The Growth of Prepaid: Who Drives It and How It Is Driven

November 12, 2018         By: Michael Millington

Sponsored by Discover® Global Network

The open-loop prepaid card market experienced accelerated adoption throughout 2017 and is predicted to see loads increase 10% by 2021, reaching a total of $427.7 billion.1 As consumer trends shift towards digital and loyalty reward offerings, it is important to identify who uses open-loop prepaid programs and how they continue to drive market growth.

According to a report by Mercator Advisory Group, prepaid cards are used most often by young adults.2 Prepaid card services continue to be seen as a suitable alternative to regular banking services, with 57% of prepaid cards being purchased for self-use.2 Some prepaid card services offer the convenience and security of a bank account without the potential fees that may accompany other accounts. Many prepaid card services may offer bank features like direct deposit and money transfers.

As much as young people like to use prepaid cards for the aforementioned reasons, the benefits that retail cards offer can be an equally enticing boon for users as well.

Retail cards may benefit those seeking loyalty rewards and allow for practices like budget splitting among store cards, receiving discounts on store bought items, and other forms of retailer-driven rewards—all of which may help provide a variety of uses among consumers. 83% of retailer gift card users and 79% of general purpose gift cards users say they have spent more than the value of the card.3 The same users have also reported buying from one store more often or buying higher priced items when using a retailer gift card.3

Retailers may recognize the importance of having a convenient choice available for their customers. People still make most of their retailer-centric card purchases at the physical retail location (55% of consumers to be exact) and many through alternate physical locations (48%), reports Mercator Advisory Group.3 However, more individuals may be making their prepaid card purchases online at the retailer website or other websites that happen to sell prepaid retail cards (29%).3

The digital implementation of these cards may encourage greater consumer utilization, as online use offers more security enhancements. Mercator Advisory Group reports that the purchase of digital prepaid cards has steadily increased over the years.4 It can be concluded that the purchase of these retail and digital prepaid cards inspire more retail loyalty among consumers.

Retailers, as well as program managers and card issuers, can act on this changing consumer behavior by embracing the evolution of digital prepaid cards. In order to take advantage of the digital movement, retailers might consider upgrading their card usage and availability. Having the ability to put prepaid and loyalty cards in mobile wallets and in the digital space may help reach a growing demographic of consumers who show brand loyalty or who prefer to shop electronically. The convenience of digital payments, paired with the benefits that prepaid cards hold over other traditional payment methods, may drive the growing trend of young adults who prefer digital prepaid cards, and may create an opportunity for customer conversion and increased spending.

Want to learn more about digital prepaid solutions? Contact Discover® Global Network to help find unique solutions to your business at

The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.

1 15th Annual U.S. Open-Loop Prepaid Cards Market Forecasts, 2017-2021, Mercator Advisory Group, pg. 4
2 Consumers and Prepaid: Shifting Toward Digital, Mercator Advisory Group, pg. 5
3 Consumers and Prepaid: Shifting Toward Digital, Mercator Advisory Group, pg. 6
4 Consumers and Prepaid: Shifting Toward Digital, Mercator Advisory Group, pg. 9