The financial payments sector has experienced rapid growth. New payment methods have been adopted and enhanced by financial service providers, as we increasingly move towards a global cashless society.
Traditional financial IT vendors and payment solution providers are learning to adapt. This will include companies who operate in the prepaid cards marketplace.
Prepaid cards are a well-established technology, and part of the evolving payments market. Even so, there have been many new developments and transitions that create opportunities for growth.
Digital Prepaid Card Market Development
According to the latest worldwide market study by Juniper Research, the value of digital prepaid card transactions will exceed $3.98 trillion globally by 2028 -- that's up from $528.7 billion in 2023.
By 2028, the value of digital prepaid card transactions will represent just under 60 percent of total prepaid cards spend, up from 15 percent in 2023, demonstrating the rapid growth of Fintech solutions.
According to the Juniper assessment, it also reflects the greater use of digitally issued open-loop prepaid cards as loyalty rewards, replacing more traditional gift cards.
Open-loop systems, where payments can be made anywhere cards are accepted, will lead to an increasingly blurred line between prepaid cards and gift cards.
This will make the much wider loyalty market increasingly addressable for prepaid card vendors, compared with the closed-loop system, where payments can only be made at specific vendors.
A digital prepaid card is a virtual form of a prepaid card that exists entirely in digital format and can be accessed through a mobile software app or online platform.
Notably, Juniper's analysts forecast the number of prepaid cards issued digitally is expected to surpass 940 million by 2028.
Prepaid cards are highly appealing to the un-banked populations across the globe, offering the functionality of payment cards without the need of an account with a financial institution.
In fact, financial inclusion remains a key issue for the millions of un-banked and under-banked.
However, advances in automation, smartphone availability, and the ease with which vendors can now issue prepaid cards digitally and instantly, mean that financial inclusion is within near reach.
Outlook for Digital Prepaid Card Applications Growth
"Financial inclusion use cases can significantly accelerate the success of prepaid cards, but vendors must keep the costs very low to ensure prepaid cards remain competitive for these use cases versus mobile money apps or central bank digital currencies," said Nick Maynard, VP of research at Juniper Research.