DES MOINES — Instant issue, lifestyle needs and now even limiting loss from fraud are key factors driving the rapid growth of prepaid, according to the latest findings from The Members Group.
TMG reported a 97% year-over-year increase in prepaid product contracts, noting that 52 financial institutions that process payments through TMG added a prepaid product to their consumer payments offering in 2013.
The products being added include general-purpose reloadable, instant-issue gift cards, instant issue reloadable and a reloadable card designed especially for Hispanic cardholders.
TMG Retail Payments Product Manager Konrad Christensen said consumers are asking their financial institutions if they offer prepaid.
"More consumers understand the benefits of prepaid, they are turning first to their primary FI to see if they have an attractive option," Christensen said in a statement.
Mazuma Credit Union in Kansas City, Mo., has sold a TMG instant-issue card since 2008.
"Having a low-risk, simple and affordable way to offer debt recovery tools to our members helps fulfill our mission of people helping people," said Deborah Peterson, MSS manager for the $471 million-asset institution.
TMG noted that concerns over data breaches are one of the reasons for the growing prepaid interest. The company says a growing segment of consumers understand prepaid can limit losses if their card is compromised, plus instant issue prepaid places a card in members' hands while they wait for a new card to be issued following a data compromise.
Growth opportunities in new markets are also motivating credit unions and community banks to offer a variety of prepaid products.
"The reloadable card is great for those who do not qualify for a checking account due to our guidelines," noted TJ Marcsisak, CEO of the $28 million Nishna Valley CU in Atlantic, Iowa.
