Canadian Prepaid Springs Forward

 Jennifer Tramontana, Executive Director of the CPPO, talked about prepaid's ability to transform payments at the industry group's 2nd Annual Prepaid Symposium in Toronto last week.

Jennifer Tramontana, Executive Director of the CPPO, talked about prepaid's ability to transform payments at the industry group's 2nd Annual Prepaid Symposium in Toronto last week.

By Loraine DeBonis, Marketing & Communications Director

Last week I had the opportunity to attend the CPPO’s 2nd Annual Prepaid Symposium in Toronto. It was a welcome respite from the already 80-degree weather in the South. But spring is not the only thing in bloom in Canada. Prepaid is in full flower.

Coming off a 17% increase in loads in 2016, the open-loop prepaid market in Canada reached another milestone in 2017—loads hit nearly CAD$4 billion, according to the latest Mercator Advisory Group research.

“Prepaid products continue strong and steady growth in the Canadian market with 27 percent growth over the past three years,” said Jennifer Tramontana, executive director of the Canadian Prepaid Providers Organization, a not-for-profit industry group with 22 members, including networks, banks, program managers and technology providers.

“We are seeing new penetration in cross-border payments, gaming and bank account supplements for digital-first millennials,” she added. “Average loads per card increased dramatically over the past 12 months reflecting how these products are becoming stickier with regular loads versus one-time use.”

At the content-packed, one-day event, which attracted more than 100 attendees, speakers discussed prepaid’s role in innovative payments, as well as how the market is evolving and where Canada could lead take a leadership role (think, building credit).

$54 Billion Opportunity with SMEs

Despite the excitement around reaching the near-CAD$4 billion mark in loads, Mastercard’s Patrick Sulston, vice president of business development, said, “We’re not punching our weight.”

He pointed to massive opportunity for prepaid providers, particularly to serve gig workers and small and medium enterprises that need to get paid, make payments or manage expenses. That vertical alone could add another CAD$54 billion to the prepaid pie in Canada, where 98% of all registered businesses are SMEs.

Startups from The DMZ at Ryerson University, North America’s top-ranked university-based startup incubator, also showcased their unique approaches to cross-border payments (Curexe) and (Remitr), rental payments (Dwello) and a millennial-focused financial services account with prepaid and social engagement at its core (Stack).

All about Awareness

At the end of the day, Canadian prepaid providers—and anyone else looking to enter the market—will need to work on expanding awareness for prepaid to reach its potential (something we’re still doing in the U.S.). A panel of Canadian consumers was very complimentary about the benefits of prepaid cards but said they don’t know many people using them outside of gifting and corporate incentives. They recommended adding rewards or linking prepaid use to existing rewards programs and adding credit-building capabilities to help those with no or poor credit scores. 

I spoke with C. Sue Brown, director of Mercator’s Prepaid Advisory Service, who authored the latest Mercator report on Canadian prepaid, and she suggested that Canadian prepaid providers could accelerate growth if they offered CDIC insurance on reloadable products. 

“I think it’s a game-changer once they do that,” she said.

Brown also noted that credit-building is “definitely an opportunity,” but she advised such a feature being available on an opt-in basis. “Some people might not want that data to be reported, while others are looking for ways to rebuild their credit.”

Canada’s regulatory environment may be more amenable to the combination of credit-building services and full-fledged credit products and prepaid compared with their U.S. counterparts. As I wrote last month after Power of Prepaid, low credit scores are a major pain point for U.S. prepaid cardholders, not to mention low cash flow. While there’s still hope that the CFPB will loosen restrictions around prepaid and credit stateside, offering credit and using prepaid data to build alternative credit-scoring models could be an area where Canada overtakes the U.S.

Loraine DeBonis is the marketing and communications director for Ubiquity Compliance Solutions, which specializes in dispute and chargeback management, fraud and identity verification services for the financial services sector. Previously, she spent 10 years writing about prepaid and emerging payments for SourceMedia and Paybefore. She can be reached at