Stored Value Cards: A Scan of Current Trends and Future Opportunities

Topic :

Most stored value cards (SVCs) offer relatively limited functionality and do not provide a platform for savings, asset building, or building credit. The Center for Financial Services Innovation (CFSI) sees opportunities to marry the functionality of stored value cards with opportunities to save and build assets, transforming SVCs into powerful alternatives to traditional bank accounts. This report serves to describe and highlight some of those opportunities.

“Open-loop” SVC systems offer consumers the ability to utilize their cards for multiple purposes and at multiple points of sale. This report discusses the potential that open-loop SVCs have to serve as cash and check alternatives for otherwise under-banked consumers. It also provides insight into important industry innovations and trends, including pricing, marketing, remittance features, bill payment, consumer protections, future savings options, rewards features and credit-building components. Key findings of the report include:

  • Different types of functionality are rarely integrated into one product. This is an important innovation for the future of SVCs
  • Products distributed by banks and credit unions are more likely than other cards to have consumer protections, lower pricing, and more obvious transitions into other financial products and services
  • Some SVC products incorporate credit-building features by reporting accounts to credit bureaus. Additionally, some SVC providers are beginning to explore savings features to go along with their cards
  • SVC providers are exploring the extension of small credit to consumers.

The report highlights that additional work is necessary to move the SVC market forward. CFSI believes that the marriage of the convenient transactional model of SVCs and the long-term process of building assets provides an exciting opportunity for innovation and partnership.

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