Payments expert, Juniper Research has released a new study. It found that the value of digital prepaid card transactions will exceed $3.98trillion globally by 2028, up from $528.7billion in 2023.
Open-loop Prepaid Cards Drive Adoption
By 2028, the value of digital prepaid card transactions will represent just under 60 per cent of total prepaid cards spend. This is up from 15 per cent in 2023; demonstrating the rapid growth of digitisation. 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. Especially when 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. It exists entirely in digital format and can be accessed through a mobile app or online platform.
In its new report, Prepaid Cards Market: Trends, Strategies & Market Forecasts 2023-2028, Juniper Research found that the number of prepaid cards issued digitally is expected to surpass 940 million by 2028.
Furthermore, prepaid cards are highly appealing to the unbanked. They offer the functionality of payment cards without the need for an account with a financial institution.
Financial inclusion remains a key issue for the millions of unbanked and underbanked across the world. Nonetheless, it is within near reach of a growing number of users. This is largely due to advances in digitalisation, smartphone availability, and the ease with which vendors can now issue prepaid cards digitally and instantly.
Research co-author, Nick Maynard explained: “Financial inclusion use cases can significantly accelerate the success of prepaid cards. However, vendors must keep the costs very low to ensure prepaid cards remain competitive for these use cases. Especially versus mobile money apps or central bank digital currencies.”