IMGCAP(1)]
Though the use of open-loop prepaid cards by unbanked and underbanked consumers continues to grow, the product remains used by a minority of that population, according to a report from Aite Group LLC. The Boston-based consulting firm suggests prepaid card providers consider launching marketing initiatives that reach consumers defined as "unreached prospects," or individuals who are unaware of prepaid cards and frequently cash checks at check-cashing stores. "Television advertising is the most effective vehicle for accomplishing these high-level goals," the report says. Aite based its report on a survey of 400 check-cashing store users it conducted in Virginia in November and December 2008. Aite selected Virginia because it allows payday and low-value, short-term loans, which are products not permitted in many states. The report focused on the three largest groups of unbanked and underbanked consumers: adopters of prepaid cards (30% of respondents), rejectors (43%) and unreached prospects (17%). Aite defined adopters of prepaid cards as repeat users. Rejectors are aware of prepaid cards but have not used them and have no plans to do so. Analyst and report co-author Judy Fishman encourages providers to focus first on unreached prospects. Though the majority of prepaid card adopters regularly reload their cards, more than 20% of respondents either disposed of their cards after the initial buy or have not reloaded them. Prepaid card providers "could encourage reloading by making sure that adopters are aware of the reload capability of these cards," the report says. Prepaid card rejectors usually are inexperienced with electronic payments and do not understand the technology. Aite suggests providers consider conducing in-store demonstrations at check-cashing stores to educate prepaid card rejectors. Providers could entice this segment to use prepaid cards with a product giveaway such as preloaded card with $10, the report says.
