Why Prepaid Cards Open a New Client Base for the Touch-Free Payments Market

In the fourth post of our series on prepaid cards, Art Stewart, Global Head of Sales & Marketing, IDEX Biometrics, explains why prepaid cards open a new client base for the touch free payments markets.

The world has changed in many ways since the arrival of the  pandemic. One shift has been the hastened demise of cash, with contact free transactions now preferred for reasons of hygiene, and the growth of online payments due to the closure of many bricks and mortar locations during lockdowns; however, while the move towards a cashless society certainly seems inevitable, the financial inclusion of the unbanked and underbanked in our society now needs to be addressed.

Prepay is the answer

The prepaid card provides the ideal solution for those who do not currently participate in traditional banking methods, which is why prepay is a market that is growing fast. Already a runaway success in many developing countries, prepaid cards and touch free payments are playing an increasingly important role in remittances, with the overall global prepay market expected to reach $3.7tn (£2.7tn) by 2022 [1]. In Europe alone, it is thought that around 40 million people do not have access to bank accounts, highlighting the incredible potential for customer growth in this area.

The market for prepaid cards and contactless payments is also proving ideal for attracting younger customers. From those learning to handle money with their first pocket money cards to students who want to stay in control of their expenditure, prepay provides the ideal solution. With 15 per cent of prepay customers aged under 15 and 14.1 per cent aged 16-24, the youth demographic currently comprises a significant portion of the prepay market; in fact, 43 per cent of prepaid card users fall under the category Generation Y. Often such a card is a young person’s first touchpoint with financial institutions, presenting excellent opportunities for brands to acquire long-term loyal customers.

The importance of getting touch free payments right

The benefits of positioning your brand as a trusted provider of financial services cannot be underestimated. With prepaid cards and touch free payments proving to be a significant growth area of the market, there is no shortage of potential customers to be attracted by your offering. By gaining the trust of young people and the previously unbanked, your brand could secure these new customers for life.

Of course, to successfully build this trust, it is essential that security is prioritized. With the risk of fraud associated with prepaid card use, ensuring an effective authentication system is paramount. Biometrics can hold the key to enabling the safe and secure transactions that you and your customers need. Integrating fingerprint recognition is an ideal choice, as it provides needed security while preserving crucial ease to use. Furthermore, customers are already familiar and comfortable with the technology due to its inclusion in many mobile devices.

Untapped potential

It is clear that brands that get the prepay market right will see fantastic results, both in terms of attracting the previously unbanked and in gaining the loyalty of the next generation of financial services users. By addressing security issues and putting the right authentication measures in place, brands can successfully build their reputation as trusted financial resources and make the most of the fantastic opportunities the prepay market brings.

[1] https://edgardunn.com/wp-content/uploads/2018/10/Global-Potential-for-Prepaid-Cards-SEPT-2018.pdf

The previous post in our series on prepaid cards explained about the importance of prepay and biometric authentication for financial inclusion.