In 2019 The European Economic Area (EEA) prepaid card market was worth $186.2 billion, by 2027 it is expected to be worth $500.2 billion. Covid 19 has injected huge growth into the demand for pre-paid card services as people switched to online shopping and bricks-and-mortar venues requested ‘contactless only’ payment options. Much less cash is now being used, although, ironically, there are still more banknotes in circulation as people are holding on to them.
A prepaid card can be used in very much the same way as a debit or credit card but with a front-loaded balance. Historically these may have been paper-based vouchers, but these are now multi-purpose prepaid cards. Demand is increasing amongst consumers who have lower access to other forms of electronic payments. Unlike payment e-wallets like ApplePay and PayPal, the card is not linked to a bank account. This means that in countries where the population is comparatively underbanked, prepaid cards are opening up opportunities that were previously not available to those without a bank account.
But prepaid cards are not just for people who don’t use banking services. Security and budgeting are also attractive features. Growth is predicted all across the EEA. In The Netherlands, the cards can be used across all sectors. They can include general-purpose gift cards, Government disbursement cards, and even Payroll cards. The key providers of the cards are American Express, JPMorgan Chase & Co, Kaiku Finance, Netspend, and PayPal are also moving into this market. They are particularly popular in markets that were still cash-based before the huge changes that have occurred during the pandemic. As more merchants take card payments, prepaid cards can be used alongside standard payment methods.
There are real changes to the way we receive and spend money. Banks are having to reconsider their approach to currency as well with more than 84 countries either exploring or in advanced stages of deploying national digital currencies. These countries include China, Australia, Mexico, the USA, the UK, and many others. Cryptocurrencies and NFTs are definitely here to stay and companies like Tesla and Google operate with Crypto. The national banks cannot afford to be excluded from this sector. Crypto up until now has been separate from the traditional banking system and many people have struggled to understand how they could use it in real-life scenarios. This is now changing.
We are now totally accustomed to using our smartphones for payment and prepaid cards are being used in the same way that we use our credit, debit, and virtual payment cards. The total transaction value in the Digital Payments segment in the Netherlands is projected to reach US$60,578m in 2022. The UK is one of the most cashless countries in Europe and the sector is estimated to reach US$355,315m in 2022 – disproportionately larger even taking into account population differentials. Australia’s digital payment market is growing and will be worth US$96,348m in 2022.
In Australia, 44% of people use a digital wallet to pay for their everyday transactions according to comparison site Choosi. It is reported that they are fueling a very high level of impulse spending. Digital wallets are used across a broad spectrum of purchasing scenarios. From buying a coffee and ordering a takeaway to cloud-based gaming and online gambling in Australia. The convenience makes it an easy choice. People also really like the fact that they can easily keep an eye on their expenditure and see what they are spending in real-time.
In the Netherlands card payments grew by 7.7% in 2021 and this was predominantly debit cards – 95% of spending being on debit cards. The prepaid cards market is likely to be very successful here because there is a cultural aversion to credit amongst the Dutch who rarely use Credit and Charge cards.