There’s a sizeable and ongoing shift in the prepaid card market as more and more consumers ditch the dollar and opt for electronic payment methods. Approximately $167 billion is expected to be loaded onto prepaid cards by 2014, an annual growth rate of 42 percent compared to the $57 billion loaded onto prepaid cards in 2011, according to the Consumer Financial Protection Bureau (CFPB).
Within this prepaid market, there’s another transition with favor leaning away from closed-loop prepaid market and more toward general purpose reloadable (GPR) cards.
A closed-loop prepaid card, more commonly referred to as merchant gift cards or store cards, is one that can only be redeemed at the issuer’s designated locations. Case in point, if you get a gift card for Starbucks, you’re not going to be able to fill up a tank of gas with it at the Shell station.
GPR cards, on the other hand, can be loaded and reloaded repeatedly and used wherever the network brand (Visa, Mastercard, etc.) is accepted.
While the closed-loop prepaid market grew 3 percent to $309.1 billion in 2012 from $299.1 billion in 2011 – this is in terms of the dollars loaded onto closed-loop prepaid cards or access devices in the United States during 2012 – that growth rate was outpaced by gains in 2011 over 2010, according to The 10th Annual U.S. Closed-Loop Prepaid Market Assessment report.
“Growth in the closed-loop prepaid market has slowed, but the Digital Content and Games & Ring Tones segments continue to grow at a rapid pace as more people choose to download songs, games, books, and other content from the Internet,” writes Ben Jackson, author of the report.
Some of the declines are easily explained. The decline in prepaid long distance cards, for example, can be attributed to more people using cellular phones and scrapping their landlines. Declines in the petroleum and utilities segments, as the report points out, may reflect lower energy costs in 2012 compared with 2011.
An overarching explanation, however, may be in the fact that many consumers are choosing prepaid cards as alternatives to checking accounts, as reported by the CFPB. Whether consumers cannot get a checking account or prefer the simplicity of a prepaid card, many are also opting to receive direct deposit, such as a paycheck, on the card.
Small-cap company Global Payout has found its niche in the global payment scene in offering its prepaid solutions for business, government and financial services companies worldwide. The company offers its clients highly secured payment systems that bypass dependence on local domestic banks for the international transfer of money.
Global Payouts solutions include:
• Domestic Prepaid Cards
• Custom/Co-Branded Prepaid Cards
• European “Chip & Pin” Prepaid Cards
• International Prepaid Cards
By stepping back and observing the key trends of consumers, Global Payout has positioned itself to grow with the rapidly changing prepaid payments industry.
For more information visit www.globalpayout.com
To read the 10th Annual U.S. Closed-Loop Prepaid Assessment report visit: http://www.researchandmarkets.com/publication/mh9jefj/tenth_annual_us_closed
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