Over the five-year period between 2012 and 2016, U.S. consumers purchased more prepaid cards in each year than they did in the year before. That pattern was broken in 2017, when the percentage of U.S. adults who bought prepaid cards dropped from 63% in 2016 to 56%.
The most popular type of card was retailer-specific, but even there the percentage of adult purchasers fell from 45% in 2016 to 38% in 2017.
According to a recent report by independent research and advisory services firm Mercator Advisory Group, sales of prepaid cards fell in all eight categories tracked for the annual survey: retailer-specific cards, general purpose reloadable (GPR) cards, general purpose non-reloadable cards, gift cards for online services, prepaid mobile phone (virtual) cards, long distance phone cards and transit cards.
The report’s author, Katherine Augustine, said:
The recent dip in prepaid buying recorded by the latest CustomerMonitor Survey is a signal that issuers should beware and increase accessibility of their cards online and by mobile, given that prepaid cards lock in spend, foster loyalty, and generate significant incremental spend.
What growth there has been in prepaid has been from the young adults, particularly 25 to 34 year olds, mobile-enabled users, high-income earners and Hispanics. However, the report notes, these segments are also among the most likely to have shied away from prepaid this year.
This may be due to changes in the retailer segment generally attributed to the growth of e-commerce and mobile-commerce that has resulted in losses for many brick-and-mortar retailers and leading some major merchants to close numerous stores. New technologies for digital shopping and payments are growing fast and these are chipping away at the demand from consumers for pieces of plastic that have to either handled or reloaded or both.