Open-loop prepaid cards are a cost-effective, flexible and easy-to-use payment tool for consumers, businesses and governments to make and receive payments.
In June 2016, the CPPO released the first-ever benchmark study conducted by Mercator Advisory Group entitled, Canadian Open-Loop Prepaid Market: 2015, that reveals the open-loop prepaid card market in Canada reached CAD$ 3.1 billion in total dollars loaded onto cards. The Canadian open-loop prepaid market has eight active segments compared to 17 in the U.S., showing significant growth opportunity for prepaid programs in Canada. The Canadian market is expected to follow U.S. trends, where open-loop prepaid cards are the fastest growing form of electronic payment. Mercator Advisory Group reported that the total load value in the U.S. reached USD$ 264 billion in 2014.
The cards can be used anywhere the card network (American Express, Mastercard, UnionPay and Visa) is accepted, including online. They are rapidly replacing cheques as a less expensive and more secure option for issuing payments. In addition, they can replace a direct deposit or wire transfer, giving the end user quicker access and more flexibility to use the funds.
Open-loop prepaid cards look and function like traditional credit and debit cards at the point-of-sale and offer the same fraud and loss protections offered by the card network with a significant difference — they access a set amount of funds that have been pre-loaded for a consumer by a consumer, by a government or by a business.