PUBLISHER: Packaged Facts | PRODUCT CODE: 1255288
PUBLISHER: Packaged Facts | PRODUCT CODE: 1255288
Prepaid Cards in the US, 8th Edition
The adaptability of prepaid debit cards is manifest in the ever-growing roster of commercial sectors finding they are the right products to solve their payables needs. The cards are more secure than checks, reloadable for ongoing use and create a direct relationship between businesses and customers or employees.
The use case for prepaid debit cards as payroll cards, healthcare spending account tools, corporate expense trackers and government payments disbursement aids continues to strengthen with growth in each of those categories. These prepaid debit cards will represent $373 billion in consumer spending in 2023.
Every segment of prepaid debit cards is growing with a softening in demand only for general purpose reloadable (GPR) cards managed by marketers, like Netspend or Green Dot.
The GPR prepaid debit card has provided an off-ramp from the use of cash-only for the 20% of Americans who are underbanked and provided an on-ramp to digital commerce for Americans who are unbanked or who do not wish to use their own credit or debit cards online. These open-loop prepaid cards, running on the major card networks, have also featured access to savings and money management tools to help create more financial opportunities for their holders.
While consumers will spend almost $100 billion in 2023 using their GPR prepaid debit cards, product growth is being hamstrung by the divergent paths taken by marketers and issuers. Some prepaid card marketers and issuers have found they can generate greater long-term revenue by folding their GPR prepaid card programs into the new account programs of their denovo banks.
These new banks attack GPR prepaid card use by offering no monthly account fees and no overdraft fees. Packaged Facts surveys have found that bank account fees are anathema to GPR cardholders so these fee-free pitches may well resonate with them.
For fintechs and issuers, bank charters facilitate access to low-cost funds (through deposits) which they pair with high-value services including automatic savings and savings accounts paying extremely high rates of interest (e.g., Chime is paying 2% on a traditional savings account). However, these new operators are banks which means that consumer unable or unwilling to participate in the banking system will continue to use GPR cards.
Packaged Facts estimates that U.S. consumers will spend $468 billion with their prepaid debit cards in 2023, up from $377 billion in 2020 and $302 billion in 2016. Another $284 billion will be spent on B2B prepaid cards.
The new "Prepaid Cards in the US, 8th Edition" market research report presents a deeply detailed analysis of the opportunities and challenges confronting the companies participating in the prepaid card segment, whether they be card managers, marketers or issuers. Forecasts for each of the major prepaid card categories are also included.
Table of Content
CHAPTER 1: EXECUTIVE SUMMARY
REPORT SCOPE
REPORT SUMMARY
Market Size and Forecast
Growth Opportunity
Coattails of Pandemic Payment Changes Continue to Affect the Use of Cash
Digital Channel for Card Acquisition and Purchasing
Table 1-1. Mobile is the Lead Channel for E-commerce in the US, 2019 - 2022 (percent)
App-Based Digital Banking Threatens GPR Prepaid Industry
Broad Characteristics of the Payments Industry
Pay Before - Prepaid
Pay Now - Cash and Pin Debit
Pay Later - Consumer Credit
Status of Traditional Consumer Payments
- In 2022, Credit Card Outstanding Finally Surpassed Those of
Longer Term Payment Trends Accelerated
Figure 1-1. US Citizens Using Cash in a Typical Week, 2015 - 2022 (percent)
Longer-Term Payment Trends Unabated
Figure 1-2. Consumers Adopting Payment Cards and Online Payment Accounts, 2016 - 2021 (% share)
Government GPR Programs
Figure 1-3. Funds Disbursed Through Government Administered, General Use Prepaid Cards, 2011 - 2021 (billion dollars)
US Bank's ReliaCard Mobile App
Figure 1-4. US Bank ReliaCard Mobile App Examples
Payroll Cards
GPR Rewards
Kroger Rewards Prepaid Debit Card
The PayPal Prepaid Mastercard
Serve American Express Prepaid Debit Account
Prepaid Card Use Trends
Prepaid Card Marketer and Issuer Strategies
The Bancorp, Inc.
