The prepaid bank card market - Portugal

1.1 Definition and scope of study

The card market is divided into four categories: credit cards, debit cards, commercial cards and prepaid cards. The name of the category on the credit card is mandatory since the entry into force of the European regulation 2015/751 on 9 June 2016.

Prepaid cards "give you a limited amount of money", so they are reloadable and do not require a connection to a current (bank) account. The increased security and functionality of the prepaid card are variables that have played a decisive role in its popularity.

A prepaid credit card therefore has similar functions to a normal debit or credit card (with the card number, expiry date and security code, etc.). The main difference is that instead of the bank itself lending the funds to the customer, the customer will already have an amount of funds associated with their bank account (or a line of credit that has already been approved) and all they have to do is choose the limit. The main advantages are convenience, flexibility, but most importantly, total control over what the customer spends.

There are two types of cards:

• The prepaid single-use credit card - it allows a single debit and can be used until the total balance is exhausted ;
• The reload card - allows further withdrawals to be made when the first one is exhausted, regardless of the amount.

Within these two typologies, there are still 4 subtypes of maps, which have more specific objectives:

• Gift Cards - These are single-use cards;
• Prepaid travel cards - In order to better control travel costs;
• Pre-paid cards for young people - With the aim of giving greater autonomy to young people, allowing a practical, safe and controlled use of the expenses ;
• Virtual cards - They are specifically used for online purchases.

According to a study by the group Lafferty Portugal is one of the European countries that have experienced the strongest growth in the cards market since 2003 There are approximately 19.8 million cards of different types in the country . Card issuance is largely dominated by large banking institutions ( Millennium bcp , Novo Banco , BPI and Caixa Geral de Depósitos ) who hold two thirds of the market.