Prepaid cards aren’t what they used to be. They have come a long way from their humble beginnings. A long time ago they were just a way for consumers to gift money to friends and family or could buy themselves a present from their favourite store. They became useful with the advent of Oyster cards for travel on the London rail network. You might even be familiar with the new generation of prepaid card products that can reduce the costs of converting currency on your foreign travels.
So why are prepaid cards relevant for Accountants? Because prepaid cards have now crossed over from being a consumer payment product to something that an increasing number of companies across sectors are using to eliminate manual cash management, reduce bank fees and increase efficiency.
Why have prepaid cards suddenly become so popular?
Companies have woken up to the fact that prepaid cards tend to have lower fees than other banking and cash transfer services and they are incredibly flexible in how they can be used. According to Allied Market Research, the projected global market for prepaid cards is expected to grow by 22.7 per cent by 2022. At B4B Payments, we have seen over 100 per cent growth in corporate use of prepaid cards and a 129 per cent increase in the amount of money loaded on to our cards. This clearly suggests that the increasing number of corporates using prepaid cards is strong driver of the overall growth of prepaid products.
What are companies using prepaid cards for?
Prepaid cards are replacing old expenditure management systems and being used as an alternative to cash. They can be part of a solution that eliminates many of the most inefficient, risky and frustrating aspects of cash based systems.
Prepaid cards can give companies control of expenses and visibility of what is being spent by whom. Expense pots are predefined and capped when cards are issued, minimising the opportunity for employees to get carried away with their spending. Also, employees have immediate access to expense funds so they don’t need to claim back their expenditure at a later date. The reliance on traditional and time consuming reconciliation tasks such as petty cash is reduced along with limiting the need to hand over the company credit card for business expense purposes. The instances of poor financial record-keeping are greatly reduced so companies are much better able to reclaim VAT.
Companies are also taking advantage of the fact that they can brand prepaid cards with company logos. This is useful for creating a strong brand identity both internally with employees and externally with customers. Prepaid cards can also be issued as a convenient and low cost means of rewarding staff and customers for their loyalty. According to the Prepaid International Forum (PIF) bonuses paid to employees on prepaid cards, especially more junior members of staff have a positive effect on staff retention rates and result in increased productivity.
The prepaid opportunity for accountants
Accountants can view the trend towards prepaid use by companies as an opportunity in two ways. You can either use a prepaid solution to take control of expenditure management for your own business, or you may be able to enter a partnership agreement where you can generate a new revenue stream by selling a prepaid solution to your clients. Accounting giant Sage Spain has recognised this opportunity and recently announced its partnership with B4B Payments to offer prepaid expenditure management solution to its 300,000 clients in Europe.
The trend towards corporate use of prepaid cards is strong and the scale of the market size is beginning to emerge. Corporates are joining the consumer trend of looking outside traditional banking services to reduce costs and realise better value. Prepaid cards are at the centre of many of those innovations and accountants are well placed to capitalise on the opportunity.
B4B Payments will be on stand 243 at Accountex.