More people are benefitting from using card payments than ever before. The number of credit cards being used globally has grown from 8.6 billion just six years ago to an estimated 14.4 billion cards globally in 2017 (1). The fact is that more people than ever before are gaining value from the simplicity, convenience and versatility of electronic payments.
There are many people for whom the convenience of such financial services remains out of reach. Today, more than two billion adults in the world do not have an account with any type of banking institution either locally or online. They may not be able to provide a home address or pass credit scoring checks that are often required by financial service providers.
So what’s the problem? Most of us take for granted the ability to quickly shop around online and secure the best deals electronically with a credit, debit or prepaid card. Most of benefit from cheaper utility bills because we pay by Direct Debit which usually earns us a discount. If you can’t pay with a card or online account, you will pay more. This is called the Poverty Premium and it ironically means that the poorest members of society pay more to meet their day to day needs. Those especially vulnerable to falling into poverty are migrants and victims of human trafficking.
There is growing momentum around ‘financial inclusion’ that seeks to close this gap and help more people better manage their finances and create a fairer society.
Fintech firms are creating new and innovative solutions that are challenging the legacy providers of financial services and finding ways around the problems.
The use of prepaid cards is on the increase. According to Mercator, annual sales for gift cards and vouchers stood at GBP £6 billion in 2017 and could reach £7.4 billion if current growth continues.
This increase in prepaid card purchases has driven significant growth in payment volumes which have risen almost 20% per year since 2006. Prepaid cards are seeing the fastest growth rate of payments in the past decade.
One of the reasons for this growth is that prepaid cards have emerged as a great way to overcome many challenges from simplifying corporate expenditure management to breaking down barriers to financial inclusion.
B4B Payments, a specialist in prepaid cards, has recently been shortlisted for an industry award in recognition of its achievements in using Mastercard prepaid cards to support financial inclusion. Because prepaid cards can be issued to people such as remote workers or migrants without the need for a bank account or permanent address, money can be instantly transferred and spent online or offline in stores without legacy barriers.
The advancement of technology and changes to banking rules have made it possible for payment innovators to challenge the old ways of providing financial services. While prepaid cards have been around for years, they are increasingly being used in exciting new ways to solve existing problems.
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