Like much of the world, prepaid is the fastest-growing electronic payment tool in Canada. New research from Mercator Advisory Group, which was previewed at the symposium, showed that prepaid card loads reached CAD$3.1B in 2015. Canada offers consumer-, corporate- and government-funded prepaid cards across 17 current market segments and the top segments are general-purpose reloadable, open-loop prepaid and RAN gift cards.
The CPPO Prepaid Symposium included leaders from Canada and around the globe discussing innovative prepaid technology, the future of identity and KYC, prepaid’s role in Canadian citizens’ financial health and budgeting activities, and how and why corporations should move to electronic payments.
Five takeaways about the Canadian prepaid market from the CPPO Prepaid Symposium:
1. Corporate payments drive prepaid growth in Canada. Unlike the U.S., prepaid has not grown by meeting the needs of the underbanked in Canada. Current growth is anchored in corporate payments. Prepaid products are helping businesses get paid quicker, improving tracking and controls and becoming a more competitive replacement solution for cheques and direct deposits in some situations.
2. Prepaid products provide a great opportunity for businesses to distribute payroll to employees and streamline operations by achieving a 100 percent electronic payroll program. Compared to direct deposit, prepaid products give employees flexible access to their wages with reduced settlement–all via an easy-to-use mobile app that is especially attractive to younger employees. While 99 percent of Canadians have bank accounts, some large banks have eliminated mobile banking and consumers still have to wait until payday or beyond to actually access their money. Prepaid products give businesses a competitive recruiting advantage and are a common-sense tool for on-demand labor or shift workers.
3. Alternative payment tools are on the rise. Payments industry experts are exploring the financial habits of Canadians, how they budget, spend and save and why being “banked” does not equate to financial health. Additionally, rising alternative payments tools - like the Koho Visa Prepaid Card and mobile app - offer transparency, budgeting, enhanced functionality and personalization that help Canadians reach true financial health versus just being banked.
4. Canadian regulators are dealing with the modernization of the Canadian payments system to encompass new digital tools, clearing and settlement times and identity and KYC. There are also tax laws and prepaid regulations in progress that will affect payments companies directly. With so much provincial and federal regulation movement, Canada needs a strong voice for prepaid to ensure that lawmakers understand the nuances of the industry.
5. Canada is providing a model to the world of fintechs and financial institutions working together to successfully launch new and innovative financial tools. During the CPPO Prepaid Symposium and the Payments Canada Summit that proceeded, attendees learned about the active collaboration model that has successfully launched several Canadian prepaid firms.
The 2017 CPPO Prepaid Symposium tapped the minds of top payments and prepaid leaders in Canada to deliver a wealth of takeaways about the great opportunity within the growing Canadian prepaid market. We look forward to doing it again at the 2018 CPPO Prepaid Symposium in May 2018.