Prepaid card use rises throughout the US
July 30, 2013

According to Forbes, prepaid plastic has become the fastest growing form of payment for consumers. A recent Consumer Reports study found the fees associated with reloadable cards are decreasing, leading more customers to rely on the disposable plastic as a purchasing method. Small and medium-sized enterprises that have invested in integrated payment systems and accept debit card payments may see consumers using prepaid cards at the point of sale to take advantage of the financial security and convenience of plastic payments without having their money linked to a bank account. 

Forbes recently reported active prepaid cards are estimated to increase from 6.7 million in 2010 to 29.2 million by 2016, with a compound growth rate of 19.7 percent. In fact, gross dollar volume placed on these cards may rise from 2010's $56.6 billion to $168.7 billion in the next three years. The news source suggested the boost in consumer use of prepaid plastic may be the result of fewer people using traditional checking accounts.

Consumer Reports analyzed 26 prepaid cards based on value, convenience, safety and the number of fees to determine if the cards were a good investment for consumers. While many prepaid plastic options have fees, so do traditional checking accounts. The study also found the preloaded payment type provides users with the same convenient features as debit and credit cards, such as being able to make electronic payments.

Michelle Jun, senior attorney with Consumers Union, Consumer Reports' advocacy group, said prepaid plastic may become more common as a point-of-sale payment method as more cards enter the market. 

"The good news is that prepaid card fees have come down and a number of cards offer many of the same features you get with a bank account," Jun said.

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