Study: Canadian Open-Loop Prepaid Market Hits $3.1 Billion in 2015

Canadian Prepaid Providers Organization (CPPO) releases data from first-ever Open-Loop Prepaid Market Study in Canada

Toronto, ON – June 15, 2016 – The Canadian Prepaid Providers Organization (CPPO) today released a new benchmark study entitled, Canadian Open-Loop Prepaid Market: 2015, that reveals the open-loop prepaid card market in Canada reached CAD$ 3.1 billion in total dollars loaded onto cards. The Canadian open-loop prepaid market has eight active segments compared to 17 in the U.S., showing significant growth opportunity for prepaid programs in Canada. The Canadian market is expected to follow U.S. trends, where open-loop prepaid cards are the fastest growing form of electronic payment. Mercator Advisory Group reported that the total load value in the U.S. reached USD$ 264 billion in 2014.

Mercator Advisory Group, the leading payments analyst firm in North America, conducted the study on behalf of the CPPO and it is the first of its kind to examine the size of the Canadian open-loop prepaid market. The firm has been measuring the size of the prepaid market in the U.S. since 2004 and has now applied its benchmarking process to the Canadian open-loop market.

Key findings from the study revealed that:

  • General purpose reloadable card loads total CAD$ 1.84 billion (the average load per card is CAD$ 2,016)
  • Open-loop gift card loads total CAD$ 1.03 billion (the average load per card is CAD$ 83)
  • The average load onto consumer funded prepaid cards is CAD$ 218
  • The average load onto corporate funded prepaid cards is CAD$ 125
  • The average load onto corporate funded cards used for consumer and employee/partner incentives is CAD$ 110

“People in the U.S. have used open-loop prepaid cards for more than a decade to reduce debt and better manage their budgets and we expect Canadians to embrace these products in a similar way,” said Ben Jackson, Director, Prepaid Advisory Service, Mercator Advisory Group. “We predict that open-loop prepaid will grow as individuals, businesses, and governments use these cards to solve real pain points and increase efficiencies in the Canadian market and this study shows that great potential.”

In Canada, the average load per general purpose reloadable card was CAD$ 2,016 in 2015. In the U.S. the average load was USD$ 2,515 in 2014, the latest year data that was available. Additionally, Canadians reported a higher level of satisfaction (73 per cent) with reloadable open-loop prepaid cards than Americans, where there is a 70 per cent satisfaction rate with open-loop prepaid cards. Knowing that Canadians are looking for secure and convenient ways to manage their finances, budget and reduce debt, prepaid products are forecasted to grow in popularity as an effective financial tool.

“This data confirms that open-loop prepaid is a significant payment tool in Canada that effectively fills the gaps in the current payment system through strong collaborations with financial institutions and the Fintech community,” said David Eason, Chairman, CPPO. “This research is being launched in conjunction with the ACT Cardware and CPA Payments Panorama conferences, providing the entire Canadian payments community with the opportunity to learn more about the growing market.”

Employers are also benefiting from the business uses of prepaid cards, including: corporate disbursements, payroll, healthcare disbursements, disaster relief, government disbursements, student cards and employee incentive programs. Benefits Canada recently revealed that 60 per cent of Canadians say their employer’s rewards program does not motivate them to do a good job and employees prefer prepaid cards 16 times more than receiving company-branded merchandise for a job well done. In addition, open-loop prepaid cards lessen company expenses by reducing the number of cheques in circulation.

About Open-Loop Prepaid Cards
Open-loop prepaid cards can be used anywhere the card network (American Express, MasterCard and Visa) is accepted, including online. The cards look and function like traditional credit and debit cards at the point-of-sale and offer the same fraud and loss protections offered by the card network with a significant difference— they access a set amount of funds that have been pre-loaded by a consumer, by a government or by a business. Closed-loop prepaid cards do not typically have a network logo and can only be used at specific retail location.

About The Canadian Prepaid Providers Organization (CPPO)
The CPPO is a not-for-profit organization and the collective voice of the open-loop prepaid payments industry in Canada. It is the only Association solely focused on this growing industry and is supported by major financial institutions, card networks and other industry players. The CPPO is focused on awareness and education so that consumers and businesses can have the best experience with these popular products. Members of this not-for-profit organization include American Express (Amex Bank of Canada), Bank of Montreal, Berkeley Payment Solutions, Home Trust Company, Incomm Canada, Norton Rose Fullbright, MasterCard Canada, Peoples Trust Company, RBC, Scotiabank and The Fletcher Group LLC. For further information, visit www.cppo.ca. Connect with CPPO on Twitter and LinkedIn.

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 PaymentsJournal.com.