Canada’s prepaid market continues to experience strong growth, according to a report conducted by the Canadian Prepaid Providers Organization (CPPO), a not-for-profit organization representing the voices of the Canadian open-loop prepaid payments industry, and Mercator Advisory Group.

The annual report, The Canadian Open-Loop Prepaid Market: 2018, reveals that CAD$4.3 billion in total dollars was loaded onto open-loop prepaid cards in 2018, a 9 percent increase over 2017. Total loads increased across corporate- government- and consumer-funded cards with General Purpose Reloadable (GPR) cards (cards used as a bank account alternative) recording the highest loads at $2.5 billion. Open-loop gift cards also showed fantastic growth, increasing by 22 percent in 2018.

In a recent interview with PaymentsJournal, Jennifer Tramontana, executive director of CPPO, explained why the prepaid market is expanding in Canada, how prepaid has become a platform for innovation by banks and Fintech companies in both Canada and the UK, and how prepaid is poised to replace cheques.

Prepaid is “a nimble foundation for bringing new products and services to market,” Tramontana said. Prepaid’s “light, modular infrastructure” offers companies the creativity and flexibility to explore new features and capabilities to better suit their customers’ needs.

Although Canada is a highly banked nation, prepaid continues to grow in popularity among consumers, something Tramontana believes reflects consumers’ desire for alternative–and less expensive–financial solutions.

“Prepaid has become a really good, important educational [tool] for financial literacy… [Prepaid cards are a great] initial product that gets people into the financial mainstream.” 

The rise of prepaid also signals the end of cheques as a widely used form of payment by Canadian businesses and the government.

“There’s about 385 million checks that go out a year, and it’s estimated [that this] costs [the Canadian] economy about $5.8 billion annually,” she said.

With an annual decline in cheque use of 7 percent across the nation, Payments Canada predicts that, by 2020, virtually every business and government office in Canada will have switched from cheques to electronic payments, including prepaid. 66 percent of Canadians are ready to ditch cheques, and 27 percent of them were so anti-cheque that they were prepared to pay extra to process a cheque-free transaction electronically. 

Mobile banking and digital payments are also on the rise, which is another reason for optimism in the Canadian prepaid market. “A little bit more than two-thirds of Canadians are now doing most of their banking digitally,” said Tramontana. “And there’s obviously big opportunities for continuous development in those kind of innovative, user-centric capabilities and solutions.” 

The Canadian prepaid market is rapidly growing, and there’s lots of room for companies to make an impact.  “We’ve seen a compound annual growth rate [of around] 17%,” she said. “So it’s an important market for us to understand where to go… [There are] amazing opportunities for innovation here.”