European consumers are expected to spend €75bn ($95bn) by 2010 using pre-paid cards, sold like mobile phone top-up cards and targeted at consumers who do not have a credit card.
The pre-paid cards are expected to account for 2.3bn card transactions per annum by 2010 compared with 150m transactions now, says a new report. Consumers can buy the cards without credit checks at local shops, put their wages on to them and make cash machine withdrawals or online and telephone transactions. Retailers have also launched pre-paid cards as an alternative to paper gift vouchers. Visa and Mastercard have both launched pre-paid cards.
A new study by PSE Consulting, the European payment consultancy, expects growth in the pre-paid cards market will come from a variety of sources including holidaymakers using them as an alternative to travelers cheques.
It expects retailers will issue more plastic cards which act as a replacement for paper gift vouchers and that cards will be used more for internet-based payments.
Peter Jones, managing director of PSE Consulting, believes banks have been slow off the mark in taking advantage of this growing sector. "Banks must act quickly if they are to secure their share of the pre-paid opportunity and compete with non-banks," he said.