The Rise of Prepaid Debit Cards

According to the Washington Post, there are $17m unbanked households.   This number is extremely important for the online lending industry.  Bank accounts are the vehicle that online lenders use to place and withdraw money from a bank account.

So, how do you work with a customer that only has a prepaid debit card?

You process their transactions through the merchant card network.  This alternative costs more than the typically ACH, which usually costs anywhere from $0.25 – $0.40 a transaction.  Prepaid cards are superior, in some ways, to the ACH system in a couple of ways:

  • The lender gets an instant approval.
  • The money is made available, within 48hrs.
  • The Lender does not incur return fees when a transaction is dishonored.
  • From a collections standpoint, these forms of payment are convenient and instant.

If you’re looking for a partner in the processing space, take a look at Repay Online.  They are an OLA (Online Lenders Alliance) and CFSA (Community Financial Services of America) member and recognized as an Inc. 500 fastest-growing private company.

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