Visa, MasterCard See Gold in Prepaid

"There is an old saying, 'It's expensive to be poor,' and it really is," says Red Gillen, an industry analyst at Celent. "You pay to cash your check. You pay for money orders. For a lot of the unbanked, you pay to send funds. And then throw in indirect costs, such as travel to go to a check cashing agent. It's a very expensive way to live. And so the cards have a way to reduce costs and ease up these peoples' lives."

Buse says banks are eager to get access to customers who have been reluctant to set up accounts. And the market is significant. According to a December report by Celent, the so-called unbanked population in the U.S. alone is roughly 36 million, representing $260 billion in aggregate income.

And there is plenty of opportunity there. Celent estimates that the potential market size for the so-called general purpose reloadable cards in the U.S. is roughly $192 billion. In 2006, only $710 million was estimated to have been loaded on general purpose, reloadable cards in the U.S., compared to actual spending via credit and debit cards of $2.88 trillion, Celent says.

Looking outside the U.S., the potential for these cards is enormous, others say.

"We believe that there will be rapid adoption of prepaid in these emerging [countries] alongside debit," Buse says. "Debit grew so substantially in the U.S. because we all had checking accounts. In these emerging economies today they don't usually have an electronic payment relationship."

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