Page 6 - Pay Magazine s2014

viewpoint
The FuTure oF PrePaid:
4 Trends and 4 Predictions
VIEwpoInT
By Thea Garon, Center for Financial Services Innovation
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to o er readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.
The prepaid card industry
is at an in ection point. Over the last few years,
the industry has changed dramatically. Fees have come down, functionality has gone up, and prepaid cards are by and large high-quality products that enable cardholders to spend wisely, save and plan for the future.
The Center for Financial Services Innovation (CFSI) released its 2016 Prepaid Industry Scorecard, which assesses the quality of the prepaid industry through the lens of the Compass Guide to Prepaid. The industry received an A- for Core practices (basic standards for a high-quality prepaid card),
a B for Stretch practices, and a B- for Next Generation practices (best practices for providers looking to go beyond the basics). The industry’s Core and Stretch grades did not change from 2014, but the industry’s Next Generation grade increased from a C- to a B-.
CFSI also identi ed four key trends shaping the industry:
1 Easier loading and unloading. Cardholders now have multiple, a ordable ways to load and withdraw funds from their cards.
2 More transparent and sup- portive fees. Prepaid programs increasingly are communicating costs in clear and easy-to- understand ways, helping users avoid unnecessary fees and select a card that best meets their needs.
3 Increased personalization. Many prepaid cards now enable users to customize their ex- perience, o ering a variety of account plans and customizable alerts and noti cations.
4 Enhanced functionality. Addi- tional features, such as compan- ion cards, budgeting tools and savings platforms are making prepaid cards versatile nancial tools that help cardholders build and sustain nancial health.
It’s clear how the industry has changed in recent years; what’s less clear is how the industry will change in the years ahead. Here are a few predictions on the trends we think will shape the industry:
1 Consumers with bank accounts —particularly millennials— increasingly will turn to prepaid cards to spend, save and manage their money. These individuals currently represent the fastest-growing segment
of prepaid card users.
2 The distinction between pre- paid cards and traditional demand deposit accounts (DDAs) will continue to dim- inish, as the functionality of these two products converges. Consumers will not di erentiate between prepaid cards and checking accounts; they simply will select the best product that meets their needs.
3 The CFPB’s industry-wide regulations will spur innovation by establishing “rules of the
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