The prepaid card market is in flux, and the market share of various card types will be shuffled in the next few years as use cases evolve, according to the latest research from Aite Group. Government cards, which still account for the largest chunk of market share in the prepaid industry ($148 billion), are one category that will see only incremental changes from the few federal benefit programs and many state governments using prepaid cards to disburse funds.
Gift cards—including closed-loop retail cards and open-loop prepaid gift cards used for rewards and incentives—comprise more than a third of the overall market, and the category is poised for change. While gift cards as a whole are growing, various studies indicate digital versions of these cards will begin to displace physical cards as mobile technology advances.
Payroll cards and health care prepaid cards are both predicted to expand modestly, and reloadable prepaid cards are on track to reach $59 billion in total dollar volume by 2020, as the lines blur between payment mechanisms for corporate payouts, campus purchases and wearables, Aite said. Transit and toll payments account for about 4% of the prepaid card market, and growth will be modest as more transit systems welcome open-loop contactless in the next few years.