Table 1-2. The Bancorp, Inc. Non-Interest Income, 2019 - 2022 (thousand dollars)
Green Dot Corporation
Table 1-3. Green Dot Operating Revenue by Segment, 2019 - 2022 (thousand dollars)
Walmart MoneyCard
The Bottom Line
Figure 1-5. Green Dot Consumer Services Segment Revenues, 2021 - 2022 (million dollars)
Figure 1-6. Green Dot Consumer Services Segment, Active Accounts, 2021 - 2022 (million accounts)
Figure 1-7. Green Dot Money Movement Services Segment Revenues, 2021 - 2022 (million dollars)
Pathward Financial
Prepaid Card Programs
CHAPTER 2: MARKET SIZE AND FORECAST
US PREPAID CARD MARKET SIZE AND FORECAST
- Payment Value to Reach $468 Billion in
Table 2-1. Market Size, US Prepaid Cards, 2019 - 2023 (billion dollars)
2024 Payment Value Forecasted at $475.3 billion
Open-Loop and Closed-Look Prepaid Card Market Size, by Card Type
Table 2-2 US Prepaid Card Market Size by Type, 2023 (billion dollars)
GROWTH OPPORTUNITY
Sideways/Down: Consumer General-Purpose Reloadable Prepaid Cards
Long-Term Incremental Growth: Gift Cards
Strong Near-Term/Very Modest Long-Term Growth: Government Prepaid Cards
Moderate-to-Strong Growth: Healthcare Cards
Moderate Growth: Payroll Cards
Strong Growth: B2B Payments
CHAPTER 3: CHALLENGES AND OPPORTUNITIES
GENERAL-PURPOSE PREPAID CARD SPEND TO TAKE DISCRETIONARY & NON-DISCRETIONARY HIT
Table 3-1. Transaction and Deposit Services, Estimated Fees, and Reported Incidence of Product Use, 2020 - 2021 (billion dollars and % incidence rate)
Near- and Long-Term: Prepaid Cardholder Cash Preferences to Give Way Slowly
Table 3-2 Share of Payments Use for In-Person Payments, 2016 - 2021 (percent)
Near- and Long-Term: In-Store Purchases Pressured and Online Purchases Benefit
Near- and Long-Term: In-Store Sales Decline
Near- and Long-Term: Interchange Wins
Long-Term Winner: Payroll Cards
Long-Term Loser: Prepaid Tax Refund Cards
APP-BASED DIGITAL BANKING THREATENS GPR PREPAID INDUSTRY
The Good: Prepaid Cards Adapt to Digital Banking World
The Spoiler? Fintech Marketers Undercut on Price and Deliver on Features
In Focus: Chime
Potentially and Realistically Free to Use
- Table 3-3. Chime Account Fees,
Savings Innovation
The Big Picture
The Consequences of Newest Iteration of Neobanks
In Focus: SoFi
Figure 3-1. SoFi Mobile App Example
Multiple Savings Vaults Allow for Multiple Savings Goals
SoFi's Banking Charter Fuels BaaS Growth
SoFi and Samsung
CHAPTER 4: PREPAID CARD USE TRENDS
PANDEMIC PREPAID CARD DISTRIBUTION EFFECT LINGERS
Figure 4-1. "Do You Have Any Reloadable, General Use Prepaid Cards?", 2023 (% respondents)
- GENERAL-PURPOSE PREPAID CARD USE TRENDS:
A Note About the Data
Table 4-1 General-Purpose Prepaid Card Use, 2015 - 2021 (reloadable vs. non-reloadable)
Lower-Income Adults Remain a Sweet Spot
Table 4-2. General-Purpose Prepaid Card Use: By Age Bracket and HH Income Bracket, 2015 - 2023 (% of respondents)
CHAPTER 5: GENERAL-PURPOSE RELOADABLE PREPAID CARD FEATURE AND USE RATIONALES
GENERAL-PURPOSE RELOADABLE PREPAID CARD FEATURES USED
Table 5-1. General-Purpose Reloadable Prepaid Card Features Used, 2020 vs. 2023 (percent of adults using prepaid cards)
