India’s journey towards becoming a USD 5 trillion economy requires a robust and secure payments ecosystem.
The rise of digital payments has been remarkable, over 100x in the last 9 years from 127 crore in 2013-14 to 12,735 crore in 2022-23. However, digital fraud has also surged, with 6,659 frauds amounting to Rs 276 crore reported in FY23, necessitating more secure payment solutions.
Prepaid cards offer a promising solution to address these challenges. India saw a surge in the number of open-loop prepaid cards from approximately 33.3 crore in FY17 to around 127.69 crore in FY22. Furthermore, the prepaid card market in India is projected to witness a CAGR of 31.5% during 2021-2025, reaching USD 89.8 billion by 2025, up from USD 30 billion in 2020.
Prepaid cards’ benefits contribute to their increasing popularity:
Ubiquity of Usage: Unlike closed-loop and to some extent semi open-loop, introduction of Open-loop prepaid cards with use-cases like NCMC have broadened their applications, allowing non-mobility transactions like shopping and ATM cash withdrawals. Prepaid transactions rose from 1.96 billion in FY17 to 6.58 billion in FY22.
Ease of Use: Most prepaid cards being issued nowadays are reloadable; can be easily topped up via popular methods like UPI and even cash, providing a convenient and cashless alternative.
Security: Prepaid cards not directly linked to bank accounts, thus protecting users from direct exposure of sensitive information, making them safer than carrying cash.
Budgeting Assistance: Prepaid cards facilitate expense tracking and budgeting, ensuring efficient financial management.
Innovative prepaid cards can complement existing payment methods, bolster India’s economic growth, and create a more secure and inclusive payment ecosystem.
While AGS Transact Technologies has powered NCMC for Bangalore Metro, issued by RBL Bank, it’s digital payment ecosystem led by Ongo offers issuance of prepaid cards including co-branded cards along with its partners.
A detailed version of this article first appeared on ET Edge Insights.