The Canadian open-loop prepaid card market is surging, with total load volume and the number of prepaid accounts both showing major growth over the past two years and expected to continue that upswing through at least 2025.
The strong recent performance of prepaid in Canada echoes the broader trend of prepaid expansion in markets around the world. Much of those gains can be attributed to organic market growth as consumers recognize the benefits of traditional prepaid cards in helping them spend and manage their money. But a significant portion of the prepaid boom is happening thanks to existing prepaid rails and infrastructure being used to support innovative digital payment use-cases, including buy now, pay later, gig economy payments, on-demand delivery and SMB payment services.
During a recent panel discussion held as part of the Payments Canada Summit, Galileo Head of Strategic International Expansion Kevin Ohlson provided insights into why prepaid is so well-suited to playing a key role in enabling those emerging payments services and paving the way for innovative new providers to enter the payments space.
For many of Galileo’s fintech clients, the spending controls inherent to prepaid cards are a particularly attractive asset when it comes to payment use-cases across the board, according to Ohlson.
“Prepaid allows that ability to help reduce the risk of overspending,” Ohlson said. “You can put the right controls and processes in place and offer a platform to build out a UI or UX that provides a great experience and then provide an enabler on the back end to provide access to the prepaid rails.”
Ohlson cited corporate expense as one vertical in which prepaid products’ spend control capabilities can be particularly useful. As opposed to traditional corporate credit cards subject only to overall credit limits, corporate prepaid cards enable companies to more finely control employee spending by only loading a set amount onto a card for each type of purchase, Ohlson noted.
“You can put those controls in place and know that someone can only spend the given amount per day for meals, or hotel or car rental. That way you can help ensure spending in those areas doesn’t get out of control.” said Ohlson.
Another aspect that makes prepaid cards a good fit for innovative payments use-cases is the speed at which such cards typically can be issued–including instant-issue in a digital format to a mobile wallet–a critical component of the quick and easy onboarding that’s essential to effective customer acquisition and activation.
“Because the card can be moved almost instantaneously to a phone, now it’s enabled and ready. You don’t have to wait for it to be delivered through snail mail,” Ohlson noted. “And that’s the type of great experience that [users] are looking for.”
The nimble nature of prepaid offers benefits on the provider side as well. The relative simplicity of rolling out a prepaid program compared to other types of payment capabilities makes prepaid an obvious choice as the payment element for fintechs as they go to market.
“They need to be quick to market and … need a turnkey solution that may be already integrated with a bank provider that has approved how it’s designed to work,” Ohlson said of newer entrants looking to add a payments piece to their offering. In that way, prepaid can serve as “almost a white label solution” at launch, which subsequently can be bolstered with additional payment capabilities down the road, he added.
With prepaid such a good fit for many of the hottest areas in payments, it seems likely the current prepaid boom will continue to echo throughout the coming years of fintech innovation.
To learn more about how Galileo can help support prepaid programs for consumer and corporate users, click here.
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