Payment network-branded prepaid cards represent
the "next big thing" in consumer payment cards. However, banks
have yet to pursue the growth potential of general purpose reloadable
cards for the unbanked population, which represents an untapped US$192
billion market.
Branded (Visa, MasterCard) payment cards have
largely been the domain of traditional retail banks. Following on the
successes of branded credit and debit cards, branded prepaid cards are
starting to have a considerable market presence. However, from an issuance
perspective, these prepaid cards are significantly different from their
credit and debit cousins: they are being offered and marketed by
nontraditional and nonbanks such as NetSpend, Wal-Mart, and Western
Union.
In a new report, Where the Banks Aren't: Nontraditional/Nonbank
Advances in Branded Prepaid Cards, Celent focuses on general purpose
reloadable (GPR) cards and the players that dominate.
Nonbank players have recognized the attractiveness
of these cards to the US unbanked, underbanked, and immigrant populations
historically of little interest to traditional retail banks. Recognizing
the potential of a 36 million person, $192 billion market, nontraditional
players have taken a strategic approach in supplanting bank accounts with
prepaid card accounts while offering the same ancillary services as
retail banks (e.g., direct deposit, ATM access, overdraft protection,
remittance services, and mobile features).
In a highly competitive retail banking environment,
banks should be looking for ways to reach out to the unbanked. According
to Red Gillen, senior analyst at
Celent, "Branded prepaid card programs constitute 'gateway' financial
products that could support the conversion of the unbanked population to
become bank customers. Banks have a lot to learn from the nontraditional/nonbanks."
This report spotlights some of the main players in
the branded prepaid card space and suggests models that banks could pursue
to participate in this market. The report contains 58 pages, 22 figures
and 15 tables. A table of contents is
available online.
