Why Prepaid Cards Need Protecting With Biometric Sensors
In the next post of our series on prepaid cards, Art Stewart, Global Head of Sales & Marketing, IDEX Biometrics, explains why prepaid cards should be protected with biometric sensors.
The prepaid card is making a real impact in the world of financial services, and according to current trends, this looks set to continue. Globally, the value of prepaid card transactions is forecast to grow at a CAGR of 10.7% until 2027 when the global market for Prepaid Cards is projected to reach a staggering US$4.1 trillion . The reason for this incredible growth is largely due to the popularity of such cards with the younger generation, as we discussed in our previous blog, which also sees the greatest expansion across the North America region. As a result, the prepaid card market is fast establishing itself as a crucial component and value driver in the financial sector.
The Convenience Of Prepaid
There are many advantages to choosing a prepaid card, such as control over expenditure and ease of use. Using a prepaid card offers a convenient means of going cashless in stores (as advocated by many in responses to both the Covid pandemic, and a drive towards a greener society) and making payments online.
One of the key reasons for the cards’ popularity is its democratization of finance: people who have been turned down for credit or do not have a bank account can still acquire a prepaid card and carry out the same kind of transactions as those with conventional bank linked cards. Research by the Federal Deposit Insurance Corporation  found that as of 2018, 6.5% of US households did not have a bank account, which means that 8.4 million homes had no access to convenient payment methods.
Security Issues Within The Prepaid Card Market
Unfortunately, the prepaid card market is not without its share of security concerns. The fledgling nature of this market means that standardization has not yet been established, which in turn opens the door to increasing levels of fraudulent activity. By 2020, the global cost of payment fraud had exceeded $32 billion , with this figure expected to rise by 25% again by 2027.
This threat of fraud subsequently presents problems in building trust with card users. As many prepaid card users are already disenfranchised from traditional banking institutions, reassuring this vulnerable demographic can prove challenging.
Adding Extra Confidence Through Biometrics
The answer to this problem could lie in biometric sensors. By adding biometric fingerprint identification, customers can be reassured that their card is safe from the threat of fraudulent misuse, and therefore it will allow them to make transactions with confidence.
An affordable way to enable highly secure authentication for the mass market, biometric fingerprint solutions offer a simple and touch-free method of both restoring customer confidence in the prepaid card, and ultimately bringing much-needed security to the growing prepaid card market.
Biometric Sensors- A Smart Choice
Thanks to the prevalence of similar sensors in smartphones and other popular devices, customers are already both familiar and comfortable with biometric technology. This means that providing biometric fingerprint authentication for their prepaid cards is likely to be welcomed as a trusted means of enhancing security. The onus now is for the card providers to get on board and start implementing this beneficial means of fraud prevention.
The previous post in our series on prepaid cards discussed what you need to know about the growing prepaid contactless smart card market.