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Study: US prepaid card market forecast for 2013-2016

November 8, 2013

Growth in the prepaid card industry has slowed and may remain depressed, by comparison with past years, due to ongoing economic turmoil and increased legislative and regulatory action. Key segments will continue to witness a decline over the next four years, but others should see growth.

 These are the findings of a new report by Mercator Advisory Group, "Tenth Annual U.S. Prepaid Cards Market Forecasts, 2013–2016." The report is the third in an annual trilogy of U.S. prepaid benchmark reports (open-loop, closed-loop, and prepaid cards market forecast) that provides documentation and analysis of the growth and development of the prepaid cards industry.

The reports overview load, growth, and market dynamics in the United States across all prepaid solutions. The forecast report reviews and predicts load dollar volume and card volume for both open-loop and closed-loop segments.

The report highlights the segments approaching market saturation as well as those that will continue to experience double-digit annual growth.

"Having now written 10 prepaid forecasts, Mercator Advisory Group has learned not to generalize about the prepaid market," said Tim Sloane, VP of client services at Mercator and director of the prepaid advisory service.

"The one observation that is safe to make is that companies and consumers continue to find new uses for prepaid technology, and that will drive growth in some segments and a movement of dollars between segments. In addition, the cost of operating a prepaid program continues to rise due to increased regulation while income is squeezed in this fiercely competitive market."

The report makes a number of observations about the prepaid market:

• the current state of the U.S. economy is largely responsible for Mercator’s conservative assumptions about the rate of prepaid market growth;
• the closed-loop prepaid market size is expected to exceed the open loop market for the foreseeable future;
• the growth outlook among the 27 segments covered varies widely, indicating a range of opportunities for various prepaid stakeholders; and
• the two largest segments are likely to remain closed-loop in-store gift cards and nutrition assistance cards, with the growing money and financial services segment following.

One of the 74 exhibits included in the report:

Read more about trends and statistics.