Prepaid Card Association: How Consumers Actually Use Prepaid Cards

Prepaid Debit Card AssociationThe Network Branded Prepaid Card Association (NBPCA) today released a paper titled “Consumers and General Purpose Reloadable Cards: Who Uses Them, Why and the Unique Value They Provide”. The paper describes a number of usage scenarios intended to show how users of network branded prepaid cards actually use these cards to manage their finances and conduct financial transactions.

The report (available by request from the NBPCA) includes an overview of the network branded prepaid market as well as an introduction to network branded prepaid cards (which are prepaid cards bearing a network logo, such as that of Visa, MasterCard, Discover or American Express).

The real purpose of the report, however, is to describe how a typical consumer uses a prepaid debit card. Several profiles of consumers are presented to illustrate how a prepaid card can provide financial, time, and quality of life benefits.

For example, one of the consumer profiles is of “Jason”, a college student, who earns under $10k a year. The profile shows how Jason could save money by using a prepaid card instead of a checking account. In particular, Jason could save a significant amount each year by using a prepaid debit card instead of a checking account just based on the avoidance of overdraft fees. The report assumes the use of a general prepaid card that has relatively high fees (including a $9.95 activation fee and a $4.95 monthly fee).

Based on our knowledge of the demographic and usage patterns of prepaid debit cardholders, it appears that the consumer profiles presented in the NBPCA report appear to be reasonable. Further, the cost savings shown in the report are similar to those presented on in our prepaid card reviews.

For readers who want to better understand the demographic of typical prepaid debit card users and their usage patterns, this report from the NBPCA is a must-read.

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