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Government disbursements will become the largest prepaid category in terms of dollars loaded onto cards, Tim Sloane, principal analyst at Mercator Advisory Group Inc., tells CardLine in an e-mail. Social Security payments likely will become the largest single open-loop segment in the next two to three years, Sloane says. Based in Maynard, Mass., Mercator released its fifth annual Network Branded Prepaid Market Assessment this week. It said that the U.S. Department of Treasury loaded $10 million onto open-loop prepaid cards as Social Security payments in 2007. The prepaid market grew 10.3% from $197.9 billion in dollars loaded onto cards in 2006 to $218.3 billion in 2007, the report says. The volume of funds loaded onto open-loop cards grew from $26.76 billion in 2006 to $38.66 billion in 2007, an increase of 44.5% , the report says. The volume of funds loaded onto closed-loop cards grew by 4.9% from $171.2 billion in 2006, to $179.6 billion in 2007. The closed-loop volume grew more slowly than open-loop volume because closed-loop cards have been around longer, thus maintaining a double-digit growth rate is more difficult, Sloane says. Closed-loop cards can be used only in a limited number of places, so they are less attractive to consumers than open-loop cards, Sloane says.
