The Indian prepaid card market has been booming lately and the reason is quite simple. Prepaid cards help simplify overly complex billing and transaction processes and also provide control over cash flow. In this context, the business sector would be one of the major sectors which are rapidly adapting to the use of prepaid cards. This allows it to process payments quickly and easily and further eliminates the tedious process that delays refunds and provides limited payment flexibility. In addition, guaranteed payday loans and cash payments issued to employees for various reasons can also be a source of concern for companies in terms of embezzlement or financial fraud. Hence, companies and multinationals are moving towards the adoption of the prepaid card.
According to a study by the Expert Market Research company, the Indian prepaid card market is expected to grow at a CAGR of 40.5% between 2021 and 2026. Some of the major reasons for the growth of corporate prepaid cards are as follows:
Better cash flow management
Employers can have full control over their spending and they can decide how much money to load into the card for employee spending. Therefore, employers and employees are fully aware of the maximum limit and have full control over their spending.
Employee reimbursement made easy
Nowadays, employees often have to be on the move; whether for business trips, participation in events, seminars and customer meetings. This results in high-value bills and other expenses, which must be paid for in cash or by card. Often, employees are reluctant to pay upfront expenses themselves instead of later payments. Businesses also want to avoid the hassle and paperwork associated with refunds and bill payments. Hence, a prepaid card is pretty much the need of the moment for organizations as it not only eliminates unnecessary processes and facilitates financial operation, but also ensures a certain stability, which most businesses are looking for.
Safer than checks and cash
It wouldn’t be wrong to say that carrying cash on a trip might not be the safest choice. As the probability of money being stolen or misplaced is quite high. And when it comes to payments by check, sometimes they are less acceptable and it is quite inconvenient to pay for trivial expenses using checks while traveling. Therefore, using a corporate prepaid card is much better and much more secure. Additionally, if a corporate prepaid card is stolen or lost, it can be easily reported and recovered.
Unimpeded credit score
Business credit cards are issued to employees by employers. Therefore, it cannot in any way affect an employee’s credit rating for any underlying reason. Employees can use their corporate credit card as needed.
The rapid rise and growth of the prepaid sector is also fueled by the various consumer trends and uses of the prepaid card in the market.
The growth of the prepaid card market can be summarized according to the following categories of use:
Gift cards have been a predominant trend in the prepaid card market. They have succeeded in strengthening the tradition of giving. Whether used for online purchases or in a retail store, gift cards have remained the most popular prepaid card on the market. That said, electronic gift transactions have tripled in the recent past.
An important growth segment for a prepaid card is meal cards, which has taken the corporate sector by storm. And some companies have started offering such meal cards to their employees for their various purposes. These cards can be used in a variety of settings such as buying snacks and meals at various restaurants, as well as shopping for groceries in particular stores. These cards are convenient, making them a win-win solution for employees and employers.
Prepaid travel cards are also increasingly adopted by the corporate sector. This makes it easier for employers to charge a single currency for employees traveling to a destination. In addition, employers can also charge it with multiple currencies if employees need to travel to different international destinations.
Pay day cards
PayDay cards are specially designed for concert workers. Gig Workers can now instantly receive their pay through these cards at the end of their shift. With the creation of prepaid payroll cards, the days when temporary workers had to wait in line for hours to receive their payments are over.
In summary, various trends are poised to enter the corporate prepaid card market. This involves innovative RnR programs, employee tax benefit programs, a multi-wallet rechargeable prepaid card option, etc. In addition, it does not appear that such cards will struggle to be accepted and used in the market. Nowadays, companies prefer innovative new age products, which not only allow them to increase their profitability, but also offer selected incentives to their employees. And this also at this time of the pandemic where it is crucial to boost employee morale and boost their productivity.
So businesses, on the whole, have realized that the best way to improve employee productivity is to provide them with attractive perks, rewards, and tax breaks. And the fastest way to do that is by offering distinctive offers through corporate prepaid cards.
Although thinking of prepaid cards, we only imagine big banks such as ICICI, HDFC and Kotak Mahindra to offer such facilities. However, FinTech companies are not behind this race, but rather have an advantage over traditional banks in the prepaid card arena. In addition, it is the FinTech companies that offer products as nimble and agile as those mentioned above to companies of this generation.
[The author of the article is Raj N – Founder and Chairman of leading FinTech company Zaggle and SME neo-bank ZikZuk.]