Trends in consumer spending indicate that 2015 will be the year of the ‘prepaid economy’, according to financial industry experts, as consumers increasingly reject credit cards and seek greater protection from online fraud.
New figures show that UK has seen an explosion in the number of prepaid card products available to consumers, from 50 in 2007 to over 240 currently on offer.
The Prepaid International Forum (PIF) reports that with this growth in availability of prepaid products is driving greater regular use of prepaid cards to pay for goods and services.
The rise in prepaid cards has gone hand-in-hand with the decline in credit card usage. In June last year the British Retail Consortium revealed that the number of transactions involving credit cards had fallen by 13%, indicating that post-crash UK consumers are more cautious about credit, which has opened up a gap that prepaid cards are starting to fill.
While prepaid cards are well established in the UK as gift cards or as an alternative to taking foreign currency abroad, growth is being fuelled by a range of new applications.
For example, consumers are increasingly using prepaid cards to reduce the risks of online shopping. Across the EU 6% of all prepaid cards are used specifically for online purchases, to avoid the risk of bank or credit card details being stolen and used by fraudsters, according to PIF.
Prepaid cards are also seen as beneficial for those who may not have a bank account, such as teenagers, but still need to be able to make purchases online or over the counter when it’s not convenient to carry cash.
Alastair Graham, PIF spokesperson, commented: “Prepaid products provide flexible solutions where cash, credit or debit cards are not the answer. The digital world is creating many new applications for this technology, where people want to use cashless payments in a way that is controlled and separated from the rest of their finances.
“Increasing online fraud is a good example of a driver for these changes – consumers want the flexibility of being able to buy over the Internet, but have an increasing awareness and fear of financial details being hacked or misused.
“As consumers get more used to having a number of prepaid cards in their wallets, their application and use will continue to grow.”