Despite some conventional wisdom about the Canadian financial services market, there is a strong opportunity for prepaid products to grow, if providers can develop the right plan. A new white paper from People’s Card Services of Canada, a division of People’s Group, which is one of the country’s largest prepaid issuers makes the case that the country has room for prepaid cards to grow.
Canadian consumers and businesses still write almost a billion checks a year, and prepaid might be able to displace some of that volume. In addition, prepaid cards offer the same advantages for companies and consumers in Canada that they do in the United States and elsewhere: good funds dedicated to a payment method without the need for credit or debit accounts.
Prepaid is often seen as a tool that is primarily for unbanked and underbanked people. Because most Canadians have easy access to bank accounts, the perception is that they won’t have much interest in prepaid. However, not all Canadians choose to make use of bank accounts, and check cashers can be found in every major city catering to those individuals. Additionally, consumer research in the United States, where the prepaid market is more mature, shows that prepaid card users often have bank accounts but choose to use prepaid cards for a variety of reasons including budgeting, having a private way to shop online, and as a supplement for their bank accounts.
Companies in Canada can use prepaid for incentives, expense management, and other disbursements just like their counterparts in other countries. Prepaid offers the particular advantage of being able to grant immediate access to fund while at the same time imposing limits. The primary limit is how much can be spent. Prepaid can also allow for limits on merchant types and around other parameters such as location. Virtual prepaid cards can provide a way to displace checks and speed up the payments process.
Prepaid providers in the United States who are interested in possibly venturing north should read the white paper and think about whether or not they might have programs that they can export it can be found here.