Prepaid Cards Gaining Traction in the U.S.

by Karen Augustine 0

Mercator Advisory Group’s Tenth Annual U.S. Prepaid Cards Market Forecast2013-2016, which identifies prepaid card loads, growth, andmarket dynamics across 26 market segments, presents researchshowing that growth in prepaid cards slowed in 2013 because ofongoing economic turmoil and increased legislative and regulatoryaction.

Although prepaid growth may have slowed temporarily, findings fromthe latest report in Mercator Advisory Group’s CustomerMonitorSurvey Series (CMSS) survey of 3,000 U.S. adult consumers, fieldedin June 2013, suggests that consumers are using prepaid cards inmore ways and in more places than ever before. Over half (53percent) of the respondents recalled buying prepaid cards withinthe year prior to the survey. And more recalled buying each type ofprepaid card-general purpose reloadable (GPR), general purposenonreloadable, retailer-specific prepaid, gift cards for onlineservices, and prepaid mobile phone cards-up from 47 percent ofrespondent to our 2012 survey who recalled buying prepaid cards.This year, we added two new categories-transit and long distancephone service cards-to better correlate with the prepaid categorieslisted in Mercator Advisory Group’s Tenth Annual U.S. Open-Loop Prepaid Cards Market Assessment andPrepaid Industry Overview.

The CMSS survey finds that consumers are using prepaid cards morefor their own personal use now, although more consumers still buyprepaid cards for gifts than for self-use. The trend of purchasefor personal use is even more apparent for virtual cards. Of themore than 1 in 4 consumers who bought virtual cards in the yearpreceding the survey, half report purchasing them as gifts and halffor their own use. In fact, prepaid cards appear to be gainingtraction among mobile users, as the survey finds smartphone andtablet owners are more likely than average to buy any type ofprepaid card.

For more information on attitudes, interest in, and use of prepaidcards, GPR card reloading activity and card duration, interest anduse of direct deposit, brand awareness, and buying behavior ofeight major GPR card brands, features most important for prepaid,other factors that may impact the growth of prepaid cards as aprimary payment tool in the U.S., please refer to Mercator AdvisoryGroup’s CMSS research report, Prepaid 2013: U.S. Consumers Buying More Cards forOwn Use.