Why Financial Institutions are Banking on the Prepaid Card Market

NEW YORK, Nov. 7, 2019 /PRNewswire/ -- Digital wallets and prepaid cards are quickly taking over traditional banking as we know it. Gone are the days when consumers had to use cash or their credit card to make bill payments, order food and do their shopping. The rise of payment platforms like Square Inc. SQ's Cash App and PayPal Holdings PYPL's Venmo have made it possible to conduct virtually all transactions on your smartphone. Interestingly, one market that hasn't fully embraced the mobile payments movement is the US, despite widespread smartphone use. The adoption rate for mobile payment apps is under 10% in the US, mainly due to a lack of incentive to switch. Instead, many Americans are opting for prepaid cards to make payments and purchases. In fact, the US prepaid card market is on track to reach a whopping $877 billion USD by next year, fueled by an increasing desire for convenience, security and a growing unbanked and underbanked population. It makes sense why companies like Green Dot GDOT, Synchrony Financial SYF, and LiteLink Technologies Inc. LLNKF LLT have created solutions for this market.

Green Dot (GDOT) offers reloadable prepaid Mastercard and Visa cards that are sold at big box retailers like CVS and Walmart, while Synchrony Financial (SYF) is mainly focused on store credit cards for both specialty stores and major retailers. LiteLink Technologies Inc. LLNKF LLT's uBUCK Pay App offers consumers a digital wallet and a prepaid Visa to send and receive funds, make payments, withdraw cash at ATMs around the world and earn rewards as they go. But what really sets LiteLink Technologies Inc. (LLNKF-LLT) apart from the competition is its connection to the traditional banking world.

LiteLink Technologies Inc. (LLNKF-LLT)'s uBUCK Technologies SEZC joined forces with Deltec Bank & Trust, a long-standing independent financial services group located in The Bahamas. This strategic commercial relationship with Deltec Bank & Trust will not only allow LiteLink to accelerate the implementation of its fast, commission-free and highly secure alternative to traditional payments but will also open up uBUCK to a large network of financial institutions across the globe.

The partnership between LiteLink Technologies Inc. LLNKF LLT and Deltec Bank will include providing prepaid debit cards to Deltec's existing bank and wealth management clients, marketing the card program to regional private bank networks in the Caribbean, South America, Asia and Europe, and creating dedicated white label card programs for its existing digital asset exchange clients.

The Rise Of The Prepaid Card

Prepaid debit cards offer the unbanked and underbanked the opportunity to transfer money, pay bills online, purchase airline and concert tickets and have the same ATM access as their banked counterparts. The fact is, 17 million Americans don't have traditional chequing accounts and 51 million people in the US are underbanked, meaning they use alternative financial services to supplement their bank account. Some of the reasons for this growing demographic include being blacklisted by major banks, being a young consumer and being fed up with fees.

Synchrony Financial SYF is addressing the struggles of the unbanked community by teaming up with Amazon to launch a credit card for those with no credit or bad credit. The Amazon Credit Builder allows users to build up their credit through a secured, prepaid credit card that can be used to make purchases on Amazon.com, Audible and select Pay with Amazon merchants. However, this card is fairly limited in its abilities to do much else, including making bill payments and sending transfers and is only available to US residents.

PayPal PYPL also offers prepaid cards to its members which can be used the same as any regular credit or debit card. PayPal offers these prepaid gift cards with the Visa, American Express, Mastercard or Discover logo on them, making it simple for consumers to use them virtually anywhere in the US.

Unlike its competitors, LiteLink Technologies Inc. (LLNKF-LLT) has taken its services a step further by offering the global underbanked population the same opportunities as those with good credit. uBUCK's digital wallet and prepaid cards will allow the unbanked to shop anywhere that accepts debit, withdraw cash from ATMs, make bill payments, and send funds without paying transfer fees, all while earning rewards.

Its partnership with Deltec Bank & Trust, expands LiteLink Technologies Inc. LLNKF LLT reach beyond North America to service the global unbanked, which accounts for roughly 1.7 billion adults worldwide. Not only will Deltec be providing uBUCK prepaid credit cards to its existing bank and wealth management clients, but it will also be marketing the card program to regional private bank networks in the Caribbean, South America, Asia and Europe.

Financial Institutes Are Embracing Prepaid Cards

When it comes to these alternative payment methods, many of the big banks around the world are adopting the "if you can't beat em, join em" mentality and creating their own prepaid cards to gain a piece of this lucrative market. In fact, most major banks now offer prepaid credit and debit cards. The problem is, many of these cards come with hefty fees to activate, load and withdraw money. What's more, many of them also include a monthly fee that ranges from $0.99 to $19.95.

This is another area where LiteLink Technologies Inc. (LLNKF-LLT) stands out in the prepaid card world. Compared to the competition, uBUCK prepaid cards are available for lower fees and don't include a monthly charge.

Again, the company's business model focuses on the unbanked and underbanked, many of which had shied away from banks due to hefty fees.

Whether consumers stick with payment platforms like Square Inc. SQ  and PayPal Holdings PYPL or opt for Green Dot's (GDOT) reloadable prepaid, Synchrony Financial's (SYF) store credit cards, or LiteLink Technologies Inc. (LLNKF-LLT) digital wallet and a prepaid Visa, it is clear that digital payment platforms are here to stay.

For a free research report on LiteLink Technologies Inc. LLT LLNKF, visit microsmallcap.com

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