by Joseph Kenny | 04/15/09

While it's no secret that the economy's trouble is deepening, it may be a surprise to some to hear that there is one industry that is experiencing significant growth. The business of prepaid cash cards is poised to seize a substantial market base and enter a new phase of service expansion.

These prepaid cash cards function as portable checking accounts that you can carry with you wherever you go. Many of the cards come complete with credit card functionality and bear the MasterCard, Visa, and Discover logos. The cards differ from credit cards because the funds used may be added by depositing the amount at local retail outlets. This means that the prepaid cash card is outside of the domain of the traditional financial institution.

The prepaid cash credit cards are very much like debit accounts, but rather than using banks, they are managed and distributed by independent companies. Names like the Green Dot Corp, NetSpend Corp, and nFinanSe Inc have are major players in the emerging cash card industries. The companies provide the computer servers, software, and customer service to a growing network of retail services including supermarkets, drugstores, and some check-cashing outlets.

The prepaid cash card industry has its foundation in the well-established market of more than 44 million adults in America that do not have any type of bank account. (In fact, some financial experts place the number closer to 73 million, when prospective cash card customers that have had low access to bank services due to low income or inability to maintain the minimum balances on such accounts.)

As a result of this economic crisis, the number of so-called unbanked and those that have not banked much are on the increase. According to the credit and payment research service, the Mercator Advisory Group, it was estimated that in November 2008 the volume of transactions on standard prepaid cards amounted to more than $4 billion. The group also suggests that this amount will rise to $7.2 billion in 2009 with a further increase of more than $3 billion in 2010.

As more banking institution and credit card companies are cutting back and streamlining their cash flows, the business potential for cash cards has never looked better. The decline of credit card services in the wake of global financial woes has provided the perfect opportunity.