4th Annual Prepaid Closed Loop Market Assessment

Abstract

This report is the second of three reports that provides a thorough analysis of the growth and development of the Prepaid Industry. It documents the spending, growth, and market dynamics for all Closed Loop Prepaid Solutions in 12 Categories and 33 Market Segments from 2003 through 2006.

This report provides an overview of spending in each category and delivers details on the dollars loaded in each segment, the growth over the last four years, and the market dynamics that impact each segment. This report is unique in that it clearly defines the 33 market segments that are measured and delivers a historical perspective on these markets using data that goes back to 2003 - delivering the only consistent data set that measures the growth and dynamics of the prepaid industry over a period of four years.

This report finds that:

• $171.18 Billion was loaded on Closed Loop Prepaid Solutions in 2006, an increase of 13.9% over the 2005 spend of $160.29.
• Closed Loop Gift Cards used for Consumer Incentives grew by 271% while campuses across the nation increased the load placed on campus cards by almost 8%.
• The Digital Content Category had a great 2006, growing overall by $1.49 Billion. This represented a growth of 37% for Digital Media, 35% for Net Phones, and 45% for Games and Ring Tones.
• The In-Store Gift Card market segment grew by $6.98 Billion while the Distributed Gift Card market segment, driven by the rise in prepaid malls, grew a total of more than 87%. The use of Closed Loop Prepaid products to support Employee Benefits grew by 9%. The Petroleum Industry, late to the prepaid market, finally introduced gift cards and established a presence in their own stores. The market rewarded them by buying just over $1 Billion in cards - yet this industry remains a laggard when it comes to embracing distributed gift cards, leaving a huge opportunity for Network Branded cards on the table.
• The Telecommunications Category also performed well in 2006, posting a 22% gain in Prepaid Mobile and 7% for Prepaid Long Distance.