Banks and other financial institutions that saw their revenue being curbed with the introduction of the CARD Act have now begun issuing prepaid cards in large number to make up for the lost revenue. These cards have become so popular now that even state government are sidelining paper checks and issuing various benefits on these cards.
An executive with the treasury services in the Charlotte, NC based Bank of America, Margaret Scopelianos, said that this was just the stepping stone for many governmental organizations to facilitate paperless transactions and reduce the impact on the environment. One of the recent reports in this segment has revealed that consumer transactions on prepaid cards that totaled $48 billion in 2009 went up in 2010 and reached a total of $65 billion. Businesses had to pay only about $1 billion as processing fees to card processing networks to process all the transactions during 2010. Banks are foreseeing continued growth with prepaid cards and expect these cards to minimize the $25 billion loss incurred due to the implementation of the CARD act.
Prepaid cards are also a huge hit among people with no credit history or those with a credit history so tarnished that they cannot get approval for any other type of credit card. Banks approve the application forms for prepaid cards since their risks are significantly lowered. Customers have to pay up from to avail credit limit on their card, therefore reducing the risk of monetary loss.
