In The Prepaid Mobile Wallet: Taking Prepaid into Account, U.K.-based mobile financial services association Mobey Forum said prepaid payment services have the potential to dramatically simplify mobile wallet schemes. Part of that simplification involves merchants, mobile operators and other influential mobile wallet stakeholders, such as Google Inc. and the American Express Co., choosing prepaid as a way to provide financial services outside the traditional banking system.
"Some stakeholders are actively using prepaid as their transactional model of choice in order to sidestep the traditional banking system entirely, open up new engagement channels with their customers and displace banks from their traditional role as 'guardians of commerce' in the mobile world," the paper said.
Another factor is that large swaths of consumers who have no access to traditional bank accounts, but more often than not use some form of mobile device, can access financial services via prepaid cards. "For demographics that struggle to get access to the traditional financial system, due to factors such as job security or financial hardship, prepaid cards, which require no credit checks to be issued, can offer many of the benefits of a traditional bank account," Mobey Forum stated.
The association's report, which is the last installment in a six-part series of white papers on the mobile wallet ecosystem, also detailed the benefits of prepaid for mobile payment providers. The prepaid infrastructure can be "administered at a significantly lower cost than that of a traditional banking system; this is self evident in the commercial viability of the prepaid business models serving this [unbanked] market," Mobey Forum noted.
There is also evidence that prepaid mobile providers are now targeting the successfully banked. Mobey Forum cited payment app developer Movencorp Inc. as one company that is challenging traditional banks by going after their customers with its Moven app and accompanying prepaid debit card.
"With sophisticated and flexible prepaid platforms already developed and deployed, a significant opportunity now exists for prepaid providers to take their services to mainstream mobile consumers and compete directly with banks in the market for current accounts and related services," the association said. 
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