Nearly nine in 10 current prepaid debit cardholders are “extremely” or “very” satisfied with prepaid cards, based on a recent Aite Group survey of 500 U.S. consumers of alternative financial services.

The prepaid debit and payroll card industry is a formidable force in U.S. consumer financial services, and Aite Group expects the market for this product to grow to $104 billion in 2014. The recent recession, ongoing high rate of unemployment, and recent regulatory changes are fueling this growth. Seven in 10 current prepaid cardholders perceive prepaid debit cards to be a better deal than credit cards, and half say that prepaid cards are a better choice for them than checking accounts. While satisfaction of prepaid debit cards is high among users of alternative financial services, marketers of this product must be mindful of cardholder expectations in order to innovate and fuel growth.

More specifically:

•    Prefer prepaid card to checking account: Current prepaid cardholders, 50%; former prepaid cardholders, 24%; payday loan borrowers, 15%; check cashers, 24%.

•    Prefer prepaid card to credit card: Current prepaid cardholders, 71%; former prepaid cardholders, 52%; payday loan borrowers, 48%; check cashers, 52%.

“While satisfaction rates among prepaid card users are high, former users’ views of the product aren’t as favorable,” said Ron Shevlin, senior analyst with Aite Group and author of this report. “Prepaid debit card issuers’ marketing efforts should attempt to influence prospective cardholders’ expectations about the product, especially regarding access to credit and credit-building. Long-term use should be incentivized, and alternative offerings associated with the product should be explored.”

http://www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=809