A prepaid card is a form of debit card loaded with credit by the user. It has many advantages over traditional bank-issued cards. We discuss their use and increasing presence in the market below.
The first prepaid cards were introduced in the United Kingdom during the 1970s. Their purpose was to allow people to make calls in phone boxes. The advantage was that it prevented users from having to load coins into the slots as they spoke. This soon spread to the use of gift cards in the decades that followed. However, in the last few years, prepayment has become a huge sector of digital payment infrastructure.
The increasing popularity of prepayment
Over the last two decades, prepayment methods have grown hugely. This has generally been down to a shift in buying, with buy now, pay later schemes and subscriptions also becoming popular. Digital wallets, carried on mobile devices, are also responsible for some of this. In just ten years the prepayment industry has risen by 13.5%. A survey by Recharge showed that their use in the United Kingdom alone has increased 118% since the cost of living crisis began.
A perfect example lies in the growth of Neosurf. In 2024 it became one of the most up-and-coming methods of online payment. The company provides a prepayment method that allows users to buy a voucher or credit their Neosurf account. These funds can then be used for a range of goods and services, from gaming to finances and shopping. All of this is done using a PIN, which is created when you make an account.
There are now around 20,000 websites that accept Neosurf, and the number is growing. Most of the top casinos found online now have Neosurf as a payment method. This is a boost for both the casinos and patrons, as it is a quick payment method that allows people to credit accounts without giving out their financial information, such as credit card numbers. The iGaming industry is growing across the globe by using attractive bonus offers and wider selections of games. However, prepaid systems like this allow it to venture into jurisdictions where access to traditional financial infrastructure, like payment gateways, is insecure or just not available.
The advantages of prepay for customers
There are several advantages to prepayment. One of the main ones is it makes it easier for consumers to budget. They can load their disposable income onto a card and use it until their next paycheck. This is in contrast to debit and credit cards, where money can seem like an invisible concept. It is akin to having the cash in your hand, with a balance you can consistently monitor.
There is also a huge security element to prepayment. We now live in an age where digital and financial fraud are rife. The simplicity of loading money onto a digital card or voucher actually limits the touchpoints at which financial information is being shared, making it more secure. Prepayment also has a high level of security. Even if these cards are breached, it is usually only disposable income at risk of theft, which is much more palatable than having your life savings and whole bank account exposed.
Benefits of prepay for businesses
For retailers and those who want payment, prepaid services and their advantages are obvious. They guarantee future revenue, particularly if that prepaid voucher is tied to a service like a PlayStation store or Amazon voucher. It also lets consumers buy goods, particularly digital ones, even if they don’t have access to a bank account. Essentially, they have a debit card without a bank account. This can be vital in emerging markets where financial infrastructure is lacking.
They are also a very quick way to get a product to market. When using prepay schemes, most people will hire people who already have the system for prepayment in place. This allows businesses to build their own prepayment systems or accept others.
One of the big advantages is the ability to use buy now, pay later systems. This has grown alongside prepaid cards. It is the provision of a small amount of credit that allows a user to buy a product and then pay later. Usually, no interest is added. However, steep fees are attached if any of the payments are missed. This sector has grown by 227% over the last two years alone. One of the main providers that has risen to fruition over the last few years has been Klarna. They are often a payment option next to the gateways on online shopping sites, essentially looking like a standard payment method.
Prepayment does not look like a passing phase. It is here to stay. This may even increase as the online world becomes more fraudulent and people look for more secure ways to handle their money. As a business owner, accepting these or having your own methods can increase leads and vital conversions.
