Generation Z is choosing prepaid cards over bank accounts
Prepaid cards and mobile banking has become the payment method of choice for the next generation of financial service customers, as they look to ditch traditional bank accounts when they begin to pay for goods and services.
Next generation of payment methods
The Prepaid International Forum (PIF) surveyed 1,000 parents with children under the age of 16 and found that 26 per cent of children use financial products to make purchases.
Within this group of young consumers, only 40 per cent use debit cards linked to a bank account, whereas 58 per cent use a prepaid card or mobile banking as their payment account of choice.
For parents with children under the age of 12, prepaid cards has become the most popular way in which to give their children financial responsibilty.
Under-16s accounts for 35 per cent of first time account openings for prepaid cards, but the format has proved five times more popular than debit cards and mobile payment accounts for children below the age of 12.
While reading the findings of this report, you may be wondering: Why are parents giving their children a prepaid card at such a young age?
According to the survey, 60 per cent of parents feel that prepaid accounts give their children a greater sense of financial responsibility, as well as the ability to manage a budget.
Traditional bank accounts are failing to attract younger users, due to a lack of technological innovation. With prepaid and mobile bank accounts, parents expressed their delight at being notified with their children’s balance and transaction updates (43 per cent) and mobile money transfers (28 per cent).
Ray Brash, MD and chairman at PrePay Solutions, explains why prepaid and mobile banking is proving so popular for the next generation of consumers.
‘‘Prepaid owes its success to the flexibility of the product. These days it can offer anything from multi-wallet loyalty cards, to multi-currency travel cards and even basic bank accounts.’’
‘‘To a card-holder, prepaid is a flexible companion that can offer additional benefits a traditional bank account might not, such as real-time transaction information, detailed spending analysis to help you budget, or better rates when travelling abroad.’’
‘‘It is an ideal product to help teach young people how to handle their money in an increasingly digital age. For the issuer or retailer, the implementation benefits of a prepaid programme in any shape are endless.’’
‘‘It’s flexible, gives a platform to innovate, it’s scalable, and offers measurable results, whether you are an association of local retailers wanting to issue loyalty cards, or a large corporate wanting to offer employee benefits.Watch this space. Prepaid will be going places over the next few years.’’