Before they can properly market their product, issuers of prepaid cards must overcome low prepaid-card awareness among overdrafters.
Boston, October 18, 2011 – A new report from Aite Group segments and analyzes the behaviors of consumers who overdraw their checking accounts, and assesses the related market opportunity for providers of prepaid debit cards. The report is based on a February and March 2011 Aite Group survey of 500 U.S. consumers who use alternative financial services.
As part of their marketing strategy, many prepaid card issuers target consumers who pay overdraft fees as a result of overdrawing their checking accounts. Aite Group finds, however, that prepaid card issuers’ overdrafter opportunities are not as lucrative as they might think. The majority of overdrafters pay an overdraft fee just once or twice a year, making the economics of switching their banking activity to a prepaid card less than worthwhile.
“Few overdrafters will switch to prepaid cards based on overdraft fees alone,” says Ron Shevlin, senior analyst with Aite Group and author of this report. “In fact, low prepaid-card awareness among overdrafters is an initial hurdle that prepaid card issuers must overcome before they can properly market their product.”
This 18-page Impact Note contains seven figures and five tables. Clients of Aite Group’s Retail Banking service can download the report.