The Rise & Fall of Canadian Prepaid Credit Cards

Prepaid cards are a subject we’ve covered before here at Frugal Flyer, even going as far as writing an article on the best reloadable prepaid credit cards in Canada. Needless to say, prepaid credit cards are a continuing curiosity of the Canadian credit card market.

I think that the overwhelming question I have when looking at products such as these is: Why are there so many options? And why do they have to be prepaid? Why can’t the features included be on the regular line of credit cards?

Well, today, I think I have a bit of an answer for why there are so many, and some theories as to why features common to prepaid cards have to stay in that category. But to find out, we’ll have to do something I’m fond of: a little history lesson chronicling the rise, apogee, and subsequent fall from grace of the Canadian prepaid credit card industry.

What Are Prepaid Credit Cards & Why Are They Popular?

OK, so first things first: A prepaid credit card’s name is, in some ways, defective. Nothing I’m talking about today is a lending product: the issuer won’t front the money that you have to pay back later (potentially with interest).

Instead, prepaid credit card products work more similarly to debit cards or bank accounts: you deposit cash onto the card and then you can only spend up to the amount that was loaded. When your balance reaches zero, you’re out.

On the flip side, this also means that the “prepaid credit cards” don’t actually build your credit score. They also work on the Mastercard or Visa network, meaning you can’t use them at vendors who only accept debit, like many utility providers or the Canada Revenue Agency. The issuer does get the juicy full cost of interchange fees from you swiping your card at merchants, though. 

In the past, these products have been popular because they’ve offered features not common to other products, such as waiving foreign exchange (FX) fees or ATM withdrawal fees.

As we’ll see, over time, many of these benefits have been stripped away, thus leaving the current predicament of the prepaid market a more open-ended question. Many products seem to have adapted by becoming hybrids between bank accounts and prepaid credit cards but the question does remain: why does it have to be set up this way? 

With the above in mind, let’s take a look at the last eight years of the prepaid credit card market in Canada, to better understand where we have been and where it’s going.

The Rise & Fall of Canadian Prepaid Credit Cards

2017-2018: Stack Prepaid Mastercard – Revolutionary for Its Time

Back in 2017, the Canadian credit card market as a whole entered a time of excellent innovation.

The American Express Cobalt card, the most value-providing credit card in Canada in the past decade (if not longer), was launched. The entire market tried to catch up. When did it launch? September 2017.

One such new competitor was the Toronto-based fintech Stack Financial, which partnered with Mastercard to launch their new prepaid option… also in September 2017.

Millennials such as myself, addicted as we were to our phones, were growing older and entering the higher-earning echelons of the workforce, and companies wanted in. They decided the best way to do that was to offer cards like the Cobalt, offering lifestyle rewards, or products like the new Stack card.

Stack was revolutionary for its time because it offered anyone the chance to get a Mastercard product that didn’t charge FX fees. It also gained cashback on every transaction and had a sleek (for the time) app while many other legacy issuers were still working out the intricacies of app development for banking.

It had a clear value proposition: no FX, cashback, and an easy-to-use app. 

It also came on the heels of competitors such as the Koho Prepaid Mastercard which had launched back in March of the same year. This was ironic, as Koho’s more conservative approach to rewards would ultimately result in them acquiring Stack, but that story is for later in the article.

In the background of all this, another prepaid card that has become extremely important in the Miles & Points world had also made its debut in 2016: the Paypower Prepaid Mastercard. The modern reward travel space in Canada would not look the same without it.

2019: Revolut Joins the Fray

2019 was the year I joined the Miles & Points game, so it will always have a place of supreme fondness in my heart. It also seems to have been the time that the prepaid credit card industry in Canada found its legs, with Stack and Koho both experiencing growth.

In fact, the appetite of Canadians for prepaid products got the attention of a fintech giant that is all over Europe, the United Kingdom, and recently, the United States: Revolut.

This card is famous in Europe because it has no FX fees and is meant to be hyper-accessible. When the Canadian beta launched in 2019, I signed up and, despite the lack of rewards, the difference in user experience was palpable.

For one thing, the app integration on Revolut was sleek and seamless. Revolut also offered a variety of benefits then unheard of in the Canadian market, such as easily-generating virtual credit card numbers. Plus, you could load the Revolut card with credit cards, and it may or may not have coded as a cash advance.

The product was great, but little did the parent company realize they were entering the market right before the life-altering virus and lockdowns that would come to dominate our lives for years to come…

2020-2021: COVID-19 Drives Prepaid Industry Growth

We all know what happened in 2020: a novel strain of coronavirus locked us all inside. We all had to wear masks. It was a strange time. On top of that, central banks made a novel decision:

OK, the meme is a bit hyperbolic, but most banks had the overnight interest rate at or around 0%. This meant that the cost of credit and borrowing became very cheap, leading to an unprecedented bull stock market. In this bull market, tech stocks were some of the best performers of the pandemic.

Well, prepaid cards in Canada had always had the tech-based app element, and there were now lots of venture capitalists running around with lots of money for what might be the Next Big Thing. So the companies adapted. This was how you got products such as the Mogo card, which first paid out cashback in Bitcoin and also allegedly planted trees to offset carbon emissions.

