Prepaid bank card use to soar
Research suggests a 600 per cent increase by 2010
Use of prepaid bank cards in Europe will increase 600 per cent by 2010, according to financial analyst The Tower Group
In a recent report the analyst predicts that prepaid spending will reach €75bn by 2010 with 375 million cards in circulation.
The Single Euro Payments Area (Sepa) has forced Europe’s bankers to find new ways to motivate customers to use low-cost payment instruments, such as credit, debit and charge cards according to the report.
The Sepa directive, which will require cross-border payments to be treated the same as domestic payments, has challenged European banks to find ways to be profitable in the payments market.
Banks are increasing charges for cash and cheque use while providing discounts and incentives for customers using online or card payments.
Prepaid cards as a direct substitute for cash and cheques give Europe’s banks a mechanism to achieve savings after Sepa is in effect.
Tower Group estimates the cost of Sepa across all of Europe, beyond the eurozone, will be in excess of €40bn for Europe’s banks.
That figure is based on revenue lost through the disappearance of cross-border payments fees, which for one bank, ABN Amro, will be as high as €29bn a year, and Tower Group’s estimate of banks’ expenditure of €10bn to institute Sepa.
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