For Prepaid Providers, Budgeting Equals Opportunity (April 15, 2014)
Personal budgeting is an effective method for consumers to build a strong and stable financial future. Yet, for many, staying on budget is a constant struggle. Prepaid products can serve as a powerful budgeting tool, presenting an opportunity for prepaid providers to grow their businesses, according to a new white paper from i2c Inc., released to mark Financial Literacy Month in the U.S.
Prepaid cards are inherently useful to control overall spending because they’re pre-funded. But features increasingly common on prepaid cards, including real-time account alerts and multiple spending purses, make these cards even more effective personal financial tools—removing much of the complication of budgeting. “If budgeting is perceived as difficult, then few will undertake the challenge even when faced with economic problems,” writes the paper’s author, Dan Horne, a business professor and consumer finance researcher. Because prepaid cards are readily accessible, easy to activate, widely accepted and simple to use, they can help consumers get over the initial adoption hurdle to budgeting.
Prepaid providers can benefit by offering prepaid products with strong budgeting features as a way to attract and retain customers—and they’re more likely to be happier customers too. “[C]ustomers that are helped through difficult times remember the assistance they received and tend to be strong loyalists,” leading to longer-term, more profitable customers, Horne writes.
