The global prepaid card base will increase to 921 million in 2021, up 46 percent from 624 million as of Dec. 31, 2015, according to a new forecast from U.K.-based Retail Banking Research, or RBR.
Despite the prepaid surge, debit will continue its dominance of the overall cards market. RBR’s “Global Payment Cards Data and Forecasts to 2021,” which does not cover closed-looped prepaid cards, found that debit cards in 2021 will account for 72 percent of all payment cards worldwide, up from 70 percent in 2015. That compares with:
- 6 percent for prepaid cards, up from 5 percent in 2015
- 3 percent for charge cards, down from 4 percent
- 19 percent for credit cards, down from about 22 percent
“As unbanked individuals in emerging markets continue to enter the banking system, it is in the debit sector that we will see most growth, as it is debit cards that are normally issued when a person opens a current account,” the report said.
While the number of credit cards worldwide rose by 2 percent in 2015, that sector will account for a decreasing share of the global payment card base going forward, in part due to European interchange regulations, RBR said. “The interchange fee regulation enforced across the EU in December 2015 typically lowered interchange for credit cards more than for debit cards, and RBR has found this is impacting issuance of credit cards in many countries there,” the report said. “In the Netherlands, for example, credit card interchange was a major source of revenue for banks, but some now appear to be discouraging customers from taking out credit cards because the caps have reduced their profitability.” In Russia, meanwhile, what the report called “economic uncertainly” has led banks to tighten eligibility requirements for credit cards.
“Despite varying levels of maturity of the cards markets in different countries, we forecast that debit cards will continue to see faster growth than credit cards, as a result of rising bank account holding and regulatory and economic pressure on the credit card sector,” said RBR senior associate Chris Herbert.
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