NBPCA/ CFSI Survey Results April, 2009

Results of the NBPCA/CFSI Survey

Satisfaction with and Usage of Prepaid Cards
Introduction 78%
Percentage who say prepaid
This CFSI study provides some insights into underbanked consumers’
cards are extremely or very
perceptions and usage of reloadable prepaid cards. In March 2009, the
Network Branded Prepaid Card Association (NBPCA) conducted the useful
first in-depth survey of 400 underbanked consumers currently using
prepaid cards.1 The goals of the survey were to assess the degree of 74%
satisfaction with prepaid cards, gauge the significance of specific card Percentage who are certain
benefits, determine usage patterns and measure perceived fairness or very likely to recommend
and transparency of card fees. a prepaid card to someone
else
The survey results are encouraging and complement the growing body
of industry research on why prepaid cards are becoming a reliable
option for many underbanked consumers. 64%
Percentage who use prepaid
cards to make online
Financial Service Provider Preferences and Usage
purchases
Potential survey respondents were first screened for their usage of
alternative financial services, with the goal of identifying underbanked 56%
adults. For this survey, underbanked is defined as adults who: Percentage who use prepaid
• receive income in cash or by check which is not deposited in a cards to make everyday
bank account, purchases
• receive income by check which is cashed at a location other
than at a bank where the individual has an account, or
• place income onto a prepaid card via direct deposit or cash 41%
loading. Percentage who use
prepaid cards to keep
Potential survey respondents were then screened for usage of spending within a budget
reloadable prepaid cards. The screening question described
reloadable prepaid cards in detail. Nonetheless, the survey 60%
respondents include a small number of users of gift cards, payroll
Percentage who use prepaid
cards, or benefits cards.2 This reflects the fact that consumers often
do not distinguish among these card products, perceiving them to
cards at least once/week
serve the same purpose or have the same features.
48%
In addition, because the survey was conducted online, the respondents Percentage who currently
are likely younger (49% are between 18-34) and include a greater have a bank account
percentage of students (14%) than the prepaid cardholder population
overall.3
33%
1 In this paper, prepaid cards refer to branded, general purpose, reloadable prepaid cards. Percentage who currently
2 Based on the answers to the open-ended questions, 10% of the 400 respondents may own these types of cards.
3 For detailed demographic information about the survey respondents, please see www.nbpca.com. have a credit card

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NBPCA/ CFSI Survey Results April, 2009

Usefulness, Likelihood to Recommend and Perceived Benefits of Prepaid

How useful would you say a How likely would you be to recommend
prepaid card has been for you? using a prepaid card to someone else?

50% 50%
46%
45% 45%
40% 40% 38%
36%
35% 32% 35%
30% 30%
25% 25%
20%
20% 17% 20%
15% 15%
10% 10%
4% 5%
5% 5%
0% 1%
0% 0%
ul
ul

ul

l
l

ely
fu

ely
fu

ly
n

ely
ef
ef

ef

i
se

ike
rta
se
us

lik
us

us

lik
ik
ll u
tu

ll l
Ce

tl
ry

ry
y

y
el

ha

ha
er

er
ta

ta
Ve

Ve
m

tv

tv
ew

ew
ta

ta
tre

No

No
m

m
No

No
Ex

So

Consistent with other CFSI research about consumer preferences regarding prepaid So

cards4, the perceived benefits of prepaid cards include:

• protection of funds: the ability to recover the full amount of funds on the card, including any
unauthorized transactions, if the card is lost or stolen;
• convenience: making life easier by paying bills, shopping online and keeping track of
purchases;
• control: avoiding the overdraft charges that often come with checking accounts;
• access/inclusion: ownership of a branded card that can be used to pay anywhere,
regard less of credit or banking history;
• safety: no need to carry as much cash, particularly if purchasing a large item;
• transparency: straightforward fee structure with no hidden fees;
• budgeting: convenient management of budget with no ability to overspend; and
• value: saving money versus using a check cashing or payday loan facility.

