Prepaid cards reign as the ultimate versatile financial solution!
The latest research from the Gift Card & Voucher Association (GCVA) proves that prepaid cards are a popular and versatile tool for just about every need and financial climate. The study, published in December 2023, shows how prepaid cards are being used has changed in line with the current cost of living crisis.
Gift card purchasing was predictably lower in December 2023 compared to December 2022, reflecting the squeeze on the disposable income of shoppers and the downsizing of gift-giving.
Conversely, purchasing for self-use increased to 6.3%, with over 38% of those buyers stating they were doing so ‘to help with saving money’.
The move to self-use is in line with recent reports that, after a decade of decline, the use of cash in the UK is on the rise to manage household budgets during the cost-of-living crisis.
Prepaid cards are a helping hand
People are also looking to their employers for support during these financially challenging times, and some are willing to help – using prepaid cards.
The research confirms sales of physical gift cards through employee benefit programmes increased to 14.4% in December 2023 compared to 13.8% in the same month in 2022.
But corporates could be doing even more for their employees and customers by using prepaid cards for:
1. Rewarding staff achievements – whether it’s for hitting sales targets, completing projects ahead of schedule, or exceptional performance, prepaid cards can be loaded with e-money rewards as an acknowledgement of employees’ hard work and dedication.
2. Training incentive programmes – encouraging employees to participate in training programs by offering prepaid cards as rewards is an excellent incentive for completing training modules, achieving certifications, or attending workshops. It encourages continuous learning and professional development within an organisation.
3. Employee gifting – in an age where packaging and transportation are under intense scrutiny, prepaid cards can provide a versatile solution to traditional corporate gifts. Recipients can choose their own rewards, whether it’s shopping or personal items, dining out or leisure activities.
4. Staff or customer bonuses or incentives – distributing bonuses or incentives to both employees and customers is simple with prepaid cards. For employees, they can be given as performance bonuses or profit-sharing incentives, and for customers as rewards for loyalty, referrals or participating in promotional campaigns.
Customer loyalty schemes
Integrating prepaid cards into customer loyalty programs can incentivise repeat purchases and reward loyal customers.
The trend towards cashback
The growth of cashback incentives is another valuable case study for prepaid cards in cash-strapped times.
The Global Cash Back and Rewards App market was valued at nearly $3.326 billion in 2022 and is expected to grow at a CAGR of 6.99% for the next five years.
Cashback schemes return a percentage of the cost of a purchase to its members as an incentive to buy a specific product through their website.
It is like offering a discount, but the incentive is paid out in cash once members reach a threshold. The cashback can take the form of a bank transfer, PayPal – or via a prepaid card option.
Issuing cashback payouts using a prepaid card is ideal as it doesn’t require the recipient to have any form of bank or other type of electronic account.
The power of prepaid
Handing an employee or a customer a prepaid card opens a world of possibilities.
At its most simple level, it is a way of transferring funds in real-time without the cardholder needing any form of supporting financial service or account. Funds can be sent and spent immediately.
You can choose between open and closed-loop prepaid cards. Open-loop cards can be used anywhere that accepts payment by Mastercard, and this includes online and physical stores. Closed-loop cards are far more restricted in where they can be used, typically within one store, chain, or location.
Cards can also be used as part of a customer loyalty or employee rewards program in-store or online, anywhere that accepts Mastercard payments.
They are ideal for expense management within your business, with rules and controls that keep departments and employees in line with internal spending policies.
The next step – Banking-as-a-Service (BaaS)
Some corporates have used prepaid cards as a stepping stone to the next level. It’s now possible for corporates to bring many other financial services that were previously only available from banks directly within their operations.
B4B Payments offers BaaS, which enables your business to provide financial services as part of (or in addition to) your current commercial offering.
Take advantage of banking services, including the ability to:
- Design and market your branded prepaid cards
- Issue branded prepaid cards to suppliers, employees or other recipients
- Open business accounts in EUR, GBP, USD, and DKK so you can receive and payout in over 25 currencies
Once you have created your program, B4B Payments can take care of the essential and often complex supporting processes that may be required. These include customer onboarding, rules, regulation matters, Risk Management, Sanctions Screening and Fraud Prevention.
Conclusion
The latest research by the GCVA underscores the adaptability and popularity of prepaid cards in the current cost-of-living crisis. Corporations continue to harness the potential of prepaid cards and are seeing their value in enriching employee experiences and boosting loyalty.
The rise of programs such as cashback incentives provides yet more fresh use cases of the adaptability of prepaid cards.
But prepaid cards are proving to be just the beginning of a bigger journey for many corporates. The growth of Banking-as-a-Service (BaaS) highlights the power of prepaid cards beyond conventional transactions.
BaaS enables corporations to seamlessly integrate financial services into their operations, empowering them to issue branded prepaid cards, manage expenses, and streamline financial processes.
The big questions and hot topics from Money 20/20 USA
Money 20/20 is like Christmas in many ways. There’B4B Payments is shortlisted as a finalist at The Card & Payments Awards in the Best Payments Industry Newcomer category!
B4B Payments, in partnership with Banking Circle,Winning the GCVA Hall of Fame Awards for best gift card B2B product/service!
We’re thrilled to announce our win at the GCVA Hal