Skip to main content

Prepaid Card Transactions Reach $3.98 Trillion

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.

That said, I believe a major advantage of prepaid cards is the security of personal data it offers. General prepaid cards provide users with a method of replacing card details without incurring charges from their bank or credit card providers.

In most cases, a prepaid card can be used without any specific banking data, user data or financial history of the user. As such, any theft of information is likely to be minimal which makes the card very secure from a consumer privacy perspective.

Popular posts from this blog

Global Rise of Domestic Payment Ecosystems

Alternative Payment Methods (APMs) – comprising digital wallets, instant payments, and QR payment systems – are experiencing explosive growth that's reshaping the global financial services marketplace. According to the latest worldwide market study by ABI Research , the combined global transaction value for APMs is projected to reach $142 trillion by 2030. What's particularly fascinating is the underlying driver behind this trend: a growing desire for financial sovereignty, with nations developing domestic payment ecosystems rather than remaining dependent on international financial networks. Payment Ecosystem Market Development In 2024, approximately 45 percent of the global population used digital wallets – a remarkable adoption rate for a technology that barely existed a decade ago. China leads this transition, with 95 percent of its population using WeChat's payment functionality. WeChat exemplifies the "super app" phenomenon, where payment capabilities are in...