prepaid cards

With three-quarters of consumers either using, purchasing or receiving prepaid cards over the past 12 months, the payment method has become not only a vital tool for driving brand awareness, but a way to deliver a wider range of payment choices and financial support to those in need.

The growth in popularity and variety of uses of prepaid cards suggest there are opportunities for companies to fill gaps in the market for people who may have been forgotten or unexplored by other industry players.

Indeed, the application of prepaid programs is extensive and growing into seemingly all areas of life, such as fraud management tools, bill payments, budgeting tools, real-time/push-to-card payments via P2P and earned wage access, as well as cryptocurrency conversions. Network partners need innovation, imagination, flexibility, and a partnership approach to make these uses real.

Current prepaid usage

According to research conducted by US technology advisory firm Aite-Novarica Group in conjunction with Discover® Global Network, the global payments brand of Discover Financial Services, prepaid cards are especially popular for e-commerce transactions:  21 per cent prefer to use prepaid cards over credit or debit cards for online purchases.

Prepaid cards appeal to consumers across demographics with 67 per cent of older Millennials (those born between 1981 and 1989) owning a general-purpose reloadable card (a card that can be reloaded and used for everyday purchases), while 64 per cent of Generation Z (aged between 18 and 26 years old) own an open loop gift card (a card to serve as gift giving alternatives, giving card recipient choice of what and where they
want to purchase).

“There is virtually an unlimited number of use cases where prepaid cards offer a simpler and more streamlined payment option.”

Physical cards continued to be preferred by most people – sixty-one per cent prefer some sort of physical prepaid card over a digital prepaid card.

But it’s not just consumers that are keenly using prepaid cards, with the payment solution also favoured by businesses and governments. Some companies offer prepaid payroll cards to help employees get paid faster before a payroll date, or to pay for commuting on public transport or for parking permits. Governmental uses of prepaid cards include providing benefits as well as financial aid
and relief during disasters, such as the Covid-19 pandemic.

Despite being associated historically with the underserved or underbanked populations, 89 per cent of US prepaid card users have a checking account, according to Aite’s research.

“The popularity of prepaid cards has largely been driven by the flexibility they present,” says Dane James, Head of Sales, Network Solutions at Discover Financial Services.

“There is virtually an unlimited number of use cases where prepaid cards offer a simpler and more streamlined payment option. Reloadable cards offer consumers another convenient way to manage their weekly and monthly expense budgets by loading their available funds for groceries, transit, or even entertainment.”

Finding the right partner

Discover® Global Network, which processes millions of cardholder transactions each day, explains that its prepaid program offering aims to bring in the right partners, offer innovation, flexibility and fast on-boarding to allow its partners to launch their prepaid use cases in market.

Discover delivers a wide range of customised prepaid solutions in areas including gaming, student support, gift cards, corporate payments, payroll and incentive programs.

“Prepaid cards can be used to pay consumers on insurance claims, payroll and earned wage access, and they can be used to pay utility and telecom company bills,” James observed. “Businesses can use them for reimbursements, expenses, and incentives of various kinds.”

Further, almost half (48 per cent) of survey respondents believe prepaid card branding is important or very important when they receive or buy a prepaid card. Unsurprisingly, 91 per cent of consumers consider it important that a brand is accepted in most places.

Major benefits of working with Discover Global Network on prepaid programmes include:

Brand building Flexible card designs and marketing support ensure that branded prepaid cards drive awareness for both the program and a brand.

Simplicity Transparent and easy to understand pricing allows partners to grasp potential program economics. Simple network on-boarding allows partners to focus resources on other program implementation tasks.

Innovative prepaid features and program options The flexibility and openness of Discover Global Network ensures a positive environment to collaborate and co-create innovative solutions that can be adapted to new markets or verticals.

Manage where and how prepaid cards are used Discover can enable Restricted Authorisation Network (RAN) programmes. A RAN program lets you control acceptance by merchant, brand or category type.

“Prepaid cards are often used for various types of disbursements for both consumers and businesses,” James concluded. “There really is almost no limit to how they can be used.”

The application of prepaid programs is expanding rapidly. To learn how new prepaid solutions can increase your payments offerings and market opportunities, contact a Discover representative at

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