Question: Which business solution can expand your customer base, empower your employees, and increase your revenue?
Answer: These are all benefits of prepaid cards, which are fast becoming a must-have among businesses seeking a long-term profitable card solution.
If you’re a business owner interested in integrating card services into your operations, prepaid debit cards have probably been on your radar for a while. Yet maybe you’re struggling to find answers to common questions about them, like:
- How prepaid cards work, and how you can integrate them into your business
- Which card options are best for your business, be it a credit card, a payroll card, or gift cards.
- How much it costs to set up a debit card, including activation fees.
Major international payment providers, including JP Morgan Chase and BBVA, have figured out ways to address these concerns and are part of a fast-growing prepaid card market.
This isn’t limited to just payment providers, either, with major companies outside the payment sector also signing up for the prepaid card revenue stream, including retailers.
But what is it about this personal finance tool that makes it such an attractive proposition? Let’s take a closer look at the benefits of prepaid cards that can help boost the bottom line of your business.
The top 9 benefits of prepaid cards for your business
So, why would someone use a prepaid card?
Well, the fact is that these solutions are rising in popularity because they offer consumers, employees, and businesses several important advantages.
Read on to discover these benefits of prepaid cards in more detail.
1. Prepaid cards help you expand your customer base
We appear to be hurtling toward a cashless society but this risks alienating a significant section of the general public.
Recent data from analysts Merchant Machine shows that 21% of the North American adult population is unbanked, a market cut off from many customer bases.
Almost a quarter of North America doesn’t have a bank account
Source: Merchant Machine via Research Gate
The unbanked population can’t apply for debit cards or obtain credit as both are linked to having a bank account and a credit history.
Prepaid cards, meanwhile, don’t require a credit check from customers, unlike these other card solutions. This is because they simply top them up with money they already have, with no option to overspend through buying goods on credit or entering into an overdraft.
This opens the door to customers with a low credit score who would normally be off the radar for other companies. These people have the potential to be valuable, long-term customers who can turn around their poor credit history by using prepaid cards to improve their financial management skills.
In short, it’s a win-win for both them and the prepaid card provider.
2. They empower staff and boost employee retention
Keeping hold of valuable employees is a huge challenge for businesses and reflects a downturn in employee engagement across North America.
Just 32% of US employees reported feeling “engaged” with their company in a 2022 Gallup poll.
The steady downward trend in US employee engagement
Source: Gallup
Prepaid cards for employees are a simple but effective way for your company to offer its staff a range of excellent perks including:
- Wage advances upon request
- Performance incentives such as sales commissions
- Gift card bonuses for special occasions
- Quick expense reimbursement
Fast, simple-to-use, and with the capacity to distribute multiple payments simultaneously via direct deposit, prepaid payroll cards is one of the payment trends of 2024 – to the point that 81% of employee recognition programs now use prepaid cards, according to NAPCO research.
If you’re looking to engage with and keep valuable staff away from the reach of competitors, then a prepaid card may be one of the factors that keep superstars on your payroll.
3. White-label prepaid cards are a great promotional tool
Most businesses that offer a stored-value card to its customers use a white-label solution. This is where the card is produced by a third-party provider but is rebranded with your business's logo and branding.
Apart from saving the time and hassle of setting up your own card solution, the benefits of a prepaid card are varied, including
- Boosting brand exposure – every time a user pays with the card they see your company’s logo, often next to the prestigious name of the card issuer, such as Visa, Mastercard, or American Express.
- Adding credibility – a company that can offer its own official bank card is deemed more efficient and trustworthy by customers
- Increasing versatility – customers can use white-label solutions elsewhere outside of the brand’s ecosystem, unlike private-label cards, which gives your brand a wider appeal. Not to mention the extra commission and transaction fees that it brings.
Finding an experienced white-label prepaid card provider often paves the way to a solid long-term revenue for businesses keen to mold a successful embedded finance product in their image.
4. They’re a safer option than other types of card
The bad news for cardholders in the US and Canada is that fraudulent activity is on the rise. In the US alone, card losses are set to hit almost $14 billion in 2024, according to analysts Insider Intelligence.
