Abstract
Despite a poor fourth quarter that began to feel the impact of today' s
recession, the growth of the prepaid industry in 2008 continued to show great
vitality. When the prepaid market is evaluated on a segment-by-segment basis,
it becomes clear that there are far more markets that are expanding or
thriving in this economy than there are segments experiencing negative growth.
The 6th Annual Network Branded Prepaid Market Assessment is the first of our
annual trilogy of closely followed prepaid benchmark reports (Open, Closed,
Forecast) that provide a thorough analysis and documentation of the growth and
development of the Prepaid Industry. It benchmarks the spending, growth, and
market dynamics for all Network Branded Prepaid Solutions. This includes a
review of the dollars loaded on Network Branded Prepaid products in 22
different market segments.
This year' s network branded report is unique because Mercator received data
from our benchmark surveys and interviews with processors and issuers that
represent a majority of the Open Loop market. The additional information we
gained provided greater transparency regarding the development of the market
and also enabled more accurate estimation of market size data at the segment
level. This permitted Mercator to adjust its historical data to better reflect
the robust growth of the open prepaid marketplace. These adjustments provide
the fairest and most accurate possible assessment of the scale of the Open
Loop market and support our continued goal of delivering to Mercator Advisory
Group members the only consistent data set that measures the growth and
dynamics of the prepaid industry.
"Mercator Advisory Group believes the prepaid industry will continue to show
growth in 2009. However, being in the right channel with the right product is
becoming critical to the growth of prepaid products and represents a
significant volume opportunity for issuers," Tim Sloane, Vice President of
Client Services and Director of Mercator Advisory Group' s Prepaid Advisory
Service and author of the report comments. "It is clear to Mercator that no
other payments market is riding out the current economic downturn as
effectively as prepaid and I can' t think on any better payments market to be
in during a recession."
The 6th Annual Network Branded Prepaid Market Assessment also includes a
special section on the utilization of Restricted Authorization Network (RAN)
technology. In conducting our surveys, Mercator discovered an increasing use
of the technology to enhance card programs. RAN is typically used to create an
infrastructure that lowers costs and delivers added revenue to prepaid
programs by steering consumers to specific merchants.
Highlights of the report include:
- The total load for all 33 prepaid segments in 2008 (Open & Closed) was
$247.7 billion, a $27.8 billion increase over the $220.27 billion load in 2007
- an increase of 12.4 percent.
- Network Branded solutions had $60.42 billion loaded in 2008, an increase
of 48.6% increase from the previous year.
- Open Loop gift cards continue to penetrate the sale of Closed Loop gift
cards. The 2008 shake-up of the retail industry provided added traction for
this segment, which saw a 54.3 percent increase.
- Social Security, now out of the pilot phase and being fully rolled out,
hit $1.48 billion in loads in 2008, making it a significant new government
program.
- Despite continued challenges to get consumers to reload the products, the
Money & Financial Services (GPR) segment continues to show solid growth with
more companies moving away from bare bone products to more sophisticated
offerings that include features such as lines of credit.
This report contains 29 pages and 13 exhibits.
Segments Covered: Travel, Open Money/Financial Services (GPR), Open Gift
Cards, Money Remittance / P2P, Business Travel, Events & Meetings, Employee &
Partner Incentives, Consumer Incentives, Relocation Card, Campus, In-Store
Gift Cards, Distributed In-Store Gift Cards, TANF, Court Ordered Payments,
Transit (Tolls & Light Rail), State Unemployment, Insurance, Payroll,
Benefits, FSA/HSA Tax Deferred Programs, Purchasing, and Social Security
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