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Rising prepaid card use in UK amid living cost crisis
Prepaid cards are experiencing a boom in the UK, with one fifth of the British population (approximately 11.4 million people) now using them. This reflects a significant 118% growth in their use since the onset of the cost of living crisis. Based on recent payments research conducted by Opinium on behalf of PayTech company, Recharge, 34% of these users (amounting to 3.9 million) trust prepaid cards as a legitimate tool for maintaining control over their finances. Incredibly, 26% of users, which equates to 3 million people, choose prepaid cards with the explicit intention of avoiding debt.
The study, involving 2,000 UK adults, further decodes the typical demographic inclinations towards prepaid card usage. The report asserts that young adults display the most bias, with 56% of the users aged between 18 and 34 years. When it comes to gender, men are reportedly 53% more likely to use prepaid cards over women. Geographically, London leads the prepaid card adoption with a whopping 61% uptake rate, far surpassing the next highest region at 25%.
In the context of the £64 billion prepaid cards market in Europe, these findings underline significant shifts in payment technology preferences. While the UK announced last week that it has officially exited recession, the enduring effects of the cost of living crisis seem to be influencing the choices of the consumers towards more manageable and controlled spending habits, with prepaid cards becoming a preferred mode.
Further breakdown of users' motivations for embracing prepaid cards reveals that, besides financial management and debt avoidance, the fear of online fraud also factors in. 35% of 18 to 34 year-olds undertaking prepaid card transactions view them as a protective measure for their financial information, a trend 75% more frequently observed than in the 35-54 age group. Among male users, 31% use prepaid cards to guard against fraud, a number 55% higher than that of female users.
Günther Vogelpoel, CEO of Recharge, commented on the study: "The cost of living crisis has changed spending habits, driving Brits to seek alternative ways to ensure they are in control of their spending. Prepaid payment products are just one of the ways they are doing this. Our research highlights the importance of financial security and control. Recharge is all about putting the consumer in charge and providing them with the options to spend their way whilst continuing to meet their evolving needs." The increase in adoption of prepaid card usage seems to align with the core ethos of Recharge, emphasising the increasing demand for personal autonomy and control in financial matters.
The nationally representative research was conducted by Opinium on behalf of Recharge, involving a sample of 2,000 UK adults. As it stands, the implications of the study record a substantial shift in the UK's payments landscape, characterised by a shift towards prepaid cards especially among youth, males and residents of London, in response to the cost of living crisis.