Prepaid Cards: A Catalyst for Financial Health

A few weeks ago, I attended the Canadian Prepaid Providers Organization’s (CPPO) first-ever Prepaid Symposium. The symposium brought together stakeholders from across the United States and Canada to discuss the current and future state of the prepaid card industry in North America. As a New York-based representative of the Center for Financial Services Innovation (CFSI), I joined a panel of other U.S. representatives to discuss promising prepaid innovations south of the border.

During the half-day conference, I was struck by the palpable sense of excitement among conference attendees. Canadians have good reason to be excited about prepaid cards: Although adoption is still relatively low in Canada – in 2015, an estimated $3.1 billion was loaded onto Canadian open-loop prepaid cards, compared with $280.2 billion in the U.S. – industry stakeholders are beginning to appreciate the important role that prepaid cards can play in helping Canadians build long-term and lasting financial health.

My organization, CFSI, defines financial health as coming about when an individual’s daily financial systems set them up to be resilient and pursue opportunities over time. While financial health is influenced by an individual’s attitudes and behaviors, financial institutions, government agencies, non-profit organizations, and employers can all play an important role in helping consumers lead financially healthy lives by designing products, policies and other solutions that put the financial health of the consumer first.

One of these solutions is the prepaid card. For the uninitiated, here are a few ways that prepaid cards can help Canadian consumers build and sustain financial health:

1. Provide convenience and accessibility

Prepaid cards are accepted at most major retailers, online billers, and anywhere that Mastercard, American Express, or Visa is accepted. For prepaid cardholders without a bank account, prepaid cards provide them with valuable access to seamless bill pay services or online commerce. Prepaid programs also offer users multiple, convenient ways to load and spend their money. According to CFSI’s most recent Prepaid Industry Scorecard, two-thirds of prepaid cards (66 percent) sampled in the U.S. allow cardholders to load funds via mobile remote deposit capture (mRDC), 80 percent of cards allow users to make person-to-person payments, and nearly all cards (99.7 percent) allow users to reload their cards using a simple one-step reload process. By offering customers a convenient way to load and spend their money, prepaid cards provide users with a convenient and accessible financial tool to manage their money.

2. Offer enhanced functionality and money management tools

Beyond offering cardholders convenience and accessibility, prepaid cards can also help consumers actively build financial health with sophisticated money management tools, such as budgeting platforms and savings accounts that allow users to plan their expenses and save for the future. Prepaid cards are also offering cardholders an increasingly personalized experience. Two-thirds of prepaid cards (66 percent) sampled in the U.S. allow consumers to choose an account plan and fee structure that best suits their needs. More than half (60 percent) of sampled cards allow users to customize budgeting alerts. As a result of features like these, prepaid cards are becoming increasingly popular among individuals with bank accounts. In fact, much of the recent growth of the U.S. prepaid card industry is attributable to increased usage among cardholders with bank accounts. According to the Pew Charitable Trusts, seven percent of U.S. adults had a checking account and also used prepaid cards monthly in 2014, compared to four percent in 2012.

3. Help employees build financial health

In recent years, employers have come to appreciate the essential role they play in helping employees build long-term and lasting financial health. State and local governments, large corporations, mid-size employers, and small businesses have increasingly turned to payroll cards to disburse wages and earnings to their employees. Not surprisingly, the payroll card industry has grown rapidly as a result. In 2014, the U.S. payroll card industry grew at an annualized rate of 9 percent to $33.5 billion in load volume. For employees without bank accounts, payroll cards offer an affordable, safe, and convenient way of receiving their wages. For employees with bank accounts, payroll cards offer an additional money management tool to use alongside tools offered through their checking or savings accounts.

These are just a few of the many ways that prepaid cards can help Canadians lead financially healthy lives. As prepaid and payroll cards continue to adopt increasingly sophisticated features and functionality, the distinction between prepaid cards and bank accounts will continue to blur. In the not-too-distant future, consumers will not look for the “best-prepaid card” or the “best checking account.” Instead, they will simply look for the best financial tool that will allow them to manage their money, spend wisely, and save for the future. Whether that tool is a prepaid card or checking account will be immaterial.

Financial service providers, employers, and other companies invested in the financial health of Canadians would be wise to anticipate and embrace this future. The attendees at last month’s CPPO Prepaid Symposium clearly understood the potential of prepaid cards to help Canadians build financial health, but more research is needed to assess the current state of the Canadian prepaid card industry and to explore how prepaid card providers can best position consumers for financial success. In partnership with the CPPO, CFSI is looking forward to continuing to explore and invest in the Canadian prepaid card industry to ensure that these valuable financial tools help Canadians build long-term and lasting financial health.

The Center for Financial Services Innovation (CFSI) is an authority on consumer financial health. CFSI leads a network of financial services innovators committed to building a more robust financial services marketplace with higher quality products and services. Through its Compass Principles and a lineup of proprietary research, insights, and events, CFSI informs, advises, and connects members of its network to seed the innovation that will transform the financial services landscape. More information is at

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