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Prepaid debit cards – reloadable issuer loyalty," said Michael Moeser, Director of Payments at Javelin. "Prepaid
general-purpose (branded) cards as lifespans are often measured in months, compared to credit cards and bank
well as non-reloadable versions used accounts, which are measured in years."
for gifts, rebates and incentives – are
a relatively recent addition to the Minimizing churn with prepaid cards will require innovative thinking by card
payments landscape. Back in 2005, issuers, along the lines of making it cheap and easy to load funds with services
Americans made just 3.3 billion like direct deposit, mobile check deposit with expedited funds availability
payments using prepaid debit cards, (a new fee income opportunity), and more value-added services, including
according to the Federal Reserve. By budgeting and savings tools.
2015, the most recent year for which
Fed data is available, the total had
nearly tripled to 9.8 billion payments.

The average value of a general-
purpose prepaid debit card was $33
in 2015; the average transaction using
private-label prepaid cards was $23.
This compares to an average $36
for traditional (non-prepaid) debit
card payments and an average $72
for credit card payments in 2015,
according to the Fed's data. More
recently, Mercator Advisory Group
said it expected more than $300
billion to be loaded onto general-
purpose prepaid cards, alone, in 2017.

The millennial effect
Much of this increase in prepaid debit
card usage can be tied to the coming
of age of millennials. In fact, a 2014
report by the Federal Reserve Bank of
Philadelphia found increased usage
of prepaid cards among millennials
exceeded increases among all older
generations.
There are several reasons for this.
Many parents, for example, use
prepaid cards to fund children's
allowances and help teach them
money management. Also, many
millennials, having come of age
during and after the Great Recession
and often burdened with college
loan repayments, either aren't being
offered or prefer to avoid credit
cards. Cash and checks are just too
20th century for this demographic.
Prepaid debit card accounts, on the
other hand, are easily loaded onto
21st century mobile payment apps.

Prepaid debit cards do have
drawbacks. "The ease of customer
acquisition has created a product
with high customer churn and low

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