Overview:

Introduction

Existing prepaid card programs have most potential and scale in markets where they provide a better alternative to existing payment tools. Globally, numerous small-scale prepaid programs exist, but they do not yet add up to a sizable market overall. However the market is now adapting, and introducing more targeted and niche products. This is likely to lead to growth in the near future.

Features and benefits

* Benchmark your performance against the penetration levels and best practice examples of prepaid cards from around the globe.
* Plan your product strategy around analysis of consumer attitudes to prepaid cards, from Datamonitor's Financial Services Consumer Insight survey.
* Get the latest information on the most recent and interesting developments in prepaid and see how this can be applied in your business.

Highlights

Despite some success stories such as in Italy and Singapore where prepaid cards provide a better payment alternative, lack of consumer demand has hindered growth in most markets. Consumers feel they either do not need one, or do not feel prepaid can offer them any benefits.
Within targeted product offerings, travel and the unbanked sectors offer the most opportunities in prepaid cards offered directly to consumers. There is also scope to build prepaid issuer-retailer relationships, where prepaid can be used for everything from gift cards, to the most rudimentary financial services to the unbanked.
Non-banking providers are currently driving innovation and prepaid issuers must back the shift to mobile services since more capabilities and applications are expected to become available in line with wider developments in mobile and NFC.

Your key questions answered

* Who are prepaid cardholders and which consumer groups should be targeted?
* What are consumer attitudes to prepaid cards? How are prepaid cards used?
* What is stopping growth in prepaid cards and how this can be addressed?
* Which global markets and prepaid products have been the most succesful?
* Which consumer groups and product types provide most opportunities in the future?

Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
Despite some success stories lack of consumer demand has hindered growth in the market 2
On a plus side, prepaid products became more targeted which gives scope to drive growth 2
Along with typical low cardholding prepaid card usage has a lot of room for improvement 3
Non-banking providers are driving innovation and prepaid card issuers must back the trend 4
Introduction 11
Unlike other payment cards, prepaid cards typically require a program manager 11
Prepaid cards exist in a variety of forms, targeted at specific audiences and needs 12
The scope of the report covers cards issued to directly to consumers and excludes cards issued to beneficiaries 13
Fees and float interest are important sources of revenue within prepaid card market 14
Consumer Attitudes to Prepaid Cards 15
Introduction 15
Key findings 15
Lack of consumer demand is the major reason for low penetration levels of prepaid cards 16
Penetration level of prepaid cards ranges between 3.2% in France to 51.1% in Italy 16
The fact that consumers see no need for prepaid cards is the single biggest reason for not having a prepaid card 19
Another interesting factor is the reason that there are no prepaid cards that consumers find useful 21
The cost of prepaid cards was also found to be one of the main reasons for not having a prepaid card 21
At the same time only a small proportion of consumers stated that they do not know how to put money onto prepaid cards 22
The proportion of consumers who are unfamiliar with the concept averages one in 10 people 23
There are potential opportunities within banked and unbanked populations 25
India, South Korea, China and Russia have the largest number of unbanked consumers 25
In Italy and Sweden prepaid cardholding is most common among the banked population 26
5.7% of global consumers are considering getting a prepaid for themselves or a family member 27
Interestingly, prepaid cardholders do not fit existing stereotypes 28
Interestingly, the majority of prepaid cardholders are in their mid-30s and up to late 50s 28
The split between males and females is more or less equal when looking at the global average 29
The vast majority of all prepaid cardholders are either married or single on average 30
The largest group of prepaid cardholders are educated to a University-level with a degree 31
Over half of prepaid cardholders surveyed are in full-time employment 32
The majority of prepaid cardholders were found to be earning more than the lowest income band globally 33
Along with typical low cardholding prepaid card usage has room to grow 35
In an average month most consumers top up their card between one and three times 35
Interestingly, nearly a quarter of consumers stated that their prepaid card cannot be topped up globally 35
One in five stated that their prepaid card is toped up by their employer 36
Cash remains by far the most common method for reloading the card 37
Lesson from Key Markets with Prepaid Cards 38
Introduction 38
Key findings 38
Existing prepaid card programs are successful in markets where they provide a better alternative 38
Prepaid cards have proved to be a cost-efficient alternative to current accounts among Italians 38
Prepaid cards are popular in Singapore due to the widespread contactless transit payments 43
Markets with low prepaid cardholding are challenging due to lack of demand but provide some opportunities 47
The UK is dominated by small- to mid-size players and major issuers are yet to embrace the prepaid card market 47
Non-traditional players and services providers are looking towards mobile as a platform to deliver new services in prepaid 49
Monitise delivers servicing of a prepaid card account through a mobile phone to key global players 50
Rêv and Shaka offer a prepaid card linked to a mobile phone to enable remittance payments 50
Mobile prepaid gift cards have been launched over the last year that differentiate on a trend element 51
Opportunities in Banked versus the Unbanked 52
Introduction 52
Key findings 52
Within banked segment, travel provides more scope for growth in the near future than gift cards 52
General purpose gift card programs are becoming more widespread 53
Travel cards are replacing cash and cheques for cross border payments 54
Prepaid card programs for the unbanked are becoming ever more targeted offerings 56
Teen cards remain targeted product offerings especially in the markets that are mature 56
Some banks and retailers see prepaid cards as a way for the unbanked to move into financial services 58
Virtual cards target consumers, who are wary of entering personal details online but remain a niche product 60
APPENDIX 63
Supplementary data 63
Definitions 81
Credit card 81
Debit card 81
EMV 82
e-purse/e-wallet 82
Interchange 82
NFC 82
POS terminal 82
Prepaid card 82
Stored value card 82
Methodology 82
Further reading 83
Ask the analyst 83
Datamonitor consulting 83
Disclaimer 83

