Prepaid card providers are raising funding rounds to further accelerate growth and expansion PayNXT360

Prepaid card providers are raising funding rounds to further accelerate growth and expansion

Over the last two years, there has been a flurry of prepaid cards in the global market. This comes on the back of growing demand for digital payment services and online shopping, amid the global pandemic outbreak. With consumers looking for efficient digital payment solutions, many neo-banking startups have emerged in the global ecosystem with their innovative mobile wallets and prepaid card solutions. This has boosted the competitive landscape in the prepaid card market around the world. These neo-banking startups and other prepaid card providers are raising funding rounds to further accelerate their growth and expansion to capitalize on the growing market. For instance,

In October 2022, GoHenry, a neo-banking startup that targets teens and children aged 18 and below, announced that the firm had raised US$55 million to further accelerate its growth in the prepaid card segment. Notably, GoHenry provides teenagers with a prepaid card and a financial education app. The firm has amassed over 2 million customers across its markets, which include the United Kingdom, the United States, France, and Spain. Notably, the firm acquired Pixpay, a French teen-focused prepaid card provider, which has given GoHenry access to the French and Spanish markets.

The United Kingdom is the highest-growth market for GoHenry. The firm registered significant growth during the global pandemic outbreak. While the firm is not yet profitable, it earned a revenue of US$42 million in 2021, which is double when compared to 2020. Over the next three to four years, the firm is planning to introduce more products targeting young consumers. Notably, GoHenry is not the only prepaid card provider that has raised a funding round to accelerate growth.

In July 2022, SmartBank, the Japanese neo-banking firm, announced that the firm had raised US$20 million in a Series A funding round, which was led by Globis Capital Partners. Rather than focusing on individuals, the firm offers prepaid cards and finance apps to couples and is also planning to introduce related services for parents and kids, like GoHenry.
In March 2022, Kyash, another Japanese mobile-based financial app, announced that the firm had raised US$41.2 million in a Series D funding round. Notably, the funding round will allow the firm to bolster the growth of its product. In 2020, the firm obtained a prepaid card license, through which it is seeking to capitalize on the massive retail market in Japan. Moreover, from the medium to long-term perspective, the firm is also planning for an overseas expansion.

In India as well, where the digital payment ecosystem has grown substantially over the last few years and is projected to further grow significantly from the short to medium-term perspective, neo-banking platforms are raising funding rounds. For instance,

Niyo, a neo-banking platform, also raised US$30 million in July 2022. With this round, the firm had raised a total of US$130 million in total, leading to July 2022. Notably, the firm is planning to use the funding for expanding its product portfolio, while part of the investment will be deployed towards increasing its customer base.
Founded in 2015, the neo-banking platform offers zero-balance prepaid cards for blue-collar workers in India. Furthermore, it also provides travel and forex cards in collaboration with DCB and SMB Bank. The foray into new product categories such as loans, credit cards, and remittances is part of the firm’s strategy to capitalize on the growing digital financial landscape in India over the next three to four years.

In the MENA region, neo-banking firms are looking to raise capital for expanding their operations in more countries. For instance,

In August 2022, Zywa, a Dubai-based Gen Z-focused neo-bank, announced that the firm had raised US$3 million to expand its operations across the MENA region. Notably, the firm is expected to use the capital to further fuel its growth in the United Arab Emirates, while part of the funding will be used to kick-start operations in Saudi Arabia and Egypt.
To make banking easier for Gen Z consumers, the firm offers a social banking app and a prepaid card. The accelerate its growth, the firm is also planning to partner with teen-focused consumer businesses, which will enable them to sell on the app. Furthermore, the firm plans to introduce a social element to its app, which will allow users to share photos and videos of their purchases.

As the global prepaid card segment becomes more competitive with the entry and expansion plans of these neo-banking startups, PayNXT360 expects firms to raise more and more funding rounds. This will further drive innovation and boost the adoption of prepaid cards among consumers globally, thereby supporting the growth of the prepaid card industry over the next three to four years.

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