Open-Loop Prepaid Card Markets On The Rise, Studies Show
The open-loop prepaid market is booming, and all signs point to another record-setting year.
The Canadian open-loop prepaid market has grown 27 percent over the last three years, according to the Canadian Prepaid Providers Organization’s (CPPO) most recent annual study, which was conducted by Mercator Advisory Group. Nearly $4 billion was loaded onto cards in 2017, and there were “significant increases to average loads per card in all 17 categories of corporate-, consumer-, and government-funded cards.”
“The Canadian open-loop prepaid market has demonstrated dynamic growth across a number of key metrics including the number of cards purchased by consumers and the value consumers placed on each card,” Tim Sloane, Vice President Payments Innovation at Mercator Advisory Group, said in a statement. “This data indicates growing confidence in open-loop prepaid products by consumers, businesses, and government agencies for a wide range of purposes.”
General-purpose reloadable cards (cards loaded by consumers for personal finance use) grew almost 10 percent to total $2 billion. Average card loads also increased across the board, with corporate-funded prepaid cards showing a 66 percent increase, and the average funds loaded onto consumer, employee, and partner incentive cards growing by 76 percent, showing that these financial products are used for regular loads and transactions, rather than one-time use.
Open-loop gift cards are also proving to be a mainstay and not an afterthought. Open-loop gift card loads grew by almost 12 percent last year, totalling $1.1 billion. According to another 2018 study on open-loop gifts cards, 73 percent of consumers plan their open-loop gift card purchases in advance. The study also found that consumers buy more cards than initially intended, and that 28 percent of consumers spend more than the value of their open-loop gift card when they visit a store. Of those consumers, 43 percent spend between $20 and $50 more than the value stored on their open-loop gift card. More than two thirds of consumers indicated that they choose open-loop gift cards due to the ease-of-use and convenience.
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