The rise in US card fraud since 2019
Source: Insider Intelligence
Prepaid cards in business offer a refuge from this illicit activity.
If a criminal hacks into a debit or credit card they can drain the customer’s checking account and run up charges like overdraft fees and interest charges before getting caught. This negative impact is reduced with prepaid cards where loss is limited to just the amount of money on the card.
It’s hard to overestimate just how much this means to safety-conscious customers who are reluctant to open new cards for fear of theft.
What’s more, prepaid cards come with the same safeguards as any card from a major financial institution, including protection from the Consumer Financial Protection Bureau (CFPB) and being FDIC-insured.
Theresa Stevens, a personal finance writer for Forbes, sums this up by saying “The CFPB requires prepaid card issuers to provide customers with the same liability and loss coverage required for debit cards, including no liability if they report a lost or stolen card immediately.”
5. Prepaid cards are widely accepted in stores and ATMs
Many card solutions suffer from limited availability, particularly when issued by smaller or less recognized providers.
Yet, provide prepaid cards stamped with the Visa or Mastercard logo to your customers and they’ll use them frequently, thanks to the widespread coverage that comes with these global networks.
The more stores that accept them, the more your cardholders will use them which is good news for brand exposure and loyalty from customers who associate them with frequent safe transactions.
That’s not to mention universal access to ATM withdrawals, with most terminals happy to accept Visa or Mastercard-branded cards.
6. Prepaid cards are easy to use and reload
Complex terms and conditions and hidden monthly fees are two major drawbacks to secured credit card usage, according to credit report provider Experian.
Prepaid cards avoid these pain points by being very simple to use. All customers need to do is load their cards and spend the funds. This is often backed up by a mobile app, which comes with user-friendly features like a card balance overview and transaction history.
Such simplicity means they’re likely to keep on using it, which is good news for your business as you continue to get exposure and revenue.
7. They improve customer loyalty
We mentioned how digital prepaid cards are a fast-growing market and this is backed up by data from Juniper Research that predicts a 7.5x global increase in usage buy 2028.
The rise in global prepaid card spending up to 2028
Source: Juniper Research
The reason for this is simple. Customers who can use prepaid cards freely and safely, without fear of breaching spending limits, are more likely to use them repeatedly.
As the provider, they’ll also more likely increase their trust in your brand,
a powerful factor in driving brand loyalty.
8. Prepaid cards are a great referral mechanism
Referrals are a powerful driver in business growth with word-of-mouth recommendations worth the most to people, ahead of online reviews and advertising.
92% of consumers put faith in what their colleagues and friends think, according to research from market analysts ReferralCandy.
Satisfied card users can do the same for your prepaid solution. If they love your card, whether as a customer or employee, they’re more likely to mention you to friends and family.
You might also supercharge this system by offering incentives for introducing a new user. These could include a cash bonus uploaded onto their card or exclusive discounts on other merchandise.
Before you know it, you’ll have built a community of satisfied users who actively promote your prepaid card solution on your behalf.
9. You can easily integrate prepaid cards into your business’s operations
The idea of offering a prepaid card as part of your customers and employees is an attractive one, but putting it into practice isn’t always easy.
Hurdles such as messy integration processes and high admin costs can put the brakes on a promising card initiative before it gets started.
The good news is that many of today’s prepaid card solutions come without these downsides. Advances in payment technology allows businesses to plug their prepaid card into their daily operations using a single-API integration.
In just minutes, customers can sign up and load money quickly and effortlessly.
Berkeley Payments’ white-label prepaid debit card is a prime example of this. Built on speed, convenience, and security, it hands you the keys to a new long-term revenue stream for your business in just minutes.
In an embedded finance industry expected to reach new heights in 2024, onboarding Berkeley’s prepaid cards may just be the smartest investment your business makes all year.
Why is a prepaid card better than a debit card or credit card? A quick summary
Making the decision about which card option to integrate into your business isn’t one that should be taken lightly, so here’s a summary of the benefits of prepaid cards with Berkeley Payments compared to traditional credit cards and debit cards.
Ready to find out how a white-label debit card can boost your business’s revenue? Sign up to Berkeley Payments today and experience the finest secure financial solutions North America has to offer.
