Prepaid cards bring gains to Visa, MasterCard
Analysis of prepaid card industry has found that the rising popularity of prepaid cards are having a major impact on the profits of Visa and MasterCard. The prepaid market is estimated to grow 22% each year over the next three years. That translates from $525 billion loaded onto prepaid cards in 2010 from $291 billion on prepaid cards in 2009.
“We believe Visa and MasterCard are the prime beneficiaries of the rapid growth in prepaid use,” David Long, analyst at William Blair& Co said. “Prepaid growth is contributing to the increase in card use over paper forms of payment.”
Many factors have contributed to the sharp growth in prepaid card use. Prepaid cards do not offer money on credit so consumers with a poor credit card often use branded prepaid cards to make purchases such as rental cars and hotel rooms as well as internet transactions. Parents often use prepaid cards to give funds to children since a consumer cannot spend more money than is on the card at any time but funds can be easily added to a reloadable prepaid card.
