Prepaid cards are becoming increasingly popular around the world, and India is no exception. Regulations for these cards are still being developed, but there are some general guidelines that apply. For example, most prepaid cards can be used to make purchase transactions, but they may not be used for ATM withdrawals or cash back transactions. In addition, there may be limits on the amount of money that can be loaded onto a card.
Directives and ambiguity from regulators in India are halting common practices of Indian fintech’s to loading credit lines onto prepaid cards. Tarush Bhalla & Saloni Shukla cover the story in The Economic Times:
“Card-based fintech players Uni and PayU-owned LazyPay (through its LazyCard product) have completely stopped giving new prepaid cards amid a lack of regulatory clarity, they added. Both these companies, however, continue to support existing cardholders and are working to forge new partnerships with lenders to ensure business continuity.”
The halting of services has resulted in a dramatic reduction in card issuance for vendors and participating trade groups are urging regulators to reconsider actions:
“The Payments Council of India (PCI), an industry grouping under the broader umbrella of the Internet and Mobile Association of India (IAMAI), recently urged the government to step in to resolve the fallout from RBI’s latest directive. PCI pegged the total active prepaid cards industry – where a credit line is disbursed – at over 10 million, with over Rs 3,500 crore worth of transactions processed through these cards in May alone.”
The regulations are disrupting business models of the current players in the space who may need to pivot to traditional cash loans if the regulations continue and the ability to find prepaid cards does not resume.
In recent years, the prepaid card market has seen benefit from the technological advances being made. Mercator Advisory Group has released a viewpoint that examines the most widely used technologies in prepaid physical cards as well as some of the most important developing technologies in the space. After identifying the leading drivers of progress within the prepaid market, we offer readers recommendations for remaining competitive.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group.