The first prepaid cards In Argentina they arrived in 2004 with some small movements by Mastercard and Banco Ciudad. In fact, the bank offered them as an option aimed at a young audience. However it was a fintech non-banking, Ualathe one that developed this service with the greatest innovation.
The objective of the issuers at the beginning was commercially penetrate unbanked segments. But, COVID and inflation were two exogenous drivers that made users change their habits, expanding their use to avoid cash.
So much so that now we can know that the prepaid cards demonstrated sustained growth in demand during the last year, in which a 52% more cards than in 2022. The data comes from a study carried out by Global Processingthe company that develops digital payment solutions in Latin America.
According to the information in the study, the number of transactions in 2023 grew by 160% compared to the previous year. Transacted volume follows the same path, which rose 370% in the same period. Of the total money that circulated through prepaid cards, only the 5% corresponds to cash withdrawal by ATM, while 90% was destined for purchases within the country, and the other 5% for international consumption. In relation to prepaid card users, 40% belongs to Generation Z and Post Z, that is, young people between 13 and 24 years old.
With respect to type of consumption that was recorded, 97% of the transactions were purchases, and of that total, 34% represents el consumption in supermarkets and food stores. This is followed by payments in restaurants and bars, then service stations, and finally contracting services – subscriptions, cable or Internet, professional services, among others.
Although 35% of prepaid card users reside in the Buenos Aires Metropolitan Area (AMBA), A high level of demand was observed in the Pampas area, with 31% of users and almost the same percentage in volume and number of transactions. In terms of number of users, it is followed by the NOA and NEA regions, while Patagonia and Cuyo are the regions with the fewest users registered in the last year.
The trend in virtual cards is consolidated
In 2023, almost a 40% of the prepaid cards issued were virtual. With a semi-annual growth of more than 60%, this means of payment is used in a 52% for gaming and entertainment purchaseswhile with the physical card the largest amount of consumption occurs in supermarkets and food stores.
Hand in hand with virtuality, another trend is its use for expenses in the global market. “Like the credit card, it is common for the prepaid card to be used for international purchases. According to the data we collected in the report, 16% of consumption with prepaid cards are purchases abroad, especially in the gaming and entertainment segment.”, stated Juan Sebastián Martínez, CBO of the company.
Exit from the stocks and pending matters
Patricia Furlong, President & CEO of GP, He also stood out in dialogue with Ambit that fintech companies today are thinking about the future exit from the exchange rate to develop financial solutions, especially for those users who work abroad.
Finally, he detailed what are the pending issues regarding regulation for the fintech industry:
- Interoperable QR.
- Salary account.
- Cross border operations.
- Greater inclusion of the crypto ecosystem.
- 100% allowance on virtual wallet deposits.
Source: Ambito
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