4 “Underbanked Consumer Study,” Center for Financial Services Innovation, June 2008; Jennifer Romich, Eric Waithaka, and Sarah Gordon, “A
Tool for Getting By or Getting Ahead? Consumers’ Views on Prepaid Cards,” Center for Financial Services Innovation, forthcoming April 2009.

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NBPCA/ CFSI Survey Results April, 2009

Usage

The top three reported uses for prepaid cards are generally paying bills, making online pur-
chases and completing everyday purchases. These do not vary substantially by banking status,
purchase outlet, frequency of use or other factors. Staying within a budget ranks highly by those
who use the card heavily: 57% of those who use a prepaid card at least once per day and 48%
of those who use a prepaid card at least once per week identify staying within a budget as one
of the uses of prepaid cards.

What do you use your reloadable prepaid card for?

(Please select all that apply.)
70%

64%

60%
56%

52%

50%

41%
39%
40%
37%

30%

23%

20%
17%

10%

3%

0%
Online Everyday Paying bills Staying w ithin Service Cash at ATM Give to Big purchases None of the
purchases purchases budget requiring a someone else above
card

How often do you use your prepaid card?

Not sure
6% More than
• 12% use their prepaid card at
Once or twice/year
4%
once/day
6% Once/day
least once per day
Few times/year
4%
6%
• 60% use their prepaid card at
Every few months least once per week
6%

Few times/week
26%

Once/month
19%

Once/week
23%

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NBPCA/ CFSI Survey Results April, 2009

Awareness and Purchase

How did you first hear about prepaid cards when you began
using them? (Please select all that apply.)
• 48%, almost half, first
became aware of prepaid
60%
cards in a store
50% 48% • 32% first heard about them
40%
from family or friends
30%
32% • Awareness as a result
23% of the internet is likely
20% 17%
15%
12%
overstated due to the survey
10% 7% 6%
4% 4%
methodology
0%
Saw them in Heard from Internet Ad on Other Flyer or Read or saw Ad in a Community Ad on radio
a store family/friend television poster in a news report magazine or group or
bank or or article newspaper organization
check casher

Where did you buy the prepaid card you are using now?
• Purchase patterns are likely
Other (H&R
Block,
influenced by the geographic
employer, distribution of survey respon-
benefits, mall)
13% dents:
Wal-Mart or
Bank similar store - 35% South
4% 30%
- 28% Midwest
Gift/friend
5%
- 21% West
Grocery store - 15% Northeast
6%
• Purchase via the internet is
Online likely overstated due to the
Drug store or 15%
convenience survey methodology
store Check
14% cashing or
payday loan
store
13%

Frequency of usage according to purchase location

• Frequency does not vary by
80%
purchase outlet, excpet:
70%
69%
- 69% of those who purchased
60% 59% 59%
61% at check cashers use their
58%
cards weekly or more
60%

50%
- Only 7% of online purchasers
40%
have not used their cards in
30% the last 6 months
21%
19% 19% 19%
20%
14%

10% 7%

0%
Total Drug store Groce ry Store W al-Mart or Che ck cashe r Online
similar

Use w e e kly or more Did not use in last 6 months

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NBPCA/ CFSI Survey Results April, 2009

Fees
In your view, how fair are the fees for using a reloadable
prepaid card once you own it?
• High volume card users think that
Not sure fees are more fair than low vol-
Not at all fair 6% Totally fair ume card users do
5% 19%
- 93% of those who use their card
at least once per day say fees
are fair
Not very fair - Only 55% of those who use their
17% card every few months, yearly or
not at all within the last 6 months
say the same
Very fair
17%
- 85% of those who use direct
deposit to load funds onto a
prepaid card think that the fees
are fair
Pretty fair
36%

How well would you say you understand the fees for using a
reloadable prepaid card?
• High volume card users report
higher understanding of fees than
Not sure
low volume card users do.
Not at all
2% 4% - 80% of those who use their card
Not very w ell Understand
at least once per day report
5% perfectly
25% understanding the fees perfectly
Somew hat
or very well
w ell • 44% of those who use their card
14% every few months or yearly and
41% of those who have not used
their card in the last 6 months say
the same
• 71% of those who use direct
deposit to load funds onto a
prepaid card report that they
Pretty w ell understand the fees perfectly or
21% Very w ell very well
29%

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NBPCA/ CFSI Survey Results April, 2009

Direct Deposit
Do you currently have your paycheck or salary
deposited directly to your reloadable prepaid (IF NO:) How interested would you be in
card by your employer? having your paycheck or salary deposited
directly to your reloadable prepaid card by
your employer?