TABLE OF FIGURES
Figure 1: Prepaid cards consist of three primary players: program managers, issuers and processors 12
Figure 2: Prepaid cards are often targeted at very specific needs 13
Figure 3: Penetration level of prepaid cards ranges between 3.2% in France and 51.1% in Italy 17
Figure 4: There are some interesting familiarities as well as some very clear differences between markets 18
Figure 5: The concept of contactless transport card is well known in Asia 19
Figure 6: Russia, Italy and India represent greater opportunities since fewer consumers agree with the fact that they don’t need a prepaid card 20
Figure 7: A significant proportion of non-cardholders stated that there are no prepaid cards that they will find useful 21
Figure 8: The fees for prepaid cards was also found to be one of the reasons for not owning a prepaid card 22
Figure 9: Fewer non-cardholders stated that they do not know how to put money of the prepaid cards 23
Figure 10: In Italy, India, Russia, China and South Korea the proportion of consumers are unfamiliar with the concept is among the highest 24
Figure 11: India, South Korea, China and Russia have the largest number of unbanked 25
Figure 12: In Italy and Sweden prepaid cardholding is most common among the banked population 27
Figure 13: More consumers in India, Italy, Singapore and China indicated that they are considering getting a prepaid card 28
Figure 14: The majority of prepaid cardholders are in their mid-30s and up to late 50s 29
Figure 15: The split between males and females is more or less equal when looking at the global average 30
Figure 16: The vast majority of all prepaid cardholders are either married or single on average 31
Figure 17: Majority of prepaid cardholders are educated to a University-level with a degree but collectively those without a degree of higher account for over half of all prepaid cardholders 32
Figure 18: Over half of prepaid cardholders surveyed are in full-time employment but there are clear differences between markets 33
Figure 19: The majority of prepaid cardholders were found to earn more than the lowest income band 34
Figure 20: In an average month most consumers top up the card between one and three times 35
Figure 21: Cardholding of any type of prepaid gift card is highest in South Korea and France 36
Figure 22: Cash remains by far the most common method for reloading the card Error! Bookmark not defined.
Figure 23: Italy accounts for the largest share of prepaid spending online when compared to the rest of the world 39
Figure 24: Prepaid cards are usually used one to three times per month in Italy 40
Figure 25: Postepay was the most commonly held brand by consumers in 2009 41
Figure 26: Postepay prepaid cards in issue and value of float 42
Figure 27: E-Link and NETS dominate this the prepaid card market in Singapore 43
Figure 28: Most Singaporeans have used contactless cards for public transport 44
Figure 29: Product and top information for EZ-Link and NETS 45
Figure 30: Fevo MasterCard combines a prepaid MasterCard and an EZ-Link card in one 46
Figure 31: The prepaid cards sector is dominated by four issuers, accounting for 75% of the market 48
Figure 32: MyPlash successfully markets the cards to youths by using images of popular celebrities 57
Figure 33: Soriana’s My Saving offers customers a loyalty program on a prepaid card 59
Figure 34: Wal-Mart's strategy for low-income earners' 'road to credit' 60
Figure 35: Surcharge fees and limits for the 3V Visa prepaid vouchers 61


TABLE OF TABLES
Table 1: Penetration consumers with a prepaid cards 63
Table 2: Penetration of general purpose payment cards versus prepaid cards 64
Table 3: Penetration of consumers with a contactless transport card 65
Table 4: Proportion of consumers who stated they have no need for prepaid cards 66
Table 5: Table Title 67
Table 6: Table Title 68
Table 8: Table Title 69
Table 9: Table Title 70
Table 6: Table Title 71
Table 7: Table Title 72
Table 11: Table Title 73
Table 12: Table Title 74
Table 13: Table Title 75
Table 14: Table Title 76
Table 15: Table Title 77
Table 16: Table Title 78
Table 1: Income bands by country - Part 1 79
Table 2: Income bands by country - Part 2 79
Table 19: Table Title 80
Table 20: Table Title 81