A new survey of 310 banks finds that just over half of them have either begun offering or are in the process of evaluating prepaid cards.
The survey demonstrates that many depositories are enthusiastic about the potential of prepaid cards, but it also found skepticism at banks that have explored and then rejected the idea of offering the product. Most of the banks surveyed were small institutions.
“Reviewing responses from all the survey participants, it appears clear that participants from banks that have deployed prepaid are generally satisfied with the results and are hence relatively optimistic about the regulatory environment and market opportunities associated with prepaid,” the report’s authors wrote.
“All other respondents tend to be more critical of the prospects for prepaid the farther removed they are from active investigation of prepaid products.”
The survey, which was conducted by Mercator Advisory Group on behalf of the American Bankers Association, found that 58% of the banks that have begun offering prepaid cards believe the regulatory environment is either favorable or very favorable.
By contrast, less than one quarter of the banks that decided not to offer prepaid cards said they viewed the regulatory environment as either favorable or very favorable.
A similar split was evident when banks were asked whether there is a strong market demand for prepaid cards within their geographies. Among banks that have deployed prepaid cards, more than 80% reported a favorable perception of market demand. That figure fell to below 40% for banks that decided not to launch the product. Overall, 109 of the 310 banks surveyed have begun to offer prepaid cards.
Within that group, prepaid gift cards are the most popular offering, following by general purpose reloadable cards, and then payroll cards.
Among the institutions surveyed, 40 banks are currently evaluating prepaid cards. Another 58 banks evaluated and decided not to offer the product. The remaining 103 banks have not evaluated the cards.
The vast majority of the banks surveyed have under $1 billion of assets.