Prepaid cards in the US have become a mainstream product, with more than 20% of the population estimated to be holding a prepaid card. Prepaid cards in the country are expected to grow moderately over the next five years, recording a CAGR of about 13%, to reach gross dollar value (GDV) of USD 877 billion by 2020. Factors such as providing a viable electronic payment option to the unbanked population, convenience and security to consumers, and serving as a cost-effective alternative to disbursements through cash and checks, are some factors expected to drive growth of the card category in the US.
Gift cards have long been popular in the US due to their versatility as a gifting and payment solution. However, with maturity of the product category, card issuers are constantly looking for the next big channel for revenue generation and devising new uses and applications to keep the gift card space exciting and fresh. Recently some companies have come up with a unique ways to use prepaid gift cards. One such way is as an investment tool for the stock market. Blackhawk Network and Stockpile have collaborated to launch Stockpile's "Gift Cards for Stock". This prepaid gift card is redeemable online to open and fund an account with stock.
Among the various consumer sets, card issuers are finding that understanding the requirements of the millennials is the most difficult as they showcase the most unpredictable behavior and do not display much brand loyalty. Card issuers in the US are focusing on designing prepaid cards that cater to millennials’ requirements. For instance, American Express added new tools to its Serve prepaid card allowing consumers to set budgets, categorize spending, and save for an unexpected or upcoming expense.
Popularity of prepaid cards is growing across sectors as consumers’ preference for convenient and secure cashless transactions is increasing. Prepaid card issuers are trying to increase their market by expanding beyond lower income groups to include higher income groups as well. Card companies in the US are focusing on driving growth by designing prepaid cards that fit unique needs of diverse sets of consumers, while remaining under the ambit of regulatory requirements.
Want to gain deeper understanding of prepaid card dynamics in the US?
Announcing the ‘Prepaid Cards Market Intelligence’ series – “ US Prepaid Cards Business and Investment Opportunities – Market Size and Forecast (2011-2020), Targeting Strategies, Analysis of Business Trends, Consumer Attitude & Behaviour, Retail Spend, Market Risk, Competitive Landscape and Market Innovation”.
This report from PayNXT360 provides a strategic analysis of prepaid (pay before) cards, offering a wealth of insights to help companies understand this growing but quickly changing market:
- Market dynamics: Provides a comprehensive view on size and structure, industry dynamics, market trends, consumer attitude and behaviour, and competitive landscape in prepaid card industry.
- Open loop and closed loop: Provides market estimates and forecasts to assess opportunities in open loop and closed loop prepaid market segments. Details four essential KPIs – number of cards in circulation, numbers transactions, load value, and value of transactions.
- Prepaid card categories: Details market opportunities across 11 market segments in prepaid cards for the period 2011-2020 and identifies potential risks, and consumer adoption. Card categories include – Gift Cards, Teen and Campus Cards, General Purpose Reloadable Cards, Remittance Cards, Travel Cards, Business Expense Cards, Payroll Cards, Corporate Incentive Cards, Consumer Incentives, Government Benefit & Other Program Cards, Healthcare & Insurance Cards.
- Benchmarking and risk index: Benchmarks the prepaid card industry in the country with key global markets along with a risk assessment through PayNXT360’s proprietary Prepaid Cards Industry Risk Index (PCIRI).
- Consumer attitude and behaviour: Drawing from proprietary survey results, this report identifies and interprets key prepaid KPIs, including spend by age, gender, and income level. In addition, it provides an overview of how consumers are currently using prepaid cards across five key categories – travel, bill payment, retail spend, cash withdrawal, and P2P transfers. It also provides a breakdown by transaction size.
- Retail spend: Breaks down retail spend across 11 categories to provide detailed insights on consumer behaviour and changing dynamics of prepaid card spend.
- Gift cards: Drawing from proprietary survey results, this report provides in-depth analysis of opportunities in both open loop and closed loop prepaid gift card categories. Assesses consumer behaviour by type of consumer (retail and corporate), gifting occasion, card type (paper, plastic, digital), and market share by retail categories.
- Innovation and market strategies: Explores prepaid card strategies, including innovations across categories, competitive positioning, and new product launches.
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