Millennials are embracing prepaid cards

More than other generations, tech-savvy millennials are the most likely to embrace a new alternative financial solution that provides them with the most flexibility to manage their finances − prepaid cards. The open loop prepaid card market in Canada is on track for an annual growth rate of 18.5 per cent from 2015 to 2020, or an additional $9.4 billion growth, according to market research firm Euromonitor International. Millennials account for a large portion of this growth, with this demographic favouring a number of attractive features. While many are struggling to pay down student loan debt, millennials like the convenience, stability and flexibility in managing their finances that prepaid cards offer. With the increasing ownership of smartphones, this group is likely to find prepaid cards to be the most convenient way to manage their finances right from their mobile devices. Although the majority of millennials still uses traditional banks, 88 per cent want to avoid visiting a bank and 41 per cent have trouble staying on budget. Canada is seeing an uptick in new financial tech startups, rolling out a prepaid card programs that target those who don't routinely visit a bank. Many of these prepaid card programs also offer mobile apps with budgeting tools. According to the Canadian Prepaid Providers Organization (CPPO), 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 (Visa, MasterCard and American Express) with a significant difference — they access funds that have been pre-loaded. Prepaid cards are popular tools in the U.S. with more than 60 per cent of millennials having one, and they are gaining ground in Canada. Millennials will continue to adopt emerging financial solutions, such prepaid cards, as a way to conveniently meet the needs of their increasingly mobile lifestyles,” said David Eason, CPPO Chairman. While traditional banking is not likely going away in Canada, the prepaid market is seeing a healthy surge in growth as Canadians continue to adopt emerging financial solutions, such prepaid cards, as a way to conveniently meet their financial needs.