BOSTON — Though consumer demand for prepaid debit cards continues to rise, new entrants to the market have caused price compression, limiting revenue opportunities, according to a new survey.
The Aite Group report, "Prepaid Debit Card Realities: Cardholder Demographics and Revenue Models," found that the prepaid debit card market is a "mass market with many different consumer use cases." The consultancy firm said it has established the "true economics" for the prepaid debit card product.
Based on a survey of 1,242 U.S. consumers, Aite Group said Americans are increasingly using prepaid debit cards across all income levels as Gen Xers and Gen Yers look to prepaid debit cards as a tool to help them manage their complex and ever-changing financial lives.
Aite Group advises prepaid debit card providers to segment portfolios by acquisition channel and cardholder demographic to identify what it defines as "Debanked" and "Prebanked" cardholders. Targeted marketing efforts will drive higher revenue generation through greater direct deposit penetration and increase point-of-sale usage, according to the firm.
"Continued success in the prepaid debit market will require providers to focus on educating, activating, motivating, and cross-selling consumers. This will drive higher active cardholder revenue and help them scale business," said Madeline Aufseeser, senior analyst in retail banking at Aite.