Money Movement and Payment Features: Demographic Analysis
Table 5-2. General-Purpose Reloadable Prepaid Card Payment Features Used by Age, 2023 (% respondents)
REASONS FOR CHOOSING RELOADABLE PREPAID CARDS
Customer Service and Online Shopping Drive Card Selection
Table 5-3. Most Important Features of Prepaid Cards, 2023 (% respondents)
Influence of Direct Deposit on Card Use
Table 5-4. Prepaid Card Reload, Monthly Fee, Withdrawal, and Purchase Behavior, 2018, 2020, 2023 (% respondents)
Table 5-5. Prepaid Card Reload, Monthly Fee, Withdrawal, and Purchase Behavior by Income Bracket, 2020 (% respondents 18-34 years old vs. 35+ years old)
CHAPTER 6: PREPAID CARD MARKETER & ISSUER STRATEGIES
ISSUER ASSET SIZE DRIVES PREPAID CARD MARKETER CHOICE
Note: Axos Financial
PATHWARD
Meta Bank Rebranded as Pathward
Pathward Prepaid Card Programs
- Table 6-1 Pathward Financial: General-Purpose Reloadable Prepaid Card Program Brands, Managers, and Networks,
Figure 6-1. H&R Block Emerald Card Example
The Tax Man Cometh: H&R Block Prepaid Emerald Card and Related Products
The Emerald Card Leverages Ancillary Products to Grow
Spruce Mobile Banking Offered Through Pathward
H&R Block Moving Prepaid Cardholders to its New Banking App, Spruce
Table 6-2. H&R Block Revenue: Total, Refund Transfer, Emerald Card, and Emerald Advance, 2019-2022 (million dollars and % change)
THE BANCORP BANK
Specialty Lender and Prepaid Card Leader
Strong 2022 Growth Bring Bancorp to 150 Million Active Cards
Table 6-3. The Bancorp, Inc. Non-Interest Income, 2019-2022 (thousand dollars)
Future Growth is Payments and Partners
- Table 6-4. The Bancorp Bank: General-Purpose, Reloadable Prepaid Card Program Brands, Managers, Networks, and Card Types,
But Non-Prepaid Debit Fintech Partnerships Drive Growth
- Table 6-5. The Bancorp Bank: Non-Prepaid Debit Fintech Partnerships by Name, Network Brand, and Launch Date, 2012 -
Healthcare a Bright Spot
GREEN DOT CORPORATION
Figure 6-2. Green Dot Products: Features & Benefits,
- Table 6-6. Green Dot Consumer Product Features and Platform Capabilities,
Market Segments
Table 6-7. Green Dot operating Revenue by Segment, 2019 - 2022 (thousand dollars)
Table 6-8. Green Dot Active Account, Gross Dollar Volume, and Purchase Volume, 2021 - Q3 2022 (million accounts and million dollars)
Deposit Account Programs
Key Program Brands
- Table 6-9 Green Dot General-Purpose Reloadable Prepaid Card Program Brands and Networks,
- Table 6-10 Green Dot General-Purpose Reloadable Prepaid Card Program Management-Only Brands and Networks,
Key Relationship: Walmart
The Walmart MoneyCard
Savings, Budgeting, and Direct Deposit Features
Key Competitive Threat: Low-Cost App-Based Digital Banking
Key New Product: Unlimited by Green Dot
Figure 6-3. Green Dot Unlimited Example
Key Service: BaaS
Apple Cash
Uber
Intuit
Wealthfront
NETSPEND
Overview
- Table 6-11. Green Dot General-Purpose Reloadable Prepaid Card Program Brands and Networks
APPENDIX
METHODOLOGY
ABBREVIATIONS
Table A-1. Report Abbreviations
TERMS AND DEFINITIONS
