A Juniper research study has shown that the value of digital prepaid card transactions will exceed $3.98 trillion globally by 2028, up from $528.7 billion in 2023.
The study found that, by 2028, the value of digital prepaid card transactions will represent just under 60% of total prepaid card spending, up from 15% in 2023, demonstrating the rapid growth of digitisation.
It also reflects the greater use of digitally issued open-loop prepaid cards as loyalty rewards, replacing more traditional gift cards, according to an IT-Online report.
Open-loop systems, where payments can be made anywhere cards are accepted, will lead to an increasingly blurred line between prepaid cards and gift cards.
This will make the much wider loyalty market increasingly addressable for prepaid card vendors, compared with the closed-loop system, where payments can only be made at specific vendors.
A digital prepaid card is a virtual form of a prepaid card that exists entirely in digital format and can be accessed through a mobile app or online platform.
Prepaid cards are highly appealing to the unbanked, offering the functionality of payment cards without the need for an account with a financial institution.
The number of prepaid cards issued digitally is expected to surpass 940 million by 2028.
Financial inclusion remains a key issue for the millions of unbanked and underbanked across the world.
However, advances in digitalisation, smartphone availability, and the ease with which vendors can now issue prepaid cards digitally and instantly, mean that financial inclusion is within near reach of a growing number of users.
Research co-author Nick Maynard explains: “Financial inclusion use cases can significantly accelerate the success of prepaid cards, but vendors must keep the costs very low to ensure prepaid cards remain competitive for these use cases versus mobile money apps or central bank digital currencies.”