100%
Yes
21% 80%

No
60%
57%
Does not 40%
29% 28%
apply/ 24%
20% 12%
Not 8%

currently 0%
Extremely Very Somew hat Not very Not at all
employed Interested
22%

Do you currently have your paycheck or salary deposited

directly to your reloadable prepaid card by your employer?
• Those with the most use of direct
Use card at least once/day 47% deposit to prepaid are as follows:
Purchased card online 38%
- 47% of high volume card users
- 38% of those who purchased their
Receive income in cash and put on prepaid card 30% cards online
Certain to recommend prepaid card to others 29%
• Direct deposit to prepaid used by:
Satisfied with credit card experience 27% - 20% of those with checking ac-
counts
Satisfied with bank experience 26%
- 22% of those without checking
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% accounts
- 26% of those who express satisfac-
(IF NO:) How interested would you be in having your tion their banking experiences
paycheck or salary deposited directly to your reloadable
prepaid card by your employer?
Use card at least once/day 47%

Purchased card at a check casher
Certain to recommend prepaid card to others
Receive income by check, cash at check casher
Do not have checking account
Not satisfied with bank experience
0%
36% • Those with the highest reported
30% interest in using prepaid cards for
29%
direct deposit are as follows:
- 47% of high volume card users
27%
- 36% of those who purchased cards
26% at check cashers
5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

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NBPCA/ CFSI Survey Results April, 2009

Lapsed Usage

Have you used your reloadable prepaid card in the

past 6 months?
(IF NO:) Why have you not used your reloadable prepaid • 19% have not used their prepaid
card in the past 6 months? card at all in the last six months.

- 18% purchased the item for which

Bought the one they had intended to use the card
item purchased 18% - 17% got a bank account
the card for - 16% think that fees were too high
- 16% report that they did not have
Got a bank 17% money with which to load the card
account
• Among this 19% of “lapsed
Fees are too high 16% users:”

- 29% are unemployed

Do not have any 16%
- 34% say that direct deposit does
money not apply to them
- 44% do not think card fees are fair
Not convenient to or they are not sure if they are fair,
14%
reload versus 24% of those with longer
card usage
- 23% do not understand card fees,
Fees are too 8% versus 7% of those with longer card
confusing
usage
- 5% had purchased their cards
Not convenient 9% online, vs 17% of those with longer
enough to use card usage
- 47% receive income in cash which
Not happy with the 5%
they do not deposit in an account or
customer service load onto a card versus 33% of t
those with longer card usage
- 39% receive income by check and
No reason to use 5%
deposit at a bank, versus 27% of
those with longer card usage

Card expired 5%

Have not reloaded 3%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

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NBPCA/ CFSI Survey Results April, 2009

Banked Status
Do you currently have, or have you ever had, a
checking or savings account with a bank? (IF YES:) How satisfied would you say you
have been in your experiences with your
bank?
Never
had, 45%
40%
6% 40%
35% 33%
31%
30%
24% 23%
Yes, 25%
Used to 20%
currently, 20%
have,
48% 15% 11%
46%
10% 7%
5% 4%
5% 2% 1%
0%
Extremely Very Somewhat Not very Not at all Not sure

Yes, currently Used to have

94% of the survey respondents either have a checking account currently or have had one in the past.
Those who currently have a checking account report much higher satisfaction with their banking ex-
periences than those who do not have a checking account. However, their experiences with prepaid
cards are more similar. While cardholders who do not have checking accounts report higher levels of
satisfaction with prepaid cards than do non-checking account holders, this increased satisfaction is
not at statistically relevant levels given the size of the study.

How useful would you say a How likely would you be to recommend using
prepaid card has been for you? a prepaid card to someone else?

