Around £50 billion a year will be spent on prepaid cards in the EU by 2010, a new report from Payment Systems Europe (PSE) has predicted.
The cards are loaded with cash in a similar manner to pay-as-you-go mobile phone credit before they are used to spend in shops or withdraw from cash machines.
Within the next four years, PSE predicts that 2.3 billion transactions will take place on 360 million prepaid cards every year.
Because borrowing on the cards is not possible they are ideal for under-18s, but are also expected to be used as an alternative to travellers’ cheques and gift vouchers.
A second innovation are internet payment cards allowing people to load up their card before purchasing something online or through a telephone.
Because the amount on the card is limited, these will reduce the damage fraudsters are able to do should they get hold of the card details.
Many analysts say that the card manufacturers have an uphill battle explaining to the public how the cards work and why they need them, however.
“We believe that some of the prepaid products currently offered in the market require significant further development if they are going to meet consumers’ needs,” said Chris Jones of PSE.
“The sector must focus on developing and delivering simpler, cheaper products and services if the forecast levels of growth are to be achieved.”
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