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The market for prepaid cards has increased dramatically since 2013, when they became regulated by Brazil’s Central Bank.
The advantages for users are increasingly popular to those consumers that do not have a bank account, or access to any other services offered by banks. A prepaid card gives users the chance to control their expenses, make purchases, withdraw and transfer money, and all without the need of a traditional bank account.
One prepaid card provider, Agillitas, says that it has issued more than one million cards, and that all types – apart from one which can be used for travel in foreign currency – have seen growth of around 15% a year. One card has become very popular, Zuum, which is linked to user’s smart phones and has achieved a national customer base of nearly half a million people, having a growth of 120% since 2014.
Obtaining a prepaid card is comparatively simple for most people, which has helped the rate of growth on the market. Customers only need to register the CPF, which contributes to financial inclusion. According to the Data Popular Institute, around 55 million people in Brazil who don’t have a bank account, have used prepaid cards to move more than R$660 billion a year.
Another reason for their growth is that companies are giving them to employees as rewards and incentives for successful sales campaigns. They are also a popular way for parents to give their children allowances and send gift cards. And they can be used for international travel.
However, even though the rise of prepaid cards has been spectacular, experts believe that even if the financial services sector generally expands at a rapid pace, prepaid cards still remain niche and will probably never overtake credit cards as the most popular card to use.
Nonetheless, their increasing popularity is no short-term trend and it’s likely that their fast rate of growth of acceptance and use throughout the country will continue to be very impressive.
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