The Pros and Cons of Prepaid Contactless Smart Cards
In the 6th and final post in our series on prepaid cards, Art Stewart, Global Head of Sales & Marketing, IDEX Biometrics, explains the pros and cons of prepaid contactless smart cards.
In the last decade, a new product has emerged which is gaining immense popularity amongst parents and their children. The rise of the prepaid “pocket money” card provides a host of benefits, such as ease of use and helping young people to learn basic money management skills by allowing them access to their own money, while giving parents the opportunity to retain control.
Indeed, the prepaid card market is surging at an impressive rate, with the global market value expected to reach $13.87 billion this year. It shows a CAGR (Compound Annual Growth Rate) of 6.8% [1]. Another important statistic is that 15% of this market are aged 15 and under. There are undeniably many positive aspects of children having access to a prepaid card, but there are also some downsides, the most notable of which is undoubtably security.
User-Friendly Smart Cards
Perhaps the most significant selling point of pocket money cards is how easy they are to use. Children are familiar with the concept of using a payment card from an early age from seeing adults using them and as a result, these cards are being used effectively by children as young as six. The smart cards help teach young people about financial responsibility, including how to budget and save, which are essential life skills. Indeed, studies suggest that children develop their long-term attitudes towards money by the age of seven. It means that educating them at an early stage is vital for establishing lifelong good habits.
Plenty of Features
Many contactless smart cards are used alongside an app, which offers a host of additional features that can help children and parents manage their spending. The ability for parents to set spending limits can provide excellent peace of mind. Likewise, tools such as “jars” allow children to allocate money for saving. Card companies themselves set restrictions on the payment-making abilities to inappropriate merchants (including gambling sites and alcohol retailers), offering further reassurance.
Security is a Concern
Anyone with children will know all too well that young people are likely to lose things regularly. It’s a matter of concern when it extends to the loss of a contactless card that might be loaded with larger sums of money. Furthermore, theft is another risk, as some children will accrue significant sums through careful saving. The absence of standardization across the contactless smart card market should be addressed. But, in the meantime, there is a solution available.
The Addition of Biometric Authentication
How does the payments industry ensure the security of pocket money cards? Fingerprint sensors can be added to these contactless cards, ensuring that only the owner can use them. Integrating fingerprint authentication technology will mean that the cards remain easy to use but become entirely secure. Packed with great features and fulfilling a worthwhile educational need, the market for the pocket money contactless smart card is likely to continue its growth trajectory. With the addition of biometrics to increase security and peace of mind these cards can become a trusted first touchpoint for a whole generation.
The previous post in our series on prepaid cards discussed the necessity of adding fingerprint sensors to enhance security.
