Closed-loop prepaid cards for digital content, government services and telecommunications helped grow the sector in 2009, to $205.4 billion in funds loaded into card accounts, up 7% from $191.8 billion the previous year, according to a report from the Mercator Advisory Group.
Overall, the closed-loop market represents 62% of all account loads. Open-loop cards accounted for 38%, with loads totaling $124.6 billion, Mercatur says.
The digital media segment, which includes Apple Inc. iTunes cards and other music and prepaid video products, helped grow the digital-content category to $9.29 billion in loaded funds, up 15% from 8.08 billion in 2008.
Digital media accounted for $5.6 billion, up 19.5% from 4.7 billion, despite a poor 2009 holiday season, Mercator notes.
Government-nutrition programs such as the Special Supplemental Nutrition Program for Women, Infants and Children, commonly referred to as WIC, increased 18.5%, to $45.9 billion from $38.7 billion in 2008. Mercatur attributes the increase to the down economy and to more consumers meeting a specific program’s guidelines.
The telecommunication category, which includes prepaid mobile and long-distance cards, increased 10.9%, to $24.4 billion from $22 billion in 2008.
Not all segments experienced growth, however.
Closed-loop gift cards companies use for consumer incentives fell 8.3% to $4.4 billion in funds loaded from $4.8 billion in 2008.
“It appears companies are preferring open-loop cards” for consumer incentives, says Ben Jackson, senior analyst with Mercator’s prepaid advisory group.
The gift card market segment increased 3.2%, to $70.6 billion from $68.4 billion in 2008. That segment includes both open- and closed-loop gift cards
Growth in the gift card market has slowed, but “it’s still a big segment,” Jackson says.
Merchants will seek new ways to market closed-loop cards, especially as virtual cards and mobile integration begin to gain more traction, he adds.
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