60%
45% 42%
49% 39%
50% 40%
43% 33% 33%
35%
40%
35% 30%
29% 25% 23%
30%
21% 20% 17%
20% 15%
15%
10% 8%
10% 7%
2% 5% 2% 2%
0% 0% 0%
0% 0%
46% 32% 18% 4% 0% 38% 36% 20% 5% 1%
% of Total
Extremely Very Smwht Not very Not useful Certain Very likely Somewhat likely Not very likely Not at all likely

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NBPCA/ CFSI Survey Results April, 2009

What do you use your reloadable prepaid card for?

(Please check all that apply.)

70% 62%65% 60%

60% 56%57%
43% 46%
50% 40%42% 41%
40% 33% 32% 30%
30%
16% 18%17%
20%
10% 5%
1%
0%
Online Everyday Paying bills To stay Cash at Sign up for To give to Big Other
purchases purchases within ATM service someone purchases
budget requiring a else
card
Have checking Do not have checking

In general, cardholders with checking accounts and those without checking accounts use prepaid
cards for the same purposes, with the following exceptions:

• 60% of those without checking accounts use prepaid cards to pay bills, versus 43% of those with
checking accounts.
• 46% of those without checking accounts use prepaid cards to sign up for services requiring an
account, versus 32% of those with checking accounts.
• 30% of those with checking accounts use reloadable cards to give to someone else.
• Frequency of usage varies, with 64% of those without checking accounts using their prepaid cards
at least once per week, versus 56% of those with checking accounts.

Prepaid cardholders with and without checking accounts also have similar profiles in terms of where
they purchase and reload prepaid cards. The major exception is that 18% of those without checking
accounts purchase their prepaid cards at check cashing outlets and 19% reload there, versus 6% and
12%, respectively, of those with checking accounts. However, most reloading is completed at grocery
and convenience stores for cardholders both with and without checking accounts: 49% of those with-
out checking accounts and 41% of those with checking accounts reload at grocery and convenience
stores. There are no statistically meaningful differences between those with and without checking ac-
counts regarding the percentage of lapsed users, perceptions of card benefits, or assessments of the
fairness and transparency of pricing.

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NBPCA/ CFSI Survey Results April, 2009

Methodology:
• Online survey of 400 underbanked adults who have used a reloadable prepaid card
• Underbanked adults defined as those who:
- receive income in cash or by check which is not deposited in a bank account,
- receive income by check which is cashed at a location other than at a bank where the individual has
an account, or
- place income onto a prepaid card via direct deposit or cash loading.
• From a sample of those with incomes less than $30,000
• Survey conducted March 2-5, 2009
• Margin of error: +4.9% at the 95% confidence level
• iModerate chats (one-on-one instant message sessions with an experienced moderator during the
online survey) conducted with 40 survey respondents

About the NBPCA

The Network Branded Prepaid Card Association (NBPCA) is a non-profit, inter-industry trade associa-
tion that supports the growth and success of network branded prepaid cards and represents the common
interests of the many players in this new and rapidly growing payments category. For additional informa-
tion, visit www.NBPCA.com.

About CFSI
The Center for Financial Services Innovation (CFSI), a nonprofit affiliate of ShoreBank
Corporation, facilitates financial services industry efforts to serve underbanked consumers across the
economic, geographic, and cultural spectrum. It provides funding and resources, enables partnerships,
and identifies, develops, and distributes authoritative information on how to respond to the needs of the
underbanked profitably and responsibly. CFSI works with banks, credit unions, technology vendors,
alternative service providers, consumer advocates, and policy makers to forge pioneering relationships,
products, and strategies that will transform industry practice and the lives of underbanked consumers. For
more on CFSI, go to www.cfsinnovation.com.

ShoreBank is America’s first and leading community development and environmental banking corporation.
For more on ShoreBank, go to www.shorebankcorp.com.

To Contact CFSI:

Center for Financial Services Innovation

2230 South Michigan Avenue, Suite 200
Chicago, IL 60616

tel: 312.881.5856
fax: 312.881.5801

www.cfsinnovation.com

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