The Canadian Prepaid Providers Organization (CPPO), the collective voice of the open-loop prepaid payments industry in Canada, today released its industry forecast and market sizing in collaboration with Aite-Novarica Group. The forecast, Canadian Open Loop Prepaid Market, 2020-2025, estimates that the Canadian open-loop prepaid card market will grow to CA$8.7 billion in 2021, up 80 per cent from 2019. This value is projected to nearly double to CA$17.2 billion by 2025.
Open loop prepaid payment solutions look and function like traditional credit and debit cards without requiring a credit score or bank account, while also offering immediate access to funds. The products’ universal access for Canadians, ease of use and gateway to digital payment options has driven their popularity as a more convenient payment solution and bank account alternative.
“Prepaid is increasingly being harnessed as the platform of choice to introduce new and innovative products and services for Canadians, playing a leading role in Canada’s digital payments and banking transformation,” said Jennifer Tramontana, Co-Founder and Executive Director, CPPO. “As consumer preferences shift towards more convenient, cashless and contactless payment methods, prepaid provides both incumbents and new fintech entrants an avenue to introduce new products and services, while still adhering to stringent regulatory requirements.”
According to the Canadian Open Loop Prepaid Market, 2020-2025 analysis, there were approximately 46 million open-loop prepaid accounts in Canada by the end of 2020. It is expected that this will grow by a five-year compound annual growth rate (CAGR) of 15 per cent, reaching 93 million accounts by 2025. Prepaid solutions provided a safe and simple online payment option during the pandemic, enabling access to the benefits of ecommerce which has proven to be a critical channel for the purchase of goods when access to retail stores has been reduced or discouraged.
Prepaid has also become the core offering for most Canadian challenger banks to best support their banking models and bring accessible products to their customers. It promotes financial inclusion to the essential and growing gig economy by offering immediate wage payments daily or after every shift. For non-banks, like tech giants, big retailers, e-commerce players, prepaid has become the key to embedded payments that disappear into the background of the solution being offered to a customer.
“The prepaid payments industry is steadily growing in Canada as payments innovations continue to uncover more prepaid card uses,” said Francisco Javier Alvarez-Evangelista, Advisor, Aite-Novarica Group. “Prepaid cards have historically been perceived as a tool to reach Canada’s under- and unbanked market segments, but this is expanding. The rise in buy-now-pay-later providers, challenger banks and gig payment platforms are largely due to the availability of Canadian prepaid card rails.”
To access a summary of the findings, please visit www.cppo.ca. CPPO members will have full access to Canadian Open Loop Prepaid Market, 2020-2025 analysis. Please contact [email protected] for information on membership details.