Prepaid Is Leading The Digital Commerce Revolution
The digital commerce revolution is here.
Gartner, Inc. forecasts that 8.4 billion connected things will be in use worldwide in 2017, and total spending on connected things will hit $2 trillion in 2017. The amount of connected things is up 31 percent from 2016, and an additional 30 percent from 2015, and this number is expected to balloon up to 20.4 billion by 2020.
The biggest reason for the rapid growth is the ubiquitous use of mobile devices. By 2018, it’s estimated the average U.S. adult will spend more than six hours each day on a mobile device. It’s estimated that by 2020 almost 1 in every 2 dollars spent online will come from purchases made using mobile devices. Mobile users are now used to–and expect–instant gratification. The face of commerce is changing thanks to the ability to purchase virtually anything from any location on your phone at the touch of a button.
As the desire for simple, instantaneous, one-click shopping continues to grow, so too will the demand for fast, convenient, seamless, and secure digital payment options. This is where prepaid solutions become THE solution. In 2015, prepaid debit cards accounted for $23.8 billion of the total $341 billion in online sales. By 2018, that figure is estimated to increase to $29 billion. In 2020 this number will be even higher.
According to prepaid industry executive Amir Wain, “In many ways, a prepaid card is to a mobile wallet what a debit card is to a checking account. Think about how much more accessible debit cards made our checking accounts. Prepaid cards do the same for mobile wallets today.”
So, what are the reasons for this?
Prepaid Is More Secure Than Debit/Credit
A study of more than 900 cyber-security professionals revealed that 47 percent think mobile payments aren’t secure. In addition, 59 percent of consumers don’t use mobile wallets because of security concerns. Making purchases online via digital payment has always been a security issue… until now. Using a prepaid card instead of a debit or credit card helps alleviate some of these fears thanks to its special protections. Consumers have control over how much money is loaded onto a card, and most prepaid cards offer zero-liability protection, so even in event of a security breach their funds are safe.
Anonymity Is Important
50 percent of Internet users are concerned about the amount of their personal information that is available online. “Today companies in almost every sector are eager to scoop up the digital prints that we leave behind when we post, shop and browse online,” Federal Trade Commission (FTC) Chair Edith Ramirez said. A prepaid card is a great way for a consumer to make their purchasing and payment data less traceable.
Millennials Prefer Prepaid
According to TD Bank, one in three Millennials uses a prepaid card. Unsurprisingly, they are also the first generation to grow up with total connectivity to the Internet. “This is the generation that will define the growth and sustainability of the [online] market,” Udaya Shankar, vice-president and head of IoT (Internet of Things) at Xchanging Plc. Millennials, who make up the biggest group in the workforce, want to use the Internet to take care of their everyday shopping and financial needs. Their high level of Internet engagement and preference for non-traditional banking methods makes them the perfect users for prepaid solutions
According to Richard Cordray, the director of the CFPB, “Many general- purpose reloadable prepaid cards are specifically designed to help consumers manage their spending while limiting costs and risks.” Susan Grant, the director of consumer protection at the Consumer Federation of America, agrees, saying that prepaid cards are are a great “budgeting tool for those who don’t want to carry cash but want to avoid the overspending that can occur with other payments.”