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The amount of funds loaded into closed-loop prepaid card accounts in 2008 was $187.2 billion, up 4.2% compared with $179.6 billion in 2007, Mercator Advisory Group wrote in a report published last week. The strongest growth in the prepaid sector, however, is occurring with open-loop, network-branded prepaid cards, which consumers increasingly use as replacements for cash and checks, Mercator says. Growth in the closed-loop card market, however, generally has fallen into a "rut," Mercator reports. "Few investments are being made to create innovative solutions that increase the value of closed-loop cards," Mercator wrote. The Maynard, Mass.-based company notes, however, several fast-growing markets exist for closed-loop cards, including digital media, which grew by 24% last year; consumer incentives, which grew by 19%; and petroleum, which grew by 23.2%. Despite the growth in these market segments, they were unable to compensate for several large segments that underperformed. They are closed-loop transit and campus cards, which are being replaced by open-loop cards, Brent Watters, a Mercator spokesperson, tells ATM&Debit News, a CardLine sister publication. "There is slow growth in these areas," Watters says. "For example, the Chicago Transit Authority is planning to replace its closed-loop CTA card with an open-loop card." Mercator discussed the state of the closed-loop industry in its "6th Annual Closed Loop Prepaid Market Assessment." A Mercator official could not be reached for comment about the report.
