Over 300 delegates attended this year’s Prepaid Cards
Summit, held in Rome on 12-13 November. The success of Poste
Italiane’s prepaid portfolio, which now has 5.6 million
participants, was an excellent indication of the opportunities in
prepaid – a point the first-rate line-up of speakers keenly
discussed.
Go deeper with GlobalData
VRL, publisher of RBI and its sister titles Cards
International and Electronic Payments International,
ran one of its most successful conferences in mid-November.
The subject was prepaid cards, and
opportunities for financial services institutions, retailers, post
offices and government agencies in adopting prepaid solutions. Over
300 delegates from around the world, representing banks, payment
networks, vendors and programme managers, attended the event and
heard the latest information on prepaid from an array of leading
industry speakers (see www.prepaidcardssummit.com).
The two-day event looked at the successful
implementation of prepaid programmes around the world and recent
launches in countries such as Italy, the UK, Poland, Romania and
the US. It also examined the challenges the prepaid industry faces
in increasing adoption rates in all markets as well as key ones
such as Germany, France and India.
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By GlobalDataSome of these challenges include better
segmentation (i.e. moving away from the notion that prepaid cards
are only for unbanked and underbanked markets); more attractive
fees and charges; and better, stronger marketing with clearer
messages about the benefits of prepaid cards.
Volker Schloenvoigt, a consultant at Edgar
Dunn and Co, voiced concerns that perhaps some mature countries
were still not ready to accept prepaid cards. Germany in particular
was singled out as a market that has been very reluctant to embrace
prepaid – though opportunities for growth remain.
“In Germany… there are about 200,000-300,000
active cards, ignoring gift cards,” Schloenvoigt said.
“There has been some very interesting research
by the German central bank, looking at payment preferences of
consumers. Its conclusion was that only about 0.2 percent of
transactions by value are going through prepaid cards at the
moment.”
He added: “In Germany there are free credit
cards with free ATM access and so forth, and so when you look at
some of the prepaid card pricing it might not necessarily be very
competitive. If you are targeting the unbanked, and then charging
€40 [$60] a year management fees plus all sorts of other costs,
intuitively that does not quite work.”
In contrast, some of the biggest interest in
prepaid cards has come from post offices. Michael Birchall, prepaid
product manager at the UK Post Office, for instance, gave an
exclusive launch announcement to the summit.
Following on from the launch of the Travel
Money prepaid card in 2006 and the Christmas Club and Gift card in
2007, the Post Office has taken the decision to launch a prepaid
closed-loop card, the Post Office Budget card, in 2010.
It works as a deposit product issued by the
Bank of Ireland and operates in the same way as Post Office savings
stamps.
Birchall also announced that the Post Office
is considering launching a sterling denominated general-purpose
prepaid card to leverage the Post Office’s network and brand. An
OJEU (Official Journal of European Union) tender notice will be
published in December 2009 or January 2010 to engage with
interested parties, with Birchall telling delegates to “watch this
space”.
Italy: Europe’s most successful
market
Rome was a fitting location for this
year’s event, given that Italy is home to one of the world’s most
successful prepaid programmes, the Postepay card offered by Poste
Italiane, which now has 5.6 million cards in issue.
Flavio Mastrangelo, head of prepaid products
at BancoPosta, the financial arm of Poste Italiane, and Alessandro
Albano, head of payment systems at BancoPosta, both took to the
stage to outline the development of the programme to date and newer
prepaid innovations that the organisation is now rolling out.
Now in its sixth year, the Poste Italiane
Postepay card has proved incredibly popular with younger consumers.
Around 48 percent of Postepay holders are under the age of 30, who
account for 55 percent of all transactions.
However, Postepay is not just a product for
young consumers in Italy – 10 percent of customers are non-Italian,
and 30 percent of all Postepay transactions take place abroad.
Around 54 percent of Postepay transactions take place on the web.
The success of the product has provided Poste Italiane with a
valuable cross-selling tool – 52 percent of Postepay customers have
another Poste Italiane product.
Poste Italiane is now branching out into other
prepaid products, such as a corporate offering and launching Poste
Italiane as a mobile network operator to capitalise on the
synergies between prepaid and mobile payments.
In 2007 it also introduced a contactless card
and there are now 60,000 active cards in the marketplace, which has
led to Poste Italiane developing multi-application prepaid
propositions for use in the transit and access spaces. Its latest
product launch in January 2010 will be the ‘Postepay&Go’
contactless prepaid card for use on public transport in the city of
Ravenna.
Poste Italiane is also moving into the money
transfer space through its Postepay TWIN proposition, a
card-to-card solution available at over 14,000 outlets of Poste
Italiane targeted at the international remittance segment.
Control spending and cut
costs
Many in the industry have
highlighted prepaid as an ideal consumer and corporate tool to
control spending and cut costs, two themes which have become all
the more important during the recent global economic
turbulence.
