Significant Growth in Closed-Loop Cards:

Mercator Advisory Group’s recent market assessment indicates a growth in the closed-loop prepaid market, increasing by 13 percent since 2009. A closed-loop prepaid card may only be redeemed where it was purchased, whereas an open-loop prepaid card can be used at multiple locations. Growth in the closed-loop prepaid market has been driven by the In-Store Gift Card segment, which continues to grow and develop as retailers move from thinking about prepaid cards as a plastic version of paper gift certificates to a multi-functional promotions and sales tool," says Ben Jackson, senior analyst in Mercator's Prepaid Advisory Service and author of the report.

The growth in the close-loop prepaid market coincides with our nation’s recession. Are more Americans relying on prepaid cards during this economic hardship? What other factors could potentially affect the rise of closed-loop usage? Mercator Advisory Group’s chart below measures just how far closed-loop prepaid cards have grown in the U.S. within the last seven years. For full size image click here.

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