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Banking the Unbanked with Prepaid DebitDecember 2 Prepaid debit cards are making inroads among unbanked and under-banked Americans. Yet, those consumers who use prepaid cards remain a small percentage of the overall market, according to a new report from the Boston-based consultancy Aite Group. “Prepaid debit cards are in the initial stages of their product life cycle. As such, there is ample opportunity to grow product usage,” said Gwenn Bezard, Research Director at Aite and author of the report. But he sees substantially more growth on the horizon. Bezard's report is based on segment-based analysis of customers of check-cashing stores – a group believed to be largely unbanked or under-banked. These consumers, surveyed over a two-month period last year, were queried about their knowledge, usage and expectations about prepaid debit cards. From that analysis, Bezard identified 5 segments of the prepaid card market:
By examining the characteristics of each segment, along with barriers to adoption, the report identifies marketing strategies that might appeal to each group of end users. “Given the distinctiveness of the target consumer segments for this product, marketing programs should be specifically tailored to the needs of each segment,” Bezard said. As banks and other traditional financial services providers struggle to remain relevant, especially in the current economy, many of the executives at those firms are looking to prepaid cards as way to reach under-served consumers. Among executives at prepaid card firms polled earlier this year by the Center for Financial Services Innovation (CFSI), 80% identified “underbanked” consumers as “important” or “very important” to future growth of the prepaid industry.
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 There are nearly four times as many individual bank loans to adults in the developed world as there are in developing countries (0.82 vs. 0.22) -CGAP |