2018 Payments Forecast
Growing Canadian prepaid market hit $3.6B in 2016: CPPO study By David Eason
T
he Canadian Prepaid Providers Organization (CPPO) released its second annual benchmark study, entitled Canadian OpenLoop Prepaid Market: 2016, that shows 17 per cent growth of the open-loop prepaid card market in Canada between 2015 and 2016. Growth in all nine active segments of consumer-, corporateand government-funded prepaid cards drove the market to $3.6 billion in total value loaded onto cards—revealing that Canadians are embracing prepaid payments tools at the same trajectory as most other major economies. The Canadian open-loop prepaid market has experienced healthy growth in both total loads and expansion into new segments. The CPPO study revealed that in 2016 Canadians loaded $1.8 billion on general-purpose reloadable cards, which are a payment tool used to replace cash and cheques and supplement bank accounts for a highly banked population. For example, Koho offers a reloadable prepaid Visa card, issued by Peoples Trust Company, that serves as a “mobile hub for your money.” The solution is specifically designed for Millennials, many of whom are looking for a seamless, realtime, hassle-free way to manage their money and lead financially independent lives. The North West Company’s open-loop reloadable prepaid card program, with Scotiabank as the issuer, is used by a large percentage of its clients as the cornerstone of their personal financial management. Given the scarcity of banking services in the remote communities across Northern Canada, The North West Company’s November/december 2017
prepaid card offering allows direct deposit of government benefits, which is a huge comfort and time saver for cardholders. Of course, prepaid cards aren’t just for Millennials or underserved communities. The prepaid incentive market reached $189 million in open-loop prepaid card loads in 2016, which is relatively small versus the US$90B billion non-cash incentive market in the U.S.— revealing strong growth potential. With Canada’s broad geographic dispersion across five major population centers, it is expensive and cumbersome for corporations and governments to deploy non-cash incentive programs—a factor that will likely contribute to the openloop prepaid card growth in the incentive category. In Canada, open-loop prepaid cards are rapidly replacing cheques across corporate disbursements, payroll, healthcare disbursements, disaster relief and student cards. The average load onto corporatefunded prepaid cards grew 11 per cent last year. The CPPO study reported growth across several prepaid categories, revealing that this innovative financial solution is being used and embraced by consumers, corporations and governments. Prepaid products continue to take a bite out of cheques and they claim a significant slice of the Canadian payments ecosystem. For more information about the Canadian open-loop prepaid market, access the Canadian Open-Loop Prepaid Market: 2016 study and infographic at www.cppo.ca. David Eason is the Canadian Prepaid Providers Organization’s chair.
PAYMENTSBUSINESS
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