Celebrity endorsed prepaid cards are popular with young consumers
April 26, 2013

Small and medium-sized enterprises that accept debit and credit cards may begin to see younger clients swiping celebrity endorsed plastic. Justin Bieber is the latest celebrity to put his face on a prepaid card. Companies hope the celebrities' sponsorship will encourage consumers to purchase the cards. Despite fees associated with plastic, parents are beginning to like the cards, as they help them educate their children to manage personal finances without having to go through a bank. Prepaid cards are quickly replacing cash among younger generations, and SMEs looking to increase sales may want to consider investing in credit card payment processing software to keep up with the trend.

Safe spending
According to CNN Money, the new debit card that's endorsed by Justin Bieber is reloadable and teen-focused, providing parents with the opportunity to teach their children to be financially savvy. Already on the market are cards adorned with references to Magic Johnson and Russell Simmons, among others. With millions of fans following Bieber on social media and buying his merchandise, there is a large consumer base for the prepaid card. 

However, one of the biggest issues financial experts have with the cards are the significant fees, which typically range between $3 and $9.95, according to Bankrate. Some cards allow users to wave monthly surcharges by signing up for automatic direct deposit into the card. Prepaid cards still have the traditional problems of bank-linked debit card and out-of-network ATM fees, but the charges may help teach young consumers about sensible spending. 

There are those who oppose prepaid cards, but most agree that being detached from a bank while still having the financial security provided by plastic is a positive.

Tom Feltner, director of financial services at the Consumer Federation of America, said prepaid card benefits will grow as more companies enter the market and the cards become more financially viable. Teenagers may not be the only ones using them in the future, he added.

"It's a way to dramatically lower your transaction costs and the time that you spend managing your finances and paying bills, and those are the benefits of having low-cost access to payments networks," Feltner told Bankrate. 

Businesses accepting credit card payments are already able to take advantage of the evolving market. As prepaid cards become more popular among younger generations and their parents, having the software that allows consumers to purchase with plastic will provide increasingly large benefits in the near future. 

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