Prepaid cards have opened up a new market in retail financial services over the past few years, but issuers have struggled to find applications for them and have made only "slender" returns.ANZ's head of alliances and emerging payments in consumer cards and unsecured lending, Greg Drumm, said prepaid had had a slow start in Australia, despite very strong growth worldwide.Drumm said consumers were familiar with prepaid cards in the form of store cards and gift cards. But in their "open loop" form they were most commonly issued as travel cards.Speaking at last week's Cards & Payments conference in Sydney, Drumm said there were useful government and commercial applications for the cards, but so far these were underdeveloped. In the commercial market, prepaid is a convenient way of managing per diem allowances and other expenses. Governments can also use the cards for distributing funds quickly, when emergency assistance is required, for example.In retail banking, issuers have to be careful not to simply replicate functions that are already catered to by debit cards.Another challenge in retail is getting users to re-load their cards so they are not used as a one-off. The problem with re-loading is that it is relatively expensive and involves delays.Drumm said part of the appeal of prepaid cards in other markets was their use in areas such as remittances and the provision of payment services to the unbanked. Demand for such services in Australia was much lower than in other countries.ANZ has partnered with the University of Sydney to issue 50,000 student cards that double as student ID cards, campus passes and prepaid cards. The cards can be used to make payments on and off campus.The university can also use prepaid to make payments to students. Drumm said the card was particularly useful for foreign students, who make up almost 30 per cent of the campus population and who usually arrive in Australia without a local bank account.Drumm said an important difference between prepaid cards and debit cards was that prepaid cards were not attached to bank accounts. Not being part of a core banking function, their use is not subject to the same level of regulation. Prepaid's use as a payment service for unbanked foreign students is an example of how an issuer can make use of that difference.