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Why Prepaid Is an Innovator in Mobile Commerce

Entering card information on phone

The way Americans shop and spend is radically changing. The desire for convenience and immediacy in our lives, along with smartphone market maturity, have made mobile payments mainstream. This demand is spurring new advances within the prepaid environment. To better understand how prepaid is emerging as a payment vehicle to support these changes in consumer behavior, take a look at these three factors:

M-Commerce Transforms Consumer Payments

E-commerce has shifted the retail landscape and mobile commerce, or m-commerce, is taking the evolution of shopping and buying to an entirely new level. Characterized largely by a consumer push toward shopping and payment experiences that transcend the brick-and-mortar storefront, m-commerce is proving that there is a demand for more than just single-channel buying experiences. For example, 55 percent of consumers who made a mobile purchase in 2017 also placed an online order for in-store pickup.1

Online ordering and payments have also become popular with particular brands, most notably Starbucks. Mobile payments account for 30 percent of the coffee retailer's sales, and Mobile Order and Pay make up 13 percent of the brand's total purchase transactions.2

While physical stores still have a presence in the shopping ecosystem, as evidenced by the number of consumers using in-store pickup options, buying—and paying—is increasingly happening on the mobile plain. It's such a driving force that by 2021, m-commerce, is expected to represent 54 percent of all e-commerce sales.3

Mobile Users Are Also Prepaid Users

There's a strong connection between mobile use and prepaid card adoption. Prepaid is steadily carving out space in mobile wallets, sitting alongside traditional debit and credit cards, as a payment method. In 2017, 73 percent of mobile payment app users loaded a prepaid card into their digital wallets.1

Consumers who buy retailer-specific prepaid cards are even more likely to be mobile-enabled and pay for goods by mobile phone, according to Mercator. In 2017, 73 percent of prepaid card users placed an order in-app or online, compared to 46 percent of consumers on average.1

The sea change is tied pretty tightly to the fact that mobile payments often simplify everyday tasks and transactions. Today, people expect seamless mobile shopping, on-demand services, mobile order pay and self-checkout—and why not? Payments technologies are evolving to do just that, make life easier and get things done faster.

Prepaid cards speak to the simplicity consumers desire, while offering a secure method of payment. Prepaid is also a viable alternative to carrying cash, without sacrificing merchant loyalty points or rewards when making purchases in-store or through their mobile device. The global prepaid market is expected to reach $3.6 trillion by 2022, as consumers seek out payment methods that offer convenience, security and rewards.6

Opportunities Abound In Prepaid

The loyalty and rewards connection may be the most pivotal driver of prepaid growth in the near- and long-term. These straight-up statistics illustrate prepaid's rising popularity within the loyalty framework:

  • Sixty-eight percent of prepaid card purchasers who buy them for personal use do so to earn loyalty rewards and points.4
  • In 2017, prepaid was the preferred in-store mobile payment method to build loyalty rewards.5
  • Two out of three smartphone users said they'd be more likely to use mobile payments if it meant earning better discounts or loyalty rewards than other payment options.1

Promoting enhanced rewards and loyalty benefits could foster additional prepaid growth. That could mean greater adoption of mobile payments as a whole and increased consumer spend for merchants, issuers and program managers alike. Forming innovative partnerships is one way to dive right into the rising world of prepaid. Discover® Global Network Prepaid offers multiple solutions that are designed to help implement prepaid programs effortlessly and efficiently. Here's a closer look at the top three:

  • Discover® Digital Exchange (DDX), an integrated API-based tokenization platform that enables seamless digital transactions and more securely stores payment details, streamlining and optimizing mobile payments.
  • Discover® Commerce Exchange (DCX), a proprietary data service platform that provides robust and more accurate merchant data using confidence scoring and machine learning, which can be used to enhance marketing efforts.
  • Restricted Authorization Network (RAN), which allows program managers and issuers to control where prepaid cards are used.

When taking in the bigger picture for payments, the possibilities to grow and scale by leveraging prepaid and mobile technology are virtually limitless. Prepaid is particularly primed for innovation, as more consumers make it their preferred payment method of choice for omnichannel shopping.

To discuss how these Discover Global Network solutions can help you achieve your goals, email today.


1Mercator Research. "Mobile Payments: Greater Value Needed for Widespread Adoption,", October 2017.
2PYMNTS. "Starbucks Mobile Order Tool Accounts for 13 Percent of U.S. Purchases,", July 2018.
3CBRE. "What is the Role of M-Commerce in Retail Sales?",, 2018.
4Clover. "The Power of the Gift Card,", November 2018.
5Mercator Research. "Consumers and Prepaid: Caution Ahead,", September 2017.
6Allied Market Research. "Prepaid Card Market Expected to Reach $3,653 Billion by 2022,", 2018.


The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.