News

Mercator issues 10th annual open-loop prepaid analysis

August 27, 2013

Mercator Advisory Group has published its 10th Annual U.S. Open-Loop Prepaid Cards Market Assessment and Prepaid Market Overview, the first of an annual trilogy of reports covering open-loop cards, closed-loop cards, and the forecast for prepaid markets.

According to Mercator, the reports provide thorough analysis and documentation of the growth and development of the prepaid industry. The open-loop card report benchmarks the load, growth, and market dynamics in 18 different market segments.

For the purposes of the study, an open-loop card is one that uses one of the major payment networks to complete transactions. This could be either an open-loop gift card usable at any store that accepts the card brand, or it could be a card restricted to a particular retailer that relies on an open-loop network to complete the transaction.

For reasons identified in the report, the dollar volume loaded onto cards in the open-loop prepaid market grew by only 6 percent ($194.5 billion) year over year, a smaller growth rate than predicted. 

Within the open-loop prepaid market segments tracked by the report, the Cash Access category — travel cards, open-loop gift cards, open-money and financial services cards, and money remittance/person-to-person cards — was the fastest growing.

Still, Mercator said, it grew at a combined rate of only 12 percent, with a total load of $83 billion in 2012, up from $74.1 billion in 2011.

"Growth in the open-loop prepaid market has been driven by the cash access and government categories, but the future growth of the market could be hurt by excessive regulations," said Tim Sloane, director of the Mercator Prepaid Advisory Service and author of the report.

Highlights of the report include:

• detail of dollars loaded onto prepaid open-loop cards across 18 market segments;
• new data for government benefits cards and prepaid cash access cards;
• information about declining growth rates across segments and the one segment where growth continued to increase.

One of 23 exhibits in the report:

Read more about trends and statistics.