Prepaid cards continue to gain traction among U.S. consumers, evolving beyond traditional gift-giving into versatile financial tools used for everyday spending, transit, telecommunications, and personal budgeting. Recent research highlights significant growth across multiple stored-value card categories, while consumer purchasing and redemption habits reveal new opportunities for retailers, financial institutions, and prepaid product providers. As adoption expands, understanding where consumers buy and use these payment products is becoming increasingly important for industry stakeholders.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Prepaid Cards: Continued Growth
A surprising percent of reloadable prepaid gift cards happen at these three locations:
- 35% of consumers have purchased reloadable prepaid gift cards on display at another retailer
- 25% of consumers have purchased reloadable prepaid gift cards from a bank
- 17% of consumers have purchased reloadable prepaid gift cards from a gift card exchange website
- When purchasing reloadable gift cards from a retail display, 35% of consumers do so at a wholesale club
- Similarly, 25% of consumers have purchased reloadable gift cards at a dollar store when buying from a retail display
- Reloadable gift cards lead retail-specific (5%) and non-reloadable (4%) in the “Other” category for purchase location with 11%
About the report
Mercator Advisory Group’s most recent Insight Summary Report, Prepaid Cards: Continued Growth, from the bi-annual CustomerMonitor Survey Series reveals that the growth of transit cards in the United States has been 130% since 2013. Similarly, prepaid phone cards have grown 118% and reloadable general-purpose cards have grown 100%. Other prepaid products have also experienced strong growth during this period.
Overall growth in the U.S. prepaid market reached 17%, indicating that consumers who were already using these payment products are expanding into additional categories.
Like many emerging financial products, prepaid solutions are particularly popular among younger consumers. Currently, about 7 in 10 adults under age 45 purchase these products, compared to 5 in 10 consumers over age 45.
These cards are being redeemed online nearly as often as they are used in physical stores. The survey found that 66% of consumers redeem them online, compared to 73% who redeem them in-store. Consumers ages 18–34 are especially likely to use them online (74%) rather than in physical locations (64%).
Cash is still king however. When given the choice of gifts, 4 in 10 would prefer cash, while another 13% would like a gift chosen specifically for them and about the same would like a gift card.
Prepaid Cards: Continued Growth, the latest Insight Summary Report from Mercator Advisory Group’s Primary Data Service, is based on a sample of 3,002 U.S. adults surveyed in the annual online Payments survey of Mercator’s CustomerMonitor Survey Series, conducted in June 2019.
The study highlights consumer interest in prepaid payment products, including store cards, open-loop cards, and reloadable general-purpose cards. It explores where consumers purchase and redeem these products, whether they are bought for personal use or gifting, how they are funded, and the many ways they fit into consumers’ financial lives.
“Americans are finding more and more uses for prepaid cards in their lives as evidenced by the growth of different prepaid card categories revealed by the survey. Prepaid companies need to focus on the different use cases both for buying and funding as well as redeeming to keep up with the evolving use of these cards. The greatest opportunity is likely to come from how these consumers are using them for themselves rather than for gifts,” stated the author of the report, Peter Reville, director of Primary Data Services at Mercator Advisory Group, which includes the CustomerMonitor Survey Series.