The keynote presentation of the summit was
given by Matt Lanford, head of prepaid in Europe at MasterCard
Worldwide, who outlined how the economic situation had created a
“golden opportunity for prepaid” to meet all stakeholder needs.
However, he said, the challenge over the next year was for the
industry to demonstrate that “prepaid is more than a recessionary
phenomenon”.
Prepaid’s consistent strengths, he added,
included no direct link to an individual consumer bank account, the
ability for programmes to be customised as required, and its
alignment with cutting-edge payment technologies and
innovations.
To harness prepaid’s potential, Lanford
stated, it was necessary to target those economies where the
‘prepaid as everyday money’ message is resonating most, and to map
markets where loyalty and dependency upon cash is most prominent.
Corporates and governments also have their parts to play by
advocating the benefits of convenience, security and everyday money
management, and leveraging corporate desire for cost cutting and
efficiency and government drives to promote financial
inclusion.
Above all, Lanford concluded, “prepaid offers
the opportunity to diversify offerings to meet changing consumer
demands, rejuvenate customer relationships and improve
‘stickiness’, differentiate from competitors, and harness valuable
information about customers’ spending habits through the natural
extension of existing product portfolios to include prepaid”.
Here to replace cash
Fiona Duncan, vice-president at Visa Europe
heading up the Prepaid Centre of Excellence, spoke about upcoming
technologies in the prepaid and contactless card sphere, explaining
what she currently sees as the major demands in the market.
“From Visa’s perspective we are here to remove
cash from the marketplace,” Duncan said. “We are not going after
debit, we are not going after credit, we are going after cash and
cheques. But in order to replace cash you need to have a product
that is better than cash.
“One of the major advantages with cash
compared to card is the speed of transaction. If we want to take
cash out of things like ticketing, if we want to take it out of
concert venues for example, if we want to have quick, low-value
purchases, we need speed and the only way you can do that is with
an offline solution.”
Innovations in the credit and debit market
were also covered by Duncan, especially as a product recently
launched by Visa attempts to combine the three.
“We have just launched a product called Simply
One. This puts debit and credit on the same card, and this enables
the consumer to choose how they want to pay at the point of
purchase,” Duncan added. “Now we are in the middle of discussions
with members to launch this as ‘prepaid plus’.
“On this card you’ll start to see issuance of
prepaid plus. Prepaid plus credit, prepaid plus debit and prepaid
plus prepaid. What this means is that as a prepaid issuer you have
the ability to start to integrate other payment applications in for
the consumer at that point.”
For more information on the
event, please visit www.prepaidcardssummit.com. The Prepaid Cards
Summit was kindly supported by MasterCard
(Premier and Workshop sponsor), First
Data (Gold sponsor), SIA SSB
(Gold sponsor), Visa (Gold
sponsor), Accor Services (Silver
sponsor), FIS (Silver sponsor),
PayPal (conference bag branding),
Ukash (badges and lanyards sponsor),
BemroseBooth (exhibitor),
International Business Wales (exhibitor),
Stored Value Solutions (USB sponsor),
Transact Network (lunch session sponsor),
Citi (brand session sponsor),
Epipoli (brand session sponsor),
Laser (brand session sponsor),
eCommLink (brand sponsor),
Euronet Worldwide (brand sponsor), and the
official research partner, TNS.
Research
Exclusive prepaid research from VRL and TNS
One of the key presentations
came from VRL which, again in conjunction with global market
research firm TNS, updated its groundbreaking 2008 research into
prepaid awareness in the UK by widening this year’s research to
over 6,000 consumers in the UK and Italy.
Whereas 50 percent of UK consumers
surveyed were aware of what prepaid cards were and how they worked,
in Italy the figure was 59 percent.
But while 19 percent of Italians surveyed
were not aware of prepaid, that figure rose to 33 percent among UK
consumers, suggesting that issuers and payment networks still have
an uphill job to do in terms of educating consumers.
However, progress is being made – last
year, 10 percent of UK consumers were aware of prepaid cards but
did not really understand how they worked. This year, that figure
has risen to 15 percent, indicating that advertising campaigns by
programme managers and education initiatives are beginning to have
an effect.
Fears about online security are also
helping the uptake of prepaid – people in some markets are still
wary about using their credit and debit cards online, whereas
prepaid offers a relatively risk-free alternative.
The VRL/TNS survey found users of prepaid
cards, in both the UK and Italy, do not perceive they are paying a
lot in monthly fees or charges to use their cards.
Around 40 percent of UK prepaid users
perceive there are no monthly fees, compared to 35 percent of
Italians surveyed. In contrast to perceived viewpoints, costs do
not seem to be a major barrier to use.
To receive the full VRL/TNS
research, as well as to find out more information on all the
presentations at the Prepaid Cards Summit, please contact Jeannie
Lam on +44 (0) 20 7563 5640 or at jeannie.lam@vrlfinancialnews.com
Speakers included (left to
right): John Yeomans of FIS; MasterCard’s Laura Kelly; and
Flavio Mastrangelo, BancoPosta
