Prepaid Debit Cards for Bieber Fans—and Everyone Else

The booming market for prepaid debit cards is drawing big players, such as JPMorgan Chase and American Express, looking for new revenue streams and niche companies hoping consumers will pay a premium for a card with Justin Bieber’s face on it.

Although some prepaid cards hold a fixed amount of money, like a gift certificate, others operate more like conventional bank accounts. Users can add money by having their paychecks credited to the cards, and can use them to withdraw cash from ATMs. The research firm Mercator Advisory Group found that about 47 percent of U.S. households bought prepaid cards in the 12 months ended in June. The market is projected to reach $1.7 billion in fee revenue for financial institutions by 2016, according to Madeline Aufseeser, a senior analyst with the Boston-based consulting firm Aite Group. She says Americans could have $168 billion loaded on the cards by then. “The market for prepaid debit cards and payroll card products continues to grow at lightning speed,” she says.