Prepaid Load Growth Slows as Segments Mature

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New research from Mercator Advisory Group shows which segments of the prepaid market will grow and which will shrink through 2019.

One of the 21 figures from the 34-page report

Events in 2016 will likely make it a watershed year for the prepaid industry, and the future of many segments will hinge on regulations. Prepaid providers should be evaluating their businesses and looking for ways to diversify.

A new research report by Mercator Advisory Group titled 13th Annual U.S. Open-Loop Prepaid Cards Market Forecasts, 2016–2019 provides an analysis of the growth and development of the prepaid cards industry through 2019. The report examines loads, growth potential, and market dynamics in the United States across all prepaid segments.

Mercator Advisory Group’s forecast report identifies key segments that will continue to witness a decline over the next few years as well as those that should see growth. The coming regulations from the Consumer Financial Protection Bureau will likely have the biggest influence on the future direction of the prepaid industry. However, the economy, politics, and consumer behavior will all influence which segments grow and which decline.

This report reviews and forecasts load dollar volume for open-loop segments. This forecast highlights the segments approaching market saturation as well as those that will continue to experience double-digit annual growth.

"Events in 2016 will likely make it a watershed year for the prepaid industry, and the future of many segments will hinge on regulations. Prepaid providers should be evaluating their businesses and looking for ways to diversify," Ben Jackson, director of Mercator Advisory Group's Prepaid Advisory Service, and author of the report, comments.

Highlights of the report include:

  • Mercator Advisory Group issues this report before the forthcoming Consumer Financial Protection Bureau prepaid regulations, which could shape the future of these segments for good or ill.
  • This forecast assumes that the economic recovery will continue and that government benefit program and unemployment segments will continue to shrink, with the exception of Social Security and court-ordered payments.
  • Mercator Advisory Group forecasts that growth in the open-loop prepaid loads in the United States will be 4% through 2018, reaching a total of $341.3 billion. Declines in some segments and slower growth in others have led Mercator Advisory Group to revise its expectations for the overall market.
  • The fastest-growing segments are forecast to be the open-loop FSA/HSA Tax Deferred Programs segment, the campus segment, and the payroll segment. Growth in the Money / Financial Services segment is expected to slow as that market matures. But the campus and payroll segments could face significant pressure from new regulations. 

Companies mentioned in this report include: American Express, Assurant Specialty Property, Citi, Customer Bancorp Inc., Farmers Insurance, Green Dot Inc., H&R Block, Higher One Holdings Inc., Liberty Mutual, Nationwide, NetSpend, State Farm, TSYS, UniRush LLC, Wirecard AG

Members of Mercator Advisory Group's Prepaid Advisory Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits.

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For more information and media inquiries, please call Mercator Advisory Group's main line: (781) 419-1700, send email to media(at)mercatoradvisorygroup(dot)com.

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About Mercator Advisory Group
Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal

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Karen Yetter
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