The Canadian open-loop prepaid card market grew at a compound annual growth rate of 9 percent in 2018, according to a recent research report by Mercator Advisory Group.
The report, “The Canadian Open-Loop Prepaid Market: 2018,” a joint research project between Mercator Advisory Group, the Canadian Prepaid Providers Organization (CPPO), Canadian prepaid issuers and program managers, was created to measure the size of the
prepaid market in Canada.
“As in the United States, the future of Canadian prepaid depends on providers finding places where their cards can displace cash and checks, and where prepaid cards can become a means for distributing value more efficiently than other forms of payment. Typical
growth has come from government agencies streamlining their disbursement process and utilizing direct deposit on to a prepaid card for those individuals without a traditional checking account. Now that the market is becoming established, expect to see more
Fintechs (financial technology companies) enter the space, typically payday lenders/check cashiers. Additionally, payroll direct deposit onto prepaid debit cards for those who don’t have a traditional deposit account will be a large growth segment in the future.
These areas grew significantly in the U.S. once government insurance secured the funds,” the author the report, C. Sue Brown, Director, Prepaid Advisory Service, commented.
HIGHLIGHTS OF THE RESEARCH INCLUDE:
- The Canadian open-loop prepaid market has 11 segments out of a possible 17, which suggests that there is room for future growth in the market.
- The “Corporate-Funded Cards” category includes the Consumer Incentives and Employee and Partner Incentives segments, whose small size (Can$200 million) is in part a consequence of the fact that specialized knowledge is required to address the market’s unique
- The “Government-Funded Cards” category is new in Canada but growing as more governments utilize the cost savings associated with issuing prepaid cards instead of checks.
- The total market size for 2018 in dollars loaded onto open-loop prepaid cards is Can$4.3 billion, an increase of 9.0% over 2017, which shows that the market overall continues to be healthy.