Banks Move Into Prepaid Card Space May Help Provide Greater Consumer Disclosure, says Auriemma Consulting Group
New York, NY - Prepaid cards serve a variety of consumer needs, and the profile of consumers who buy prepaid cards is sometimes incorrectly presumed to be predominantly unbanked or underbanked. However, new research from The Payments Report, a syndicated research report published by the Auriemma Consulting Group (ACG), revealed that a slight majority, (54%), of consumers have actually purchased prepaid cards, and the demographic profile spans virtually every age and income band.
By far, most (79%) prepaid card purchasers acquired their prepaid cards at brick-and-mortar retail stores, while just over half (53%) received a prepaid card as a rebate for another purchase. Recently, several major financial institutions, including JPMorgan Chase & Co. have announced plans to introduce prepaid cards of their own.
Research from The Payments Report also revealed that a vast majority (83%) of consumers feel it's very important for prepaid card issuers to adequately disclose all fees on prepaid cards regardless of the amounts, and consumer response to disclosure boxes proposed by The Center for Financial Services Innovation (CFSI) were overwhelmingly supported. However, the research found no major differences in the response to the summary and the more comprehensive version. In May 2012, the Consumer Financial Protection Bureau (CFPB) took the first step in looking at consumer protections for the fast-growing prepaid card market.
All banks already comply with a variety of regulations which mandate pricing disclosure, including Federal Reserve Board Regulations Z and E. Dr. Patricia Sahm, Managing Director at ACG, says that banks offering prepaid card products makes perfect sense. She said, "Banks introduced the payment card to the world, so this is a logical extension of a business banks already know about." She adds that banks may be able to bring some much-needed disclosure transparency to prepaid cards that have been largely missing from this space so far.
About Auriemma Consulting Group
Auriemma Consulting Group (ACG) is a full-service management consulting firm serving the payments, lending, and retail industries since 1984. Cardbeat® is ACG’s syndicated market research study of credit cardholders, conducted monthly in the U.S. and quarterly in the U.K. ACG also conducts research in the debit and prepaid space, publishing a quarterly report covering these topics which is known as The Payments Report. With offices in New York and London, ACG consultants are experienced practitioners drawn from the credit card, private label, auto finance, mortgage, and retail banking industries that we serve. For more information, please contact Dr. Patricia A. Sahm at 212-323-7000 or patricia.sahm@acg.net.
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