Philly Fed study reveals new GPR 'power users'

September 2014 research from the Federal Reserve Bank of Philadelphia suggests that a new demographic target for general-purpose reloadable (GPR) prepaid debit cards are millennial consumers with middle and high incomes, dubbed "power users." The research, conducted by Phoenix Marketing International, said that moneyed consumers aged 18 to 32 are increasingly adopting GPR cards, representing a new market for the prepaid product other than the so-called unbanked and underbanked, who tend to have lower incomes.

"The data suggests that segments of the population, different from those who were targeted by early large-scale government and corporate prepaid initiatives, are entering the market through new gateways to GPR adoption," said the report, entitled Millennials with Money: A New Look at Who Uses GPR Prepaid Cards.

The research was based on an August 2013 PMI consumer survey compared to the same survey conducted the previous year. The results showed that over 50 percent more higher income respondents (making over $50,000 annually) owned GPR cards in 2013 as opposed to 2012.

In August 2012, 16 percent of survey respondents who made between $50,000 and $100,000 a year owned GPR cards; that number jumped to 26 percent in 2013. Similarly, 27 percent of high earners (over $100,000 annually) used GPR cards in 2013, up from 18 percent in 2012.

Additionally, the dominant age group for GPR cards skewed strongly to millennials. The research said that 34 percent of millennials used the products in 2012. The following year, PMI charted 45 percent of millennials with GPR cards, compared to 35 percent for Generation X consumers (aged 33 to 48).

"Younger adults use [prepaid] debit to the near exclusion of checks and even cash," the report said. "Given the clear linear path away from paper and deposit account-centric payment products to electronic, card-based methods, a payment card untethered to another bank product, whether a transaction account or a line of credit, would be a logical evolution in product development."

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