Prepaid debit and stored value card transactions will amount to about US$257 billion transactions by 2009, up from US$63 billion in 2004 in the U.S. By 2009, prepaid processors will generate US$1.8 billion in revenues, up from nearly US$0.5 billion in 2005.

Boston, MA, September 13, 2005 – In a 112-page report, Prepaid Cards: A Market Overview, Aite Group examines the uptake of prepaid debit cards (open loop) and stored value cards (closed loop) in the U.S. The report reviews the market opportunity offered by prepaid cards, the regulatory framework, the competitive landscape of processors and non-bank marketers, and also profiles 15 notable competitors.

Prepaid debit cards are emerging as a new segment of the bankcard industry. “While they are a testimony to the relevance of the business model of the bankcard industry, prepaid debit cards also testify to the growing importance of non-banks in the development of new payment products,” remarks Gwenn Bézard, a research director with Aite Group and co-author of the report. Prepaid debit card (or open loop prepaid card) transactions will amount to about US$150 by 2009, up from US$12.8 billion in 2004.

The prepaid market represents a fast-growing market opportunity for processors. Closed and open loop prepaid processors will generate about US$1.8 billion in revenues by 2009, up from about US$0.5 billion in 2005. By 2009, prepaid processing will be as large an industry as the debit card and ATM processing industry was in 2004. “In coming years, sheer size and rapid growth will place the prepaid market at the forefront of the competition among card processors,” adds Bézard. The report predicts that, over the coming years, card networks will continue to struggle to accommodate the unique requirements of prepaid debit cards, creating opportunities for third-party processors to innovate on top of the network utility.

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