Prepaid card issuance through digital wallets: a new revenue stream

In recent years, digital wallets have evolved from simple payment apps into multi-purpose financial platforms. With innovations in embedded finance and open banking, fintechs and payment providers like Toucan are exploring a powerful proposition, prepaid card issuance through digital wallets. This model isn’t just a product extension; it’s an actionable strategy to diversify revenue, strengthen customer stickiness, and unlock cross-border value.

A recent global intelligence report states that the prepaid card and digital wallet market was valued at about USD 1.92 trillion in 2025 and is forecast to reach around USD 3.02 trillion by 2030. Separately, Juniper Research forecasts that digital wallet users worldwide will exceed 5.2 billion by 2026, up from 3.4 billion in 2022.

The Rise of Wallet-Led Prepaid Issuance

As mobile-first consumers increasingly prefer digitally managed spending tools, prepaid cards are enjoying a resurgence. Whether it’s a co-branded prepaid card linked to a wallet or an instant virtual card generated through an app, these products deliver control, flexibility, and transparency.

By embedding prepaid card issuance within a digital wallet ecosystem, fintech startups and payment service providers gain several advantages:

• Faster go-to-market: APIs and BIN sponsorship programs from issuers streamline setup.
• New revenue streams: Fee models include card issuance charges, interchange income, top-up commissions, and FX markups for international spends.
• Higher engagement: Linking a card to an everyday-use wallet drives transactions, retention, and lifetime value.
• Regulatory alignment: Prepaid card frameworks are governed under RBI’s PPI guidelines, allowing wallet operators regulated access to payment rails.

Key Use Cases Across Industries

The prepaid-wallet combination is not a one-industry play. Its versatility is precisely what makes it compelling:

1. Fintech & Neo-banking

Neobanks and fintech apps can issue branded prepaid cards directly within their wallets, enabling spending controls, instant virtual card issuance, and interchange-based revenue without needing a full banking licence. The card becomes the gateway to a broader financial relationship—savings, lending, and investment products.

2. Telecom Operators

Telcos already have massive user bases and wallet infrastructure. Adding prepaid card issuance lets them monetise existing subscribers through card transactions, airtime top-ups, and bill payments—turning their wallets into full-fledged financial platforms.

3. Corporate & Enterprise

Businesses use virtual prepaid cards for employee expense management, vendor payments, and accounts payable automation. Issuing these through a corporate wallet eliminates paperwork, enforces spending controls, and provides real-time reconciliation and audit trails.

4. Government Disbursements

Public benefit programs—from unemployment assistance to subsidies—increasingly rely on prepaid cards issued through digital wallets for secure, auditable, and cost-effective fund distribution to citizens.

5. Gig Economy & Payroll

Platforms serving gig workers and freelancers can issue prepaid cards linked to wallets for instant payouts. This solves the speed-of-payment challenge while generating interchange revenue on every dollar the worker spends.

6. E-Commerce & Loyalty

Retailers and marketplaces can issue closed-loop or open-loop prepaid cards as part of loyalty and reward programs, driving repeat purchases, higher basket sizes, and deeper customer engagement.

Conclusion

Prepaid card issuance through digital wallets is no longer a niche play for unbanked populations. It is a scalable, multi-revenue-stream business model that spans fintech, banking, telecom, enterprise, and government sectors. The technology to launch is mature, the market demand is proven, and the revenue opportunity is compounding.

Ready to Launch Your Prepaid Card Program? Discover how Toucan’s White-Label Wallet can unlock new revenue for your business.

Visit toucanus.com to schedule a demo →

Frequently Asked Questions

Q1: What Are Prepaid Cards Issued Through Digital Wallets?

A: Prepaid cards linked to digital wallets let users load funds digitally and spend via virtual or physical cards. Unlike traditional debit cards, they’re non-linked to bank accounts, offering controlled spending for consumers, businesses, and gig workers.

Q2: What’s Required for Compliant Prepaid Card Issuance?

A: In India, comply with RBI’s PPI (Prepaid Payment Instruments) guidelines, either as a licensed wallet or via partnerships with authorized issuers/BIN sponsors. Globally, PSD2/PSD3 (EU) and similar regs apply.

Q3: Can Small Businesses Use Wallet-Issued Prepaid Cards?

A: Yes, for employee payouts, vendor payments, or customer incentives.