Growth Forecast for U.S. Commercial Prepaid Cards in 2018 and Beyond
Commercial cards across all product types, systems, and business sectors account for certain portions of business-to-business (B2B) spend. Mercator Advisory Group estimates that greater than $1 trillion of business spending is transacted through card-based products in the United States. This includes commercial credit, small business, fleet (fuel), and of course prepaid cards.
Since 2004, Mercator Advisory Group has been covering the overall U.S. prepaid market, of which commercial prepaid cards are, in effect, a subset. The factors distinguishing commercial prepaid from purely consumer prepaid are twofold. First, commercial prepaid products are sold through either a corporate or a business banking arm of a commercial bank rather than a retail or wealth management business unit. Second, there are fewer categories and segments in commercial prepaid product sets and therefore limited use cases. Mercator Advisory Group’s taxonomy of prepaid cards identifies 11 categories and 26 segments of usage for the overall U.S. prepaid market. Mercator’s taxonomy for the commercial prepaid segment of the market contains only six categories and 17 segments.
The prepaid card market in the United States had its beginnings in the 1970s, but it wasn’t until 1994 that Neiman Marcus and then Blockbuster actually issued prepaid cards to consumers. The use of prepaid cards eventually spread to the corporate banking side of financial institutions thanks to the implementation of open-loop network solutions. This allowed for more ubiquitous acceptance of prepaid cards, on par with general purpose credit cards, and created a useful and efficient set of payment tools for both private sector and public sector employers to utilize across their organizations.
This Mercator Advisory Group's research report, U.S. Commercial Prepaid Cards: 2015–2020 Forecast
, delves into the definitions and use cases for the U.S. commercial prepaid market, both open loop and closed loop. Mercator’s spend volume estimates by category and segment are presented as well as forecasts through the end of the decade with respect to commercial-specific use cases.
For a full review of the U.S. prepaid market, including open and closed loop, readers can refer to the latest research on the market, presented in two reports by Mercator Advisory Group’s Prepaid Advisory Service: 14th Annual U.S. Open-Loop Prepaid Cards Market Forecasts, 2017–2020
, released in August 2017, and 14th Annual Closed-Loop Prepaid Cards Market Forecasts, 2017–2020
, released in November 2017.