The market for pre-paid cards is growing at 22% annually and, according to analysts, is expected to reach $822-billion by 2017.
Growth like this happens when a product or service is genuinely meeting customer needs—and that’s just what pre-paid cards are doing, says Paul Opie, marketing manager for banking solutions in Africa at Gemalto.
As their name suggests, pre-paid cards are loaded with a certain amount of money at purchase, and that money can be spent either in a specific store or mall (for example, the typical gift card), or to pay for a specific type of service (for example, the pre-paid cards used on transport systems like Johannesburg’s ReaVaya or Cape Town’s MyCiti). These cards can be set up to use a PIN, giving them much more security than cash.
Pre-paid cards are increasingly being used at events like the recent St John’s Easter Rugby Festival this year. At the festival, Tap & Go contactless pre-paid cards enabled a cash-free environment for some 10 000 people, thus enhancing security for visitors and vendors alike. Other uses include foreign currency for travel, receiving corporate allowances and even salaries—particularly useful for those without formal bank accounts.
Increasingly, pre-paid cards are EMV chip based and backed by Visa or Mastercard, thus ensuring that they can be used at virtually any point-of-sale device. All the cards used on the various South African rapid transit systems fall into this category, so the cards can be used to make payments anywhere—not just on the transport system.
“Crime is a growing problem in our daily lives, and people are increasingly averse to carrying cash in any quantity around with them—it’s just another vulnerability,” says Opie. “And yet we all value the ease and anonymity of cash transactions for so many products and services. Pre-paid cards offer that convenience but with the security of a PIN, and so complement other modern banking products like credit and debit cards, making them a real alternative to cash.”
And, of course, he adds, payment via a pre-paid card also matches the anonymity of cash as well—something that many people value. It’s also a great way to retain tight control of expenditure.
“Many parents are seeing pre-paid cards as a way to give teenagers a secure way to spend monthly allowances, but also one that allows a certain amount of monitoring,” he says. “It’s just like cash, only better.”