Nearly 70 percent of polled industry executives believe that growth in the general purpose reloadable (GPR) card market will increase or stay the same in 2009 compared to 2008, according to research released today by the Center for Financial Services Innovation (CFSI).
In its latest installment of GPR-related research, CFSI turned its attention from consumers to industry executives to examine attitudes and trends.
“Our most exciting finding, perhaps, was that this industry is optimistic,” according to the report. “Even in the face of the current economic environment, prepaid card industry participants are bullish about the future.”
The research was culled from an Internet poll, conducted by CFSI in partnership with Paybefore, and in-depth follow-up interviews by CFSI with 18 industry leaders across the prepaid value chain. Although the online survey was conducted in November and December—when the economic picture was slightly better—the executive interviews were conducted between December and February, and the optimism was still intact.
“What we heard in the interviews was consistent with what we learned in the survey,” Rachel Schneider, special projects director for CFSI, tells Paybefore. “Essentially people are saying, whether by choice or necessity, there is going to be less consumer access to credit, and prepaid will be an attractive option. In addition, the industry is still so new, there’s room for growth even in a negative economic environment.”
Less surprising, perhaps, is respondents’ No. 1 ranked challenge—building consumer awareness. Almost 33 percent of respondents cited consumer awareness as the biggest challenge for the industry, followed by business-model economics at nearly 27 percent. The executives interviewed concur with this sentiment, according to CFSI. “Almost universally, they argue that consumers do not yet have sufficient general awareness of what GPR cards offer or how they work.”
To best address the awareness issue, 65 percent of survey respondents thought better customer education for existing cardholders is key. Increased marketing was the second most popular answer at 61 percent.
Today at 1:15 p.m., during the “Understanding the Underbanked Consumer Experience with Prepaid Cards” session, CFSI Director Jennifer Tescher will present these findings as well as CFSI’s consumer segmentation study and its latest work interviewing underbanked consumers.
For more daily coverage of the prepaid and stored value card industry, visit Paybefore.com. To learn about subscriptions, visit Paybefore’s booth #727.
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