CPPO Releases First-Ever Canadian Prepaid Heatmap as Industry Reaches Almost $5B in Loads

Prepaid now accounts for 1/6th of all paytech companies, with the industry recording growth in all tracked segments, including bank account alternatives, incentives and gift cards

The Canadian Prepaid Providers Organization (CPPO), the collective voice of the open-loop prepaid payments industry in Canada, today released the first comprehensive analysis of the Canadian prepaid landscape, a significant segment of Canada’s growing fintech sector. In collaboration with FinTech Growth Syndicate(FGS), The Canadian Prepaid Ecosystem 2020 captures and analyzes 74 major players in the country’s growing prepaid industry, including 30 incumbents and 35 new entrants.

Prepaid is increasingly being harnessed by incumbents and new fintech entrants as a platform to introduce new and innovative digital banking and payment products and services. According to The Canadian Open-Loop Prepaid Market 2019, an annual benchmark study commissioned by the CPPO and conducted by Mercator Advisory Group, also released today, $4.8 billion in total dollars were loaded onto open-loop prepaid in 2019 across corporate, government and consumer-funded cards, a 12 per cent increase from 2018. General Purpose Reloadable (GPR) cards—used as a bank account alternative—recorded 10 per cent growth in the past year, driven by new fintech companies offering digital banking and payment solutions on the prepaid platform.

“The prepaid heatmap is the first comprehensive dive into this industry and shows how prepaid is a significant payments sector in Canada with a depth of issuers, program managers, service providers and new fintech entrants embracing innovation in digital banking and payments,” said Jennifer Tramontana, co-founder and executive director of the CPPO. “Prepaid is driving market innovation with products that most financial institutions don’t offer, such as real-time pay for gig workers and expense management for SMEs. This success should be embraced and accelerated through an appropriate regulatory environment so Canada can be a global leader in digital banking transformation.”

“The Canadian Fintech ecosystem is constantly evolving and its impacts on the prepaid space will only continue to grow,” said Sue Britton, founder and CEO of FGS. “New entrants and services such as Challenger Banks, Payroll on Demand, and the Gig Economy will be offering increased choices and benefits to Canadian consumers and businesses where a prepaid card will be the primary payment method. That is why we were excited to work with the CPPO to identify the key players in the prepaid space and deliver a heatmap that enables existing and new members to visualize and analyze through an intuitive interactive tool.”

Key report findings:

  • There are 74 companies in the prepaid market in Canada.
  • Companies in prepaid space constitute about 1/6th of all paytechs in Canada and majority of those are new fintech entrants.
  • Most of the new company launches and innovations are seen in Challenger Bank, Program Manager and Service Provider segments.
  • About half of the prepaid companies operating in Canada are headquartered in other countries and a majority of these non-Canadian companies are headquartered in the United States.

Top market trends highlighted in the report:

  • Canada’s Challenger Banks continue to gain traction, with over 2 million accounts to date.
  • Prepaid is enabling real-time pay for gig workers.
  • SME solutions by Challenger Banks provide an immense market opportunity for Canadian players. While there are Canadian SME Challenger Banks launching in the US, they are yet to launch in Canada.
  • Fintech companies are harnessing the power of Digital ID firms to speed through the KYC/AML compliance when onboarding open-loop prepaid cards.
  • Prepaid simplifying business processes such as automated insurance claim adjudication and employee benefit payments.
  • Amid the COVID-19 crisis, governments and charities all over the world turned to prepaid for an immediate, inclusive means to distribute benefits and emergency funds. The level of partnership between the Canadian government, whether at the provincial or federal level, and fintech companies in the prepaid ecosystem aretrailing other countries.

To access a summary of the findings, please visit Payments Futures, a digital thought leadership hub for original content about the ways in which innovation, technology and prepaid are transforming payments in Canada.

Access to The Canadian Prepaid Ecosystem 2020 heatmap and 40-page analysis report is available to CPPO members. Please contact info@cppo.ca for information on membership and access to the entire report.

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