Prepaid Debit Cards are Expanding in Europe
Author: weissheiss
Prepaid cards (or stored-value cards) have been popular in the US for several years. They are used as payroll cards as well as gift, travel and benefits cards. Cards are now expanding throughout the Europe, growth of prepaid cards is estimated to be over 100% a year for the through 2011, with predictions of 2.3 billion prepaid card transactions.
A prepaid card functions like any other debit card. The main difference is that the funds on the card are not linked to a card holder bank account. Rather, the cards are issued by a bank and money loaded on to the cards is held at that bank, even though the card holder does not have an account at that bank. If the card bears a card association mark, it can be used to get money from ATM machines and be used at point of sale for purchase of goods and services.
Banks make money each time the card is used. The most profitable avenue of card revenue for banks is when the cards are used in a corporate environment. The reason is easy to understand. When cards are used for payroll, expense reimbursement, and travel cards for corporate employees, the cards are continuously replenished. For example, each time an employee is paid the card is “topped up” with the current wages.
In the UK and throughout the Europe, there are still large numbers of people that are paid with checks or by cash. As immigrant populations continue to stream into the Europe, it is common for employees not to have banking relationships established. In industries such as construction, agriculture, food service, and transportation, payroll debit cards make good business sense. Business operations are streamlined and reconciliation simplified. And the business discover that workers often prefer debit cards over receiving cash because cards are safer than carrying large amounts of cash. And, the cards are better than receiving a paper check which can be difficult and expensive to cash.
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