While the use of prepaid cards is yet to take off in India, the size of the potential market is estimated at $93 billion ( Rs 4,27,800 crore)per year, according to payment firm Visa.
According to the survey, while current prepaid payment card ownership in India was low at only two per cent, four out of 10 respondents were aware of the product, and eight out of 10 said that they would like to own such a product in the near future.
“Since prepaid card ownership is still at a nascent stage in India, there is a huge opportunity for financial institutions to grow their prepaid card business and enable more people to experience the benefits of a modern payment system,” said Visa Regional Director Prepaid Products (International) Neel Nilakantan.
Prepaid cards resemble credit and debit cards in appearance and allow users to load any amount up to Rs 50,000 on them. They can be used at swipe machines as well as ATMs, just like debit cards.
There are numerous types of prepaid cards such as payroll cards, travel cards and gift cards.
However, the penetration of prepaid cards also depends on how regulatory guidelines for this product evolve, Visa said.
According to the Reserve Bank of India regulations, issuers are required to conduct the same level of due diligence for prepaid cards as for bank account-linked debit cards
“For distribution through non-bank companies, carrying out KYC (know-your-customer) is a challenge,” said Uttam Nayak, Country Manager for South Asia at Visa.