I have yet to see a single shred of evidence that Mogo ever planted even one tree, but the point is that 2020-2021 was the heyday of Canadian prepaid credit cards. It felt like every day, new ones were launching or in development, and the ones that did exist offered some of the most competitive features the market had yet seen.

For example, you can take a look at our article about ATB Financial’s Alberta-exclusive Brightside Prepaid Mastercard, which gave ridiculous benefits and discounts on beers and restaurants in the fair cities of Edmonton and Calgary. Products like the Wealthsimple Cash Card and the PC Financial Money Account were also launched in 2020.

This was a period when competition felt most intense, and prepaid credit cards weren’t just competing against each other; they were competing against normal credit cards too. While planes and hotels sat empty, issuers put welcome and signup bonuses on maximum overdrive, further incentivizing the growth of the entire fintech space. 

In fact, the heat was so intense that Revolut abandoned the market in early 2021 and has only started looking at reentering Canada as of early 2025.

Smelling blood in the air for the No FX market, the company Transferwise (since rebranded simply as Wise) launched the Wise Prepaid Visa card to capitalize on this vacuum.

2022-2023: The Prepaid Market is Saturated & Unsustainable

In 2022, we discovered a few things. First, the strings of lockdowns finally came to an end. Central banks also realized they needed to tighten lending restrictions as the funds they’d printed began causing inflationary pressures.

This meant an environment with much less easy debt and leverage. The venture capitalists stopped being as generous. Then, crypto entirely imploded, with the owner of the largest exchange ultimately getting sentenced to 25 years in a US federal prison.

What this meant for the Canadian prepaid space was that a lot of these prepaid companies that had been sacrificing profitability for growth suddenly had to pay the bills. They didn’t have the backing to keep on expanding, and they did need to provide their investors with a plan to pay them back.

This resulted in many of the issuers’ worsening their products. Mogo pivoted away from their Bitcoin cashback and toward their infamous tree-planting scheme. Stack began charging for FX fees and ATM withdrawals.

This trend continued into 2023, which, interestingly, resulted in an established player entering the fray with excellent lessons learned from the past few years. Early 2023 became EQ Bank’s time to strike.

This direct-to-consumer online bank was clearly taking notes. It was understood that customers wanted ease of withdrawal, no ATM fees, cashback rewards on all purchases, and no FX fees. It hadn’t spent the pandemic years aggressively growing with Bitcoin cashback or flashy marketing, and so it showed up with a fantastic product that has absolutely stood the test of time since.

The rest of the year was quiet but did result in Koho finally buying Stack. While Stack’s business model failed during the pandemic, Koho apparently managed to grow enough to purchase a main competitor. They still have FX fees on all of their cards, though.

2024 to Present: The Prepaid Market Consolidates Into Mostly Identical Products

In terms of prepaid credit cards on the Canadian market, 2024-2025 has been relatively quiet. Few big ticket products have launched, with the notable exception of the Neo Financial Everyday Account, though this item seems to match most of the others available on the market.

Revolut has shown interest as of March 2025 in returning to Canada, including publicly trying to find a CEO, though this will be against the backdrop of US tariffs and political uncertainty. Will they succeed? Not sure.

Almost all these supposedly competing products have mostly identical features (cashback, app, maybe some waived fees). The ones surviving tend to be versions of these that have either better marketing (like Koho) or the strongest iteration of the same features (EQ Bank).

What do Prepaid Cards Tell Us About Canadian Consumer Finance?

We have learned a few things from the prepaid credit card experience of the past few years.

Many Canadians are happy with a product with some limited cashback features and a slick app and are very happy not to be charged foreign exchange fees. On this front, many prepaid products deliver. However, consumer habits do seem to remain conservative and loyal to one of the Big Five banks, as many prepaid startups have failed.

I’d like to make an observation: many prepaid cards (though not all) are backed by the mysterious People’s Trust financial group. This company apparently provides lending for a variety of prepaid products.

I am curious as to who they are exactly and what their business model is, as they’ve backed a plethora of products from the Neo Money Account to the Paypower Prepaid Credit card.

I guess my closing thought would be to the various industry groups like the Canadian Prepaid Providers Organization out there. If one of their representatives can explain to me why their products must be prepaid and why only prepaid credit cards can solve issues like FX or ATM fees, I’m all ears.

These products do help Canadians without great credit access rewards, but the question I’d raise is: What is the strong incentive to use products such as these over debit, which a huge number of regular folks choose to prioritize? The benefits don’t seem strong enough to break the shell of fiscal conservatism many consumers possess.

Conclusion

I hope that today’s history lesson has proven insightful. We can now see how we got where we are in the prepaid credit card space. Products often possess similar features and appear to be competing for market share among the same demographic: younger, tech-savvy consumers who want rewards but don’t want an experience too dissimilar from debit.

Due to the plethora of options available, it’s clear that there’s some demand for this, but the casualties that have occurred since 2022 seem to indicate the demand isn’t infinite.

I still wonder, though: why do these products have to be prepaid? Why can’t they be tacked onto regular lending credit cards instead? I’ll leave you to ponder this, as I’m sure I will.