Survey Finds Decline in Purchase of Prepaid Cards in U.S. After Five Years of Steady Growth
The payments industry has been in flux lately as new forms of mobile payments gain traction through a combination of device-driven mobile payment applications such as Samsung Pay and Android Pay as well as financial institutions’ and retailers’ own mobile payment options. Faster payments was also a key trend this year with many announcements and partnerships, starting with NACHA’s Same-Day ACH rules, which took effect in September 2016, and the Federal Reserve task force on Faster Payments newly released paper on faster payments with the help of blockchain and distributed ledger technology. Given the lure of new payment forms, our latest survey data suggests that prepaid card use has dipped in the United States in 2017, but this is primarily a consumer perception and may reflect the volume of transactions reviewed in depth in the annual benchmark reports of Mercator Advisory Group’s Prepaid Advisory Service. Despite this recent decline, prepaid card availability is at an all-time high with prepaid options at retailers and for transit, wireless communications, government agencies, and tax refunds along with a host of other varieties. Prepaid cards are no longer just for gifts. Mercator survey data reveals that consumers are buying multiple types of prepaid cards for their own use at retailers and for online services, phone services, and transit as well as buying general purpose cards for themselves and others.
This year, however, the demographics of prepaid use is changing and returning to its roots—young adults and people who want to avoid using checking accounts or traditional banks. The survey results show that consumers using general purpose reloadable (GPR) cards want a card to offer them the conveniences of a bank account such as mobile apps, bill payment, high-quality customer service, alerts, easy access to reloading, and fraud protection as well as ways to gain rewards—all with low setup and maintenance fees. Many want to avoid using a bank account and consider prepaid safer for online purchases. This report highlights consumer sentiment, attitudes, and self-reported use of prepaid cards compared to Mercator Advisory Group’s 14th Annual U.S. Open-loop Prepaid Cards Market Forecasts, 2017–2020
, released in August 2017, which provides forecasts of estimated loads and opportunities for prepaid cards types, available through our Prepaid Advisory Service.
Mercator Advisory Group’s CustomerMonitor Survey Series Payments survey highlights opportunities for prepaid products by identifying consumers’ changing demographics and buying patterns with respect to prepaid cards and virtual cards, ways of using the cards and reasons for use, features deemed important and needed, channels used, as well as brand awareness and use of 11 major GPR card brands. The Mercator Advisory Group Insight Summary Report, Consumers and Prepaid: Caution Ahead
, focuses on understanding the opportunity for prepaid cards in the United States by reviewing our 2017 survey data that reveals which consumer demographic segments are buying the cards, what types of cards they are buying, how many a year, the dollar amount loaded on the cards, where they are buying the cards, how they are using them, and for retailer gift cards, the likelihood of incremental spending at the retailer.