite Group, we explored why prepaid has become the payment utility of choice for use cases that span consumer, business, corporate, healthcare, e-commerce and technology segments—and how they’ll collectively fuel continued growth in the prepaid segment beyond the year 2020.
In the webinar, Jerry Uffner, FIS general manager of prepaid and Aite Group senior analyst Kevin Morrison addressed some of the unique factors driving prepaid popularity, including:
- Gift cards are increasingly being used outside of gifting scenarios. Self-use by the gift card purchaser is becoming more common than purchasing cards to gift. By 2020, Aite Group predicts the gross dollar volume load on gift cards will be at least $243 billion.
- Prepaid is a “This-Gen” account. Financial providers see a difference between a traditional checking account and a prepaid solution—but today’s consumer doesn’t distinguish one from the other in terms of services offered. In fact, many consumers now opt for prepaid instead of a checking account because of digital and mobile capabilities like person to person payments (P2P).
- The simplicity of a prepaid platform has attracted tech innovators. Morrison says that for many tech innovators, it’s much simpler to integrate a prepaid platform than a core banking system. For this reason, prepaid has become an attractive fit for P2P applications, and the overall P2P vertical.
- Prepaid has become a check replacement option in the commercial B2C market. Within the last year, many corporations have begun to use real-time payment products like FIS Faster Payments, which use electronic funds transfer (EFT) to move payments from the corporation to the processor in order to make the most efficient payment. In some cases, prepaid is the best payment option due to the ease of use and simplicity of the platform. Aite predicts commercial loads will reach at least $60 billion by 2022.
- Healthcare payments are powered by prepaid solutions. By 2020, 44 percent of all healthcare payments will be made via prepaid. Aite Group forecasts total loads in this sector to grow to about $1.1 billion.
- Prepaid closed-loop programs aren’t just about plastic cards. Digital capabilities have made prepaid the payment utility of choice in unexpected places--like transit, amusement parks and e-commerce platforms.
- New technologies will fuel prepaid growth. Morrison says most of the rollouts we have seen out of Silicon Valley in the last 18 months have used prepaid platforms because they’re conducive to the speed of development.
Tags: Customer Experience, Innovation