PayPal Inc. is digging even further into the prepaid card market at a time when more underbanked consumers favor such products.

Users of the prepaid card do not need to have a PayPal account — though having one provides access to additional benefits. NetSpend Holdings Inc. will distribute and process payments for a new PayPal Prepaid MasterCard available to interested consumers, the Austin, Texas-based provider of general-purpose reloadable prepaid debit cards announced Tuesday.

The number of unbanked American consumers using prepaid cards is growing, making PayPal's timing for a prepaid card ideal, says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC.

"We've now hit the power curve for prepaid card use," Ablowitz says. "The debit card was the vehicle in the 1990s and 2000s, but the prepaid card is the vehicle moving forward."

PayPal, a unit of San Jose, Calif.-based eBay Inc., bolsters its chances for success by lending its reputation as a trusted online payment provider to MasterCard Inc. and NetSpend, Ablowitz says.

"NetSpend is a leading company in prepaid, and they are partnering on a product that enters a market that has hit its time," he adds.

When the PayPal Prepaid MasterCard is linked to a PayPal account, it unlocks services such as online payback rewards, an optional savings account, immediate account alerts and online budgeting tools, says Dan Henry, NetSpend's chief executive.

NetSpend will encourage those interested in the card (but who are not PayPal accountholders) to open a PayPal account to get the full benefit of the card, Henry says.

Cardholders who do not have a PayPal account will be able to make purchases and withdraw money from participating ATMs, according to the PayPal website.

NetSpend will market the card to existing PayPal users through the PayPal website. It will use its direct-mail database to reach other consumers, Henry says.

In addition, NetSpend continues to negotiate with retail merchants to possibly sell the PayPal Prepaid MasterCard in stores, much in the same manner NetSpend sells Visa prepaid cards at 5,000 7-Eleven locations throughout the country.

As the card's processor, NetSpend is handling all transaction authorizations, data security and standards compliance, Henry says. The Bancorp Bank, a subsidiary of The Bancorp Inc., is issuing the cards.

PayPal charges consumers a $4.95 monthly fee for the card. Users also pay $1.95 per ATM withdrawal. PIN-debit transactions are routed over the Cirrus and Pulse electronic funds transfer networks.

Consumers may load funds into the card account through direct deposit or at more than 100,000 NetSpend reload locations throughout the U.S.

"This is a tremendous partnership and opportunity to fill a void in this country for those unbanked or underbanked and still using cash," Henry says of the partnership. "This card may be a way to get those consumers to start using electronic payments."

To appeal to the underbanked, "you have to establish tremendous trust and awareness, and in partnering with the PayPal and MasterCard trusted brands, it really makes it possible to make a substantial statement in this market," Henry says.

PayPal representatives were unavailable for comment.

PayPal and MasterCard launched another initiative last week in the United Kingdom, offering a PayPal Access Prepaid MasterCard that provides merchants access to funds in their PayPal accounts without going through a bank to make a funds transfer.