FINANCIAL BULLETIN: Visa and Mastercard Prepaid Gift Card Volume Surges 28% Amid Digital Payment Shift

FINANCIAL SERVICES INDUSTRY BULLETIN

Prepaid Card Division Weekly Market Intelligence — Issue 2025-03

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Market Overview

The prepaid gift card segment continued its strong performance in early 2025, with Visa and Mastercard branded products capturing significant market share gains. This bulletin summarizes key developments affecting institutional investors, retail partners, and payment processors.

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Performance Metrics

Transaction Volume — Q4 2024 vs. Q4 2023

INDICATOR              CURRENT     PRIOR      Δ
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Total Txn Volume       $31.2B     $24.4B   +28%
Average Ticket Size    $62.40     $58.20   +7%
Cards in Circulation   498M       412M     +21%
Activation Rate        94.2%      91.8%    +2.4pts
Fraud Rate            0.042%     0.056%   -25%

Market Share Distribution

Network	Share	YoY Change
Visa	52%	+3 pts
Mastercard	38%	+1 pt
American Express	7%	-2 pts
Other	3%	-2 pts

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Regulatory Developments

Federal Level

The Consumer Financial Protection Bureau (CFPB) has proposed new disclosure requirements for prepaid gift cards, effective Q3 2025:

Proposed Changes:

• Enhanced fee disclosure formatting
• Mandatory expiration date prominence
• Balance inquiry access requirements
• Inactivity fee limitation guidance

Industry Response: Payment Networks Association filed comment letters requesting implementation timeline extension.

State Level

Notable state regulatory activity:

• California AB-2341: Expands gift card escheatment exemptions
• New York S-7892: Requires digital balance check capability
• Texas HB-456: Limits dormancy fees for prepaid products

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Institutional Developments

Corporate Programs

Major institutional buyers have increased prepaid gift card procurement:

Enterprise Adoption Highlights:

"We've shifted 40% of our employee recognition program to Visa gift cards. The flexibility and acceptance rate make them more valuable than single-merchant alternatives."
— HR Director, Fortune 100 Technology Company

Bulk Purchase Trends:

• Corporate incentive programs: +34% YoY
• Insurance claim settlements: +22% YoY
• Government assistance programs: +18% YoY

Banking Sector

Regional and national banks expanding gift card offerings:

• 12 new bank-branded prepaid gift programs launched in Q4
• Average program size: $15M annual volume
• Primary distribution: branch sales, online portals

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Technology Updates

Digital Wallet Integration

Both Visa and Mastercard have expanded digital provisioning capabilities:

• Apple Wallet compatibility: 94% of new cards
• Google Pay support: 91% of new cards
• Instant activation via NFC: 67% of retail locations

Security Enhancements

New fraud prevention measures implemented:

1. Real-time velocity checking — Blocks rapid successive uses
2. Geolocation verification — Flags unusual use patterns
3. Machine learning models — 40% improvement in fraud detection

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Outlook

Near-term (Q1-Q2 2025):

• Continued volume growth expected (20-25% YoY)
• Regulatory clarity following CFPB rulemaking
• Enhanced digital features driving consumer preference

Medium-term (2025-2026):

• Potential market consolidation among smaller issuers
• Increased competition from crypto-backed alternatives
• Expansion of B2B prepaid solutions

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