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Open-loop prepaid cards

Study:

New data substantiates open-loop prepaid market opportunity in Canada By Jennifer Tramontana

T

he mass adoption of technology has led to a digital revolution in financial services and an uptick in emerging payments solutions such as open-loop prepaid cards—all creating new financial solutions for consumers and businesses. According to MasterCard, the global prepaid market is expected to reach $822 billion USD by 2017, with mature and diverse products serving consumers, businesses and governments. A close collaboration between technology companies and banks is to thank for this boom in prepaid. Canadians are already embracing open-loop prepaid. According to a survey conducted by Leger for the Canadian Prepaid Providers Organization (CPPO) in 2015, consumers reported a higher level of satisfaction (73 per cent) with reloadable open-loop prepaid cards than Americans, where there is a 70 per cent satisfaction rate. Canadians cited their quest for secure and convenient ways to manage their finances, budget and reduce debt as benefits of openloop prepaid products. Building on its prepaid benchmarking work in the U.S., Mercator Advisory Group turned its sights north to look at the size and potential of the open-loop prepaid market in Canada. Mercator 12

PAYMENTSBUSINESS

worked with the CPPO to develop a survey, create a taxonomy of the Canadian open-loop prepaid market and identify the key players. The information gathered from issuers was used to create an estimate of the total market size. While the market is smaller than the U.S., as would be expected, the information gathered suggests that it holds great opportunities. Here is what the benchmark study entitled, Canadian Open-Loop Prepaid Market: 2015, found: • The open-loop prepaid card market in Canada reached $3.1 billion CAD in total dollars loaded onto cards. • The Canadian open-loop prepaid market has eight active segments compared to 17 in the U.S., showing significant growth opportunity for prepaid programs in Canada. • General purpose reloadable card loads total $1.84 billion CAD (the average load per card is $2,016 CAD). • Open-loop gift card loads total $1.03 billion CAD (the average load per card is $83 CAD). • The average load onto consumer-funded prepaid cards is $218 CAD. • The average load onto corporate-funded prepaid cards is $125 CAD. May/June 2016

Payments Business Magazine May/June 2016  
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