News

Mercator issues closed-loop prepaid report

August 30, 2013

According to a new report from Mercator Advisory Group, the closed-loop prepaid market grew to $309.1 billion in 2012, up 3 percent from $299.1 billion in 2011. The numbers indicate slowing growth in the prepaid closed-loop market, Mercator said in a news release.

The report, "The 10th Annual U.S. Closed-Loop Prepaid Market Assessment," documents the dollar volume loaded onto closed-loop prepaid cards or access devices in the U.S. during 2012. It is the second of three annual reports that analyze open-loop and closed-loop markets and the prepaid market forecast. 

Mercator defines a closed-loop card as one that can be redeemed only at the issuer's designated locations. Examples include a retailer's card that can be used only at the retailer's own stores or a government benefit cards that can be used only at select stores that are linked to the government's electronic benefits transfer network

"Growth in the closed-loop prepaid market has slowed, but the digital content and games and ring tones segments continue to grow at a rapid pace as more people choose to download songs, games, books, and other content from the Internet," said Ben Jackson, senior analyst in the company's prepaid advisory service and author of the report.

In the report, Mercator benchmarks the load, growth, and market dynamics for all closed-loop prepaid solutions, including a review of dollars loaded in 17 different closed-loop prepaid market segments.

Highlights of the report include:

• overall, the closed-loop prepaid market grew at a slower rate in 2012 than in 2011;
• declines occurred in employee-partner incentives, consumer incentives, petroleum, utilities, and prepaid long distance segments;
• declines in the petroleum and utilities segments may reflect lower energy costs in 2012 compared with 2011;
• the decline in the prepaid long distance segment reflects a trend away from landlines toward cellular phones;
• the fastest growing segments were digital content and games and ring tones;
• the in-store gift and nutritional assistance segments continued to be the largest segments.

One of 19 figures in the report:

Read more about trends and statistics.