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Prepaid cards weathered recession well says study
MADISON, Wis. (9/16/10)--Despite the recession, about 49% of U.S. consumers purchased a prepaid card in the 12 months ended in May, according to a new report by the Mercator Advisory Group. That percentage is up from 45% who purchased cards in the previous year, said the report, “Consumers Provide Direction With Prepaid Under Scrutiny” (paymentssource.com Sept. 14). An online survey of 1,009 consumers ages 18 and older conducted in May was the basis of the report. “In general, we’re seeing that prepaid has held up pretty well during the recession,” said Ken Paterson, author of the report and Mercator vice president of research operations. “Consumers continue to find new uses and new value in the cards.” However, card issuers and program managers should educate consumers about recent regulatory changes regarding expiration dates and inactivity fees to allay fears about using prepaid cards, Paterson said in the report. That could result in more consumers being at ease with buying prepaid cards, Mercator contends. The leading card types that prepaid buyers purchased are merchant-branded cards (69%) and network-branded gift cards (28%). However, those numbers are down from 76% and 39%, respectively, Mercator said. The majority of consumers are not taking advantage of their reload feature, said Mercator. About 57% of respondents were aware of the reload feature but had never used it, the report said. Also, 31% were unaware of the card’s reload capability--down from 36% who said they were unaware last year.
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