Could A Prepaid Card Revolutionize Financial Inclusion In India?

January 5, 2021

India being a predominantly cash-driven economy. Almost 97% of the transactions are done through cash. Payment via debit and credit cards has risen only due to growing consumer awareness and internet penetration during the past decade. Used across the industry, such as retailers, government, and financial institutions, prepaid Cards are emerging as a popular choice among millennials and Gen Xers. They drive adoption of such cards by providing innumerable benefits to the. 

India’s Journey Towards Prepaid Payment Instruments

India has the highest youth population compared to any country on the globe. However, half of the population is unbanked. As per the latest Global Findex Database released by the World Bank, 11% of the world’s unbanked adults are in India.

This lack of financial inclusion for such a large swath of the populace reinforces the need for a tool that can genuinely fulfill their requirements to participate in formal financial transactions. Furthermore, the opportunities created by the penetration of the internet in India's rural areas have also made it possible to access the digital payment world. This, along with the young Indians who are more tech-savvy and ready to plunge into the digital payment world. 

On the brighter side, India does not halt outside companies from entering the digital payment market. And with the launch of RuPay in 2014 the Indian Government is driving force for  online payment growth in India. According to an article published by Payment Source, India has built a prepaid card network (ItzCash) that supports online shopping and bill payment over the last decade. By enabling consumers to load cash onto a card through its network of more than 27,000 ItzCash Point outlets across India. RuPay cards are accepted at all Indian bank ATMs, more than 90% of the point of sale terminals, and more than 10,000 e-Commerce merchants.

Prepaid Card Are Transforming the Online Payment System

The Indian Prepaid Payment System has been in existence for a long time, primarily with the beginning of calling cards in the form of Voice Over IP Cards (VOIP), Virtual Calling Cards (VCCs), Long Distance Calling Cards, and Prepaid Mobile Recharge Cards. Most of these were offered by the telecom industry to provide access to telecom services as per users' affordability, i.e., in different denominations, and keeping them within the control of their budget. 

Other quasi cash options like, food coupons, gift vouchers, and corporate gift vouchers also have existed for a long time for tax-related benefits and incentives. Then was the birth of general-purpose reloadable prepaid cards for payment through the internet, mobile, and Point of Sale (POS) terminal. 

According to the research by Qwikcliver, India is all set to jump from the current online gifting market of $65 million in 2019  to $84 billion by 2024. The Rs. 28k Crore gifting market with numerous options and varied preferences, consumers are preferring  prepaid gift cards instead of going through the pains of selecting a gift. 

The prepaid travel card market is also growing at about 25% year-on-year, with one out of every two customers opting for a card. Thomas Cook has seen strong consumer uptake with 30% year-on-year growth for its Borderless Prepaid Card.

Since Prepaid Cards aren't required to be linked to any bank account, it can be issued by a bank or any other non-banking financial institution. It is a 'PayNow, Use Later' type of Card, which implies it needs to have a balance of a pre-loaded amount on it. Prepaid cards are the most convenient, secure, comfortable payment instruments with control over the payment.

Prepaid Cards - A Payment Solution For All 

According to T. V. Seshadri, Global Executive for Global Products & Solutions at MasterCard Asia Pacific, prepaid cards can be employed to speed-up financial inclusion and reach out to rural areas with high growth potential. These cards will be one of the digital transactional tools for cash displacements and reduce cheque and cash-based transactions in the coming decade in the country. Seshadri believes the accelerated way to reach this huge market would be through prepaid cards, leveraging on the mobile phone networks that have spread across the country.

According to Research and Markets' report, the Indian Prepaid Card sector has increased at a CAGR of 40.2% during 2014-2018. And the market is expected to record a CAGR of 36.5%, rising from US$ 38.6 billion in 2019 to reach US$ 133.9 billion by 2023.

Considering the potential for tapping the massive cash payment markets, which are ruled mostly by the young generation and the rural population, who are either underbanked or unbanked. This demographic typically harbors hostility to traditional banking channels because of the experiences metted to them when they try to access those channels. The Prepaid Card is the most probable solution to address this segment of the Indian population and for those who prefer to remain distant from the complex Banking channels while availing the benefits.


The Indian Prepaid Card market, is currently in a transition phase, will only grow bigger with the economy going digital and financial inclusion becoming a high priority. With all the new players joining the bandwagon with their innovative products, the Prepaid Card segment will continue to grow over the following years. The future is bright as all stakeholders come together to transition the Indian economy from less dependency on cash to completely cashless.

Send more than money.