Abstract
Despite a poor fourth quarter that began to feel the impact of today' s
recession, the growth of the prepaid industry in 2008 continued to show great
vitality. When the prepaid market is evaluated on a segment-by-segment basis,
it becomes clear that there are far more markets that are expanding or
thriving in this economy than there are segments experiencing negative growth.
The 6th Annual Network Branded Prepaid Market Assessment is the first of our
annual trilogy of closely followed prepaid benchmark reports (Open, Closed,
Forecast) that provide a thorough analysis and documentation of the growth and
development of the Prepaid Industry. It benchmarks the spending, growth, and
market dynamics for all Network Branded Prepaid Solutions. This includes a
review of the dollars loaded on Network Branded Prepaid products in 22
different market segments.
This year' s network branded report is unique because Mercator received data
from our benchmark surveys and interviews with processors and issuers that
represent a majority of the Open Loop market. The additional information we
gained provided greater transparency regarding the development of the market
and also enabled more accurate estimation of market size data at the segment
level. This permitted Mercator to adjust its historical data to better reflect
the robust growth of the open prepaid marketplace. These adjustments provide
the fairest and most accurate possible assessment of the scale of the Open
Loop market and support our continued goal of delivering to Mercator Advisory
Group members the only consistent data set that measures the growth and
dynamics of the prepaid industry.
"Mercator Advisory Group believes the prepaid industry will continue to show
growth in 2009. However, being in the right channel with the right product is
becoming critical to the growth of prepaid products and represents a
significant volume opportunity for issuers," Tim Sloane, Vice President of
Client Services and Director of Mercator Advisory Group' s Prepaid Advisory
Service and author of the report comments. "It is clear to Mercator that no
other payments market is riding out the current economic downturn as
effectively as prepaid and I can' t think on any better payments market to be
in during a recession."
The 6th Annual Network Branded Prepaid Market Assessment also includes a
special section on the utilization of Restricted Authorization Network (RAN)
technology. In conducting our surveys, Mercator discovered an increasing use
of the technology to enhance card programs. RAN is typically used to create an
infrastructure that lowers costs and delivers added revenue to prepaid
programs by steering consumers to specific merchants.
Highlights of the report include:
- The total load for all 33 prepaid segments in 2008 (Open & Closed) was
$247.7 billion, a $27.8 billion increase over the $220.27 billion load in 2007
- an increase of 12.4 percent.
- Network Branded solutions had $60.42 billion loaded in 2008, an increase
of 48.6% increase from the previous year.
- Open Loop gift cards continue to penetrate the sale of Closed Loop gift
cards. The 2008 shake-up of the retail industry provided added traction for
this segment, which saw a 54.3 percent increase.
- Social Security, now out of the pilot phase and being fully rolled out,
hit $1.48 billion in loads in 2008, making it a significant new government
program.
- Despite continued challenges to get consumers to reload the products, the
Money & Financial Services (GPR) segment continues to show solid growth with
more companies moving away from bare bone products to more sophisticated
offerings that include features such as lines of credit.
This report contains 29 pages and 13 exhibits.
Segments Covered: Travel, Open Money/Financial Services (GPR), Open Gift
Cards, Money Remittance / P2P, Business Travel, Events & Meetings, Employee &
Partner Incentives, Consumer Incentives, Relocation Card, Campus, In-Store
Gift Cards, Distributed In-Store Gift Cards, TANF, Court Ordered Payments,
Transit (Tolls & Light Rail), State Unemployment, Insurance, Payroll,
Benefits, FSA/HSA Tax Deferred Programs, Purchasing, and Social Security
Table of Contents
1. INTRODUCTION 3
- TOTAL, NETWORK BRANDED, AND CLOSED-LOOP PREPAID MARKET OVERVIEW 5
- THE 33 PREPAID SEGMENTS AND OPEN VS. CLOSED LOADING
- A GUIDE TO THE NETWORK BRANDED BENCHMARK
2. CASH ACCESS CATEGORY (ADJUSTED)
- TRAVEL CARD SEGMENT
- MONEY & FINANCIAL SERVICES (ADJUSTED)
- NETWORK BRANDED GIFT CARDS
- REMITTANCE & P2P SEGMENT
3. BUSINESS TIME & EXPENSE CATEGORY
- BUSINESS TRAVEL (ADJUSTED)
- EVENTS & MEETINGS SEGMENT
- EMPLOYEE & PARTNER INCENTIVES SEGMENT
- CONSUMER INCENTIVES SEGMENT
- RELOCATION CARD SEGMENT
4. CAMPUS CATEGORY / SEGMENT
5. STORE GIFT CARDS CATEGORY IMPLEMENTED ON OPEN NETWORKS
6. GOVERNMENT CATEGORY
- SOCIAL SECURITY
- TANF
- COURT ORDERED PAYMENTS SEGMENT
- TRANSIT SEGMENT
- STATE UNEMPLOYMENT SEGMENT
- INSURANCE / EMERGENCY DISBURSEMENT CATEGORY
7. PAYROLL & BENEFITS CATEGORY
- PAYROLL
- BENEFITS
- FSA/HSA (ADJUSTED)
8. CONCLUSION
9. APPENDIX A - RESTRICTED AUTHORIZATION NETWORKS AND MFDNS
List of Exhibits
- FIGURE 1: PERFORMANCE OF OPEN AND CLOSED MARKET SEGMENTS 2004 - 2008 5
- FIGURE 2: PERFORMANCE OF CLOSED-LOOP PREPAID 2004 - 2008
- FIGURE 3: US OPEN PREPAID MARKET SIZE & GROWTH IN US DOLLARS (BILLIONS)
- FIGURE 4: THE 12 CATEGORIES AND 33 PREPAID MARKET SEGMENTS THAT COMPRISE
PREPAID
- FIGURE 5: TOTAL DOLLARS LOADED ON ALL FOUR CASH ACCESS SEGMENTS
- FIGURE 6: DOLLARS LOADED ON NETWORK BRANDED CARDS - BUSINESS T&E SEGMENTS
- FIGURE 7: COMPARING BUSINESS SPEND ON OPEN VS. CLOSED INCENTIVE CARDS
- FIGURE 8: CAMPUS LOADING ON NETWORK BRANDED CARD SOLUTIONS
- FIGURE 9: IN-STORE CATEGORY LOADING ON NETWORK BRANDED CARD SOLUTIONS
- FIGURE 10: GOVERNMENT LOADING ON OPEN CARD SOLUTIONS
- FIGURE 11: TOTAL SPENDING IN INSURANCE SEGMENT
- FIGURE 12: TOTAL SPENDING IN PAYROLL & BENEFITS SEGMENT
- FIGURE 13: TOTAL SPENDING IN PURCHASING SEGMENT
