In a new TowerGroup report entitled “Prepaid Cards: A Critical Market Foundation of Europe’s SEPA Plans”, the consultants suggest a sharp rise in the use of pre-paid products over the next 10 years will be key to bank profitability.
TowerGroup believes that the high use age of cash underscores the need for a debit-based alternative that does not include identity recognition as part of the electronic payment.
Prepaid cards offer a solution that can be as anonymous as cash, yet work with both online and offline payments. This substitute for cash and cheque options aims to make Europe’s banks more efficient after SEPA goes into effect.
TowerGroup estimates that by 2010, prepaid card usage will be worth €75 billion, a 600% increase over 2005, with 375 million cards in circulation, a 1,000 percent increase over 2005.
“The report is one in a series of reports reviewing the harmonisation of European financial markets,” says a spokesman for TowerGroup. “The report focuses on the critical implications surrounding cash usage across European Union countries as the plans for the SEPA and the Payments Services Directive (PSD) are finalised.”