Prepaid Debit, Payroll Cards Surge
BOSTON-The prepaid debit and payroll card industry is emerging as a formidable force in U.S. consumer financial services, according to a report from Aite Group.
The consultancy said the launch of an ambitious payroll card program by Wal-Mart in 2009, the successful IPO of Green Dot in 2010, and NetSpend's subsequent filing for an IPO have been historic milestones for the industry, the stydy pointed out.
Dollar volumes for the combined products reached $44 billion in 2009, a number Aite Group expects to rise to $164 billion for 2014. Multiple factors over the past few years-including the housing market bust, financial crisis, economic downturn, surge in unemployment, and large numbers of consumers defaulting on their debt-have contributed to the elimination of mainstream financial institutions in the low end of the market.
Aite said the prepaid debit and payroll card industry is uniquely positioned to fill this void because prepaid debit and payroll cards represent a compelling alternative to consumers shut out of checking accounts and credit cards.
For info: www.aitegroup.com
Debit Share Of Payment Mix Growing
MADISON, Wis.-Debit cards continue to garner a higher share in consumer payment mix according to research from the Filene Institute.
According to the Institute there is "no evidence" that debit cards are reaching peak use. Among the report's findings:
* Frequent debit card users tend to be younger and debit-only users decrease by age.
* Nearly 30% of 18- to 29-year-olds are debit-only users compared to just 7% of individuals over 70.
* Credit follows a reverse order as 49% of those over the age of 70 are credit card-only users compared to 29% of people under 30.
* Unsurprisingly, those who use credit cards frequently tend to have higher incomes and higher levels of debt than those with debit cards or no plastic at all.
* Check usage continues to fall, while cash usage has held steady.
Outstanding Card Balances Grow
PORTLAND, Ore.-Outstanding credit card balances among credit union members grew during the second quarter, according to analysis by AssetExchange. Using data from the approximately 2,150 CUs with card portfolios of $1 million or more, AssetExchange reported balances were up 7.4% in June 2010 over one year earlier, to $34-billion in outstandings, with growth continuing in the single digits.
Among Other findings:
* Card accounts grew at a 3.1% annual rate to 12.6 million.
* Cards as a percentage of total assets increased to 4.6% in Q2 2010, up from 4.5% in the second quarter of 2009.
* Overall penetration remained approximately 18%.
* Delinquencies declined to 1.7% from 1.9% between June 2009 and June 2010, but charge-offs rose to 4.5% from 4.2% over that same period.