The total value loaded annually into network-branded prepaid debit card accounts in the United States could reach $440 billion by 2017, predicts a Boston Consulting Group report commissioned by MasterCard Worldwide.
Boston Consulting Group estimates the amount loaded into the so-called open-loop cards in 2009 was $120.2 billion.
The consultancy analyzed data from 46 countries across six continents and examined 18 categories, including payroll cards and health care spending accounts. Boston Consulting originally published the Prepaid Market Sizing Report in 2008 with projections for 2015, but it updated it this month to include data for 2009 with projections through 2017.
The U.S. will continue to lead the prepaid sector’s expansion worldwide, Boston Consulting predicts. The U.S. will account for 53% of the global network-branded prepaid card market, which is more than double the combined share of the next leading markets, which include India, the United Kingdom, Mexico, the Middle East and Brazil. Combined, they represent 25% of the total share.
Growth outside the U.S. shows how open-loop prepaid products have “the ability to benefit many different constituents” worldwide, says Laura Kelly, MasterCard senior vice president of global prepaid solutions.
The need for consumers to be included in the financial process is one factor driving growth outside the U.S., Kelly says. “If you have a large segment of the population that is unbanked or underbanked, [prepaid] is the perfect answer for them,” she says.
A country seeking to displace cash and checks for payroll purposes is another factor spurring growth. Government regulations play a part in that, Kelly says. In the Middle East, for example, a regulatory mandate exists to eliminate cash payroll disbursements, she says.
Brazil is expected to experience the largest growth outside the U.S., the report says. The total value deposited into network-branded card accounts in the South American country should reach $17 billion in 2017, up from $1.7 billion in 2009.
The opportunity to convert cash and check payroll disbursements to card products is helping to drive growth in Brazil, Kelly says, noting a large percentage of financially underserved consumers there also is contributing to the growth in prepaid card products.
Factors driving growth outside the U.S. also are contributing to increases within the country. For example, more companies are using payroll cards instead of checks.
Funds loaded into card accounts tied to the public sector, which includes unemployment cards, will total $163 billion by 2017, up from an estimated $31.7 billion in 2009, the report says.
The amount loaded into payroll card accounts, which includes a large percentage of cards in the private sector, will total $99.6 billion by 2017, up from $25.6 billion in 2009, the report says.
Health care also will play its part in the growth, according to the report. Funds loaded into card accounts used for health care savings and flexible spending accounts will increase to $52 billion by 2017, up from $15.3 billion in 2009, according to the report.
