Report: Prepaid Fundamentals Strong, but Uncertain Waters ahead
Over the next two years, closed-loop prepaid loads are on the way up, store returns on the way down—and most other prepaid numbers could go either way depending on a host of factors. Those were among the main takeaways from Mercator Advisory Group’s 13th Annual U.S. Prepaid Cards Market Forecasts, 2016–2019. The report examines load, growth and market dynamics in the U.S. across all prepaid segments.
Closed-loop loads in the U.S. will grow steadily over the next two years, increasing by a projected annual rate of 2 percent to reach a total of $312 billion by the end of 2018, according to the report. Among all prepaid segments, the results of the U.S. elections and subsequent changes coming to the federal government could benefit some verticals and harm others. For instance, nutritional assistance, benefits and campus card loads will be affected by government policy, including tax law changes, funding for programs and general regulatory requirements, the report noted. Toll and transit loads will be influenced by infrastructure spending and gas prices, while energy prices will affect loads in the petroleum and utilities segments.
One area in which there’s more certainty is store credits/returns, which will decline through 2019 as consumer shopping and payments behavior changes the way returns are handled, Mercator said.
Despite an uncertain outlook overall, the “fundamental business proposition of prepaid cards as a valuable payments tool continues to be strong,” said Ben Jackson, director of Mercator’s prepaid advisory service, and author of the report. “Nonetheless, prepaid providers should be evaluating their businesses and looking for ways to diversify,” he added.