In September 2014 the Federal Reserve Bank of Philadelphia released a study called Millennials with Money: A New Look at Who Uses GPR Prepaid Cards.

The Reserve's findings dispelled long-held stereotypes of prepaid card users in the U.S. No longer are GPR (general purpose reloadable) cards just for the underbanked or those in lower-income brackets, as adoption shows to be growing among millenials and higher income groups.

Clearly the product is evolving and reaching new consumer segments outside of government and corporate programs, which made up a majority of the U.S. prepaid customer base in the last 10 years.

Key findings that stood out include:

1. Age is the overwhelming determinant of an individual's likelihood to use prepaid cards. The study found highest rates of general reloadable prepaid card (GPR) ownership was in the 18-32 year-old range. Almost half of millennial respondents reported having owned a GPR card. This declined with each older age group.

2. Income is associated with prepaid card "power users". These are individuals who express strong intentions for future usage of general purpose reloadable prepaid cards.

3. Respondents showed high co-ownership of traditional banking products, with 90 per cent having chequing accounts.

4. Cardholders preferred prepaid cards to cash, even holding the attitude that they play a positive role in financial management.

  • 68 percent of GPR prepaid card owners said using the card had caused them to use less cash
  • 54 percent reported writing fewer cheques
  • 40 percent said they used debit cards less often
  • 38 percent said they used credit cards less often

The highest rate of claimed cash displacement (reported decreased cash usage) was among the upper-income households. Out of all the $100k+ income households surveyed, 76 percent of them said their prepaid card usage caused them to use less cash.

Tech Ownership and Prepaid Cards

One finding of particular interest was the relationship between tech ownership and prepaid card users. Prepaid card users are technologically savvy, particularly with mobile devices, indicating a correlation between youth and GPR card ownership.

Future Usage of Prepaid Cards

Not only did the survey examine current usage, it also asked respondents to predict their future use of prepaid cards.

  • Generation Xers were the most likely to say they would use prepaid cards more (38 percent)
  • Boomers were the most likely to say they would stop using their prepaid cards (20 percent)
  • More than 1/3 of cardholders earning $100k+ indicated their usage would increase
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