Prepaid Cards in the US, 7th Edition

Report Overview

Prepaid Cards in the U.S., 7th Edition
The COVID-19 pandemic is reshaping the prepaid card industry. As store closures hobble the mighty J-hook, and related trends push prepaid card users into the digital realm, these cash-loyal consumers find themselves choosing their card over cash and coins. And while short-term payment value pain hits most segments of the prepaid card market, long-term interchange fee revenue gains are in the making. Of course, card type and other growth factors helps shape the longer-term outcome: B2B prepaid cards, for example, continue their growth tear, while the proliferation of app-based prepaid digital accounts pressures consumer general-purpose reloadable prepaid card growth. Overall, Packaged Facts expects the prepaid card market to grow by a healthy 6% average annual rate from 2020 to 2024.

How We Analyse This Market

Prepaid Cards in the U.S., 7th Edition, provides insight into significant near-term and longer-term factors shaping this varied and growing card segment. More specifically, this report:

• provides a market size and forecast for the prepaid card market, including trended payment value for general use (open-loop) and private label (closed-loop) prepaid cards, by card type, with related growth opportunity analysis
• assesses in detail the effects of the COVID-19 pandemic on the prepaid card industry, including cash conversion, payment electronification, interchange, and deposits, as well as effects by card type
• gauges (reloadable and non-reloadable) prepaid card use trends during 2014-2019, breaking prepaid card use down by card network; banked status; credit score; cash preference; and app and smartphone use
• identifies top general-purpose prepaid card brand and card network brands, by demographic
• studies reasons for choosing general-purpose reloadable prepaid cards, including use cost; overdraft fee avoidance and debt management; credit and bank account substitution; breadth of acceptance; and reloading method
• explores prepaid card marketer and issuer strategies, including those of Axos Financial, The Bancorp Bank, Green Dot, MetaBank and Netspend
• Analysis includes competitive positioning, new product introductions, company innovations, and trended performance analysis.
• Heavy emphasis is placed on add-value proprietary estimates for load value, purchase value, and other metrics otherwise not published by these industry participants.
• Thorough analysis of the app-based digital banking threat is also included.
• explores a variety of prepaid card industry challenges and solutions, including regulatory issues, pricing, and profit factors, broadening the target audience, bank account competition, and fraud

Packaged Facts estimates that prepaid card payment value will reach $377 billion in 2020, up from $302 billion in 2016, which translates to an 5.7% average annual growth rate. Open-loop prepaid card purchase value is expected to grow to $212 billion, up an average of 7.6% from 2016 to 2020. Closed-loop prepaid card payment value is expected to value 3.5% annually, reaching $165 billion.

Packaged Facts estimates that prepaid card payment value will reach $475 billion in 2024, up from $377 billion in 2020, which translates to an 6% average annual growth rate. Open-loop prepaid card purchase value is expected to grow at an average rate of 6.3% during the period, led by continued growth in payroll, B2B, and medical card payment value and a return to moderate growth in gift card and customer refund and incentive card payment value. Closed-loop prepaid card purchase value is expected to grow at an average rate of 5.6% during the period, led by reloadable card payment value.

While open-loop general-purpose prepaid cards continue to generate the most purchase value, they also face significant growth headwinds. Conversely, three major commercial card segments (B2B, healthcare, and payroll) are expected to perform well over the next several years. Closed-loop prepaid card payment value has been driven by reloadable cards, particularly those that underlay an increasing array of app-based retailer loyalty and payment programs. While non-reloadable prepaid card payment value has also performed well, it faces strong near-term pandemic-related headwinds.