The U.K.’s retail spending in the first three months of 2015 was 2.8% higher than the same period last year earlier.  But despite the rosier outlook, consumers’ trust in the banking industry is yet to return, together with their desire to use credit cards.

These conditions, as well as their concerns about card fraud, is driving working parents, young adults and a variety of other age groups to seek alternative forms of payment; chief among which is the widely under-valued prepaid card.

Happily for those looking to adopt prepaid, the U.K. is a hotbed of activity and innovation. The Prepaid International Forum (PIF), the trade association that represents the prepaid card industry, reports a 380% increase in the number of prepaid card products available on the market. And, as we know, competition drives value. With 35% of U.K. consumers regularly using prepaid cards and a 13% slide in credit card usage, prepaid’s successes look set to continue.

So, what’s driving demand?

First, prepaid is not new. It seems, however, the stars are now aligning for the technology.

In our post-recession world, ‘credit’ still delivers a bitter taste for some consumers, leaving the door open for prepaid to establish a foothold. Credit conscious consumers work hard to keep control of their funds. Prepaid aligns well with this ethos: no overdraft, no credit, no debt. This approach, when coupled with the loyalty and cashback programs that many prepaid cards are offered with, can actually generate funds as well as help cardholders better manage their spending.

The young, the un(der)banked and the banking system’s voluntary abstainers are all realising the benefits of "paying before." For those that can’t get, or don’t want a bank account, prepaid is a facility that enables them to participate financially in the digital world. Whether it’s shopping online, paying  bills or making ATM cash withdrawals, these cards are a must have for those outside of the traditional system.

The PIF also highlights that savvy online shoppers use prepaid cards specifically for online purchases in order to mitigate the risk of fraud. In hacking terms, even if account access details are stolen, only the limited amount of cash loaded onto the prepaid account can be accessed; a minor loss in comparison to a direct line direct line into an overdraft supported bank account, or worse, a credit card with a large.  

Despite its advances, it’s hard to envision a future where prepaid cards replace their credit-based counterparts entirely. Neither should we aspire to this; a society served by a wide variety of both credit and prepaid payment products is surely a more supportable prospect.

That said, prepaid is clearly here to stay. It’s simple, cost effective, secure and frequently offers better cashback and loyalty schemes than the current accounts of traditional high street banks. The U.K.’s prepaid product developers, working in collaboration with the card manufacturers in the U.K., are leading the world in prepaid innovation and consumers are responding. Whether it’s gift cards, online shopping, travel money or payment cards for students and the unbanked, the flexibility of prepaid is winning people over and we look forward to supporting its growth.

Paul Underwood is managing director of Thames Card Technology.