Demand for prepaid and gift cards is expected to continue to grow in 2015. Gift cards, with their ease of use, have long been popular among convenience store customers. Growth in the prepaid category stems from the availability of new services and consumers seeking alternatives for financial services outside of traditional banks.
“Prepaid as a whole, I expect will continue to go up,” said Ben Jackson, spokesperson for Mercator Advisory Group. “There’s still a lot of opportunity for people to buy cards in convenience stores. It’s an easy way to shop for these cards.”
Most new growth is expected in the prepaid side of the category, especially as smartphones move into prepaid wireless and data plans and more financial service cards become available. Convenience stores have enhanced their appeal as places for money management by offering services, such as bill pay, check services and money orders.
“As prepaid gets involved in those services and more people look to prepaid cards, they’re going to want to do that where they cash their checks or pay their bills,” Jackson said.
Hit-n-Run Food Stores, based in Lafayette, La. offers fuel, retail and wireless prepaid services.
“We provide it as a service to our guests much like lottery and money orders,” said Brent Mouton, founder, Hit-n-Run Food Stores. “We believe the category will continue to grow. Our sales for calendar year 2014 represent approximately 1.76% of our inside sales.”
GPR APPEALING
Key drivers in the prepaid category include security and budgeting. With millions of credit and debit cards being compromised every year, consumers see general purpose reloadable (GPR) cards as more secure. The functional aspect of adding value to the cards before use, rather than paying off debt later makes GPR cards a useful tool for consumers looking to budget their finances.
Many stakeholders say customers want convenience and liquidity in prepaid cards, and c-stores are increasingly able to answer those needs.
“They want to easily be able to load funds on the cards, and they want the funds available quickly,” Jackson said.
GPR consumers are middle and upper class, highly educated and young, according to data collected by prepaid products provider InComm.
Young adults between the ages of 18 and 35 are purchasing GPR cards at a higher rate than older demographics. Thirty four percent of consumers relying on prepaid cards have a college degree or higher and about one-third of prepaid card users earn more than $45,000 per year, according to InComm.
“As people look for new ways to manage money, such as moving away from paper checks and cash and quick tools for spending online, there’s going to be a segment of people who will look for that in convenience stores,” Jackson said.
To make the most of any gift card and prepaid card service, companies need to consider in-store traffic patterns for card kiosk placement.
“Target your prepaid offering with other items the prepaid consumer is in search of,” Mouton said. “Placement near the lottery offering has proven to be quite successful within several of our locations.”
GPR Customers Younger, Educated and More Affluent
• Young adults between the ages of 18 and 34 purchase general purpose reloadable (GPR) cards from c-stores at a higher rate than older demographics. [source: NACS] • More than a third (43%) of prepaid card customers are between 21 and 31 years old. [source: Aite Group] • 34% of consumers relying on prepaid cards have a college degree or higher. [source: Aite Group] • Individuals with post-graduate education are twice as likely to use GPR cards as those who have attained only high school or less. [source: Federal Reserve Bank of Boston] • 49% of prepaid users earn more than $70,000 annually. [source: Aite Group]
*Compiled by InComm
