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Reloadable prepaid cards highly favored

Consumers cite convenience, flexibility, fixed spending limit

Reloadable prepaid cards highly favored

Many American adults believe the features of reloadable prepaid cards are beneficial to consumers, with their convenience, flexibility, and spending limits seen as the top benefits to consumers, according to a new poll of over 1,000 adults conducted by Ipsos Public Affairs on behalf of ABA.

The feature most likely to be seen as a good thing for consumers is prepaid cards’ ability to be used anywhere the card's network brand (Visa, MasterCard, American Express, or Discover) is accepted. Seven in ten view this as a good thing, including 47% who feel this is a very good thing.

Another feature related to convenience—providing customers with the flexibility to shop online where checks and cash generally are not accepted—is also seen as being beneficial by about seven in ten (68%).

A solid majority (69%) of U.S. adults also like the cards’ fixed spending limit that help stop users from spending more than is on the card.

Other benefits Americans indicated were beneficial to consumers include:

• Offering customers another option to receive and use their money (65%).

• Being a good option as a "first" account for certain age groups, such as teenagers or college students (64%).

• Being attractive to people who may not qualify for a traditional checking account due to previous difficulty in managing an account (62%).

• Giving customers a way to convert cash, which can be lost or stolen, to a safer payment method (62%).

• Allowing users to receive payroll and government benefits electronically, thereby avoiding the costs, inconvenience, and risks associated with cashing paper checks (59%).

Furthermore, out of all the features of reloadable prepaid cards outlined, less than one in ten Americans would consider any of these features a “bad thing for consumers.”

In addition to identifying the many specific features of reloadable prepaid cards as good for consumers, Americans also view prepaid cards overall as beneficial for consumers. Nearly two-thirds of Americans (62%) believe prepaid cards are good for consumers. Moreover, that number is even higher among those who have experience with prepaid cards (have either bought or used a prepaid card) with four in five (80%) saying prepaid cards are good for consumers.

When it comes to the regulation of reloadable prepaid cards, a majority (70%) either feels that they should be subject to the same amount of regulation as credit cards (49%), or less regulation than credit cards (21%). Only one in ten (10%) say that there should be more regulation of prepaid cards than credit cards.

Four-in-ten U.S. adults (41%) have either used or bought a reloadable prepaid card from a bank or company like American Express, Discover, MasterCard, or Visa. This includes:

• One-in-five (22%) who say that they have used a reloadable prepaid card that was given to them as a gift.

• Almost one in five (18%) who have personally bought and used a reloadable prepaid card.

• One in ten (10%) who have bought a prepaid card and given it to someone they know, like a spouse, child, parent, colleague or friend.

The most frequently mentioned reason for using or buying a reloadable prepaid card among those who have bought or used a card is as a gift generally or for the holidays (36%), followed by its convenience (11%), and to make online purchases (6%).

The Ipsos poll was conducted Nov. 21–25, 2013. A national sample of 1,004 adults aged 18 and older from Ipsos’ U.S. online panel were interviewed online. Weighting was then employed to balance demographics and provide results intended to approximate the sample universe. A survey with an unweighted probability sample of 1,004 and a 100% response rate would have an estimated margin of error of +/- 3.1 percentage points 19 times out of 20 of what the results would have been had the entire adult population of adults in the United States had been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at [email protected]

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