Stored-value cards: challenges and opportunities for reaching emerging markets

In recent years, the financial services industry has become very inventive around new uses of technology to improve the structure and delivery of retail products. One relatively new type of payment product, stored value cards (SVCs), serves as a cash or check alternative. At this point in the industry's development, many of these cards do not provide a platform for saving, saving, building assets, or establishing (or repairing) credit. However, SVCs could pave the way for individuals to have both transactional services and links to broader financial opportunities. This paper discusses the implications of this emerging product for unbanked and underbanked consumers, explores the hypothesis that SVCs can offer consumers the potential to build assets and improve their credit records, and presents policy issues that may affect how the SVC market evolves. Questions for further research to facilitate the development of SVCs that better serve unbanked and underbanked consumers are also discussed.