Mercator Blog

Every Credit Card Executive Needs to Know the Nuances of Asset-backed Securities
Date: February 28, 2019
C. Sue Brown
Director, Prepaid Advisory Service

GPR prepaid debit cards were developed to provide consumers who are underbanked and unbanked with a method to perform financial transactions in a modern form utilizing a network-branded card rather than by paying in cash. This was not only for convenience and safety purposes but also for financial inclusion. The prepaid debit card has not only accomplished this for the underbanked and unbanked (Figure 1) but has become a mainstream financial service product that is utilized by persons no matter their banking status.

Figure 1: Financial inclusion has improved significantly since 2015.

GPR Prepaid Card Portfolio Measurements and Growth Strategies 

Source: Board of Governors of the Federal Reserve System, “Economic Well-Being U.S. Households in 2017”

A GPR prepaid debit card functions like a checking account but is typically not offered for purchase through a financial institution although there are exceptions, most notably Chase, US Bank, and BB&T. Rather, GPR cards are typically offered by money transmitters like Netspend, PayPal, and Western Union as well as alternative financial service providers such as check cashers like Ace Cash Express. All prepaid debit cards are ultimately issued from banks that maintain the associated dollars in a pooled fund rather than in individual accounts for each cardholder (like a traditional checking accounts). GPR cardholders are not subject to ChexSystems or TeleCheck qualification because their prior history with financial institutions and prior merchant activity are not considered for these prefunded card accounts. Funds are said to be “loaded” on the card rather than “deposited” in an account because the card are funded in advance with cash. During the last five years or so, it has become possible for users to load a check to a prepaid debit card by means of mobile remote deposit capture (mRDC). In this case, although the cardholder or card account doesn’t require verification that there are no past negative credit events, the current situation is verified. The check deposited must be verified as “good” before the funds are credited or “loaded” to the card account.

This report, General Purpose Reloadable Prepaid Card Portfolio Measurements and Growth Strategies, discusses measurement techniques and key performance indicators (KPIs) for GPR open-loop prepaid cards.