Canadian Prepaid Payments Industry Increases Financial Services Innovation and Choice

TORONTO, June 9, 2021: The Canadian Prepaid Providers Organization (CPPO), the collective voice of the open-loop prepaid payments industry in Canada, today released the second comprehensive analysis of the Canadian prepaid landscape, a segment which continues to drive payments innovation in Canada. The Canadian Prepaid Ecosystem Report 2021, produced in collaboration with FinTech Growth Syndicate (FGS), is an analysis of 90 companies operating in the Canadian open-loop prepaid ecosystem to develop a deeper understanding of the innovative offerings, market forces and trends, as well as to build a heatmap of all players in the Canadian prepaid space.

Prepaid cards have allowed for the development and introduction of numerous innovative use cases to the Canadian ecosystem, for both consumer and small business segments. The use cases that have gained prominence within the market employ a wide range of value propositions while laying the foundation for further innovative offerings to be developed and brought to market.

According to The Canadian Prepaid Ecosystem Report 2021, Canada is starting to see early movers offering integrated consumer ecosystems that represent the opportunity to become super apps enabled by payments. Non-banks have also been able to launch banking for their customers as an alternative to credit, and capture their spending data for further innovation in predictive services.

“Among the many benefits of the growing prepaid industry in Canada, prepaid offers increased financial inclusion to our essential and growing gig economy, while also offering more choice and convenience to all Canadians,” said Jennifer Tramontana, Co-Founder and Executive Director, CPPO. “In support of post-pandemic economic recovery, we anticipate that prepaid usage will ramp up quickly over the next few years in Canada. The CPPO is excited to continue its market research initiatives to further promote the evolution of the Canadian payments industry.”

As consumer preferences shift towards digital and contactless payment methods long-term, prepaid provides both incumbents and FinTech entrants with an avenue to introduce new products and services, while still adhering to stringent regulatory requirements.

Key report findings:

  • There are 90 companies in the prepaid market in Canada, an increase of 21 percent since 2020
  • Companies in prepaid space constitute about 1/6th of all paytechs in Canada and majority of those are new FinTech entrants, the same percentage as 2020
  • Most of the new company launches and innovations are seen in Challenger Bank, Program Manager and Service Provider segments. Challenger Banks have the highest percentage of the new FinTech entrants
  • 38 percent of the Challenger Banks in Canada offer prepaid cards
  • Out of the total 90 prepaid value chain players, 50 are headquartered in Canada and 60 percent of those 50 are based out of Ontario

Top prepaid market trends highlighted in the report:

  • Kids/Teen banking is gaining traction in Canada to allow parents to easily give money to their children, track children’s spending, set tasks that need to be completed for earning allowance, and help kids learn about savings
  • Real time/early earnings access continues to grow in Canada and globally, by transferring payment to a prepaid card which can be used immediately
  • Rewards moving away from traditional loyalty programs, including immediately accessible cashback and personalized discounts
  • Cryptocurrency marketplaces are launching prepaid cards for easier funding, withdrawing, and spending
  • Emerging consumer and SME ecosystems are creating competition in the space, enabling early movers to serve a larger portion of consumer financial needs, all within a singular digital platform or super app

“The market insights included in the report showcase how prepaid is enabling innovation and competition in the space, thus playing a key role in Canada’s digital payments and banking transformation,” said Surinderjit Kaur Bhatti, Managing Director, FGS. “We are proud to unveil this year’s prepaid report at the CPPO’s 2021 Prepaid Symposium to further educate on how a true digital payments ecosystem can offer increased access and choice for all Canadian consumers and businesses.”

Download the Presentation (The full Canadian Prepaid Ecosystem Report 2021 is only available to CPPO Members):

FGSxCPPO – Canadian Prepaid Ecosystem Research Presentation