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Opportunities in Prepaid Cards
Market Report, June 2007, 2236  €


Description

IntroductionIt is widely acknowledged that payment cards in their current form can only hope to penetrate a certain portion of overall payment market.
Prepaid cards offer a solution to capturing a greater share of payments and moving other payments towards payment cards.
This report accurately quantifies various prepaid card programs available in order to identify future opportunities in prepaid cards.ScopeThe scope of the discussion in this report is restricted to general purpose prepaid cards issued in the banking sector.
This report quantifies prepaid card market to identify which markets issuers are targeting at present.
Includes comprehensive case studies for each of the markets identified and provides Datamonitor's commentary on the potential of each program.
Concludes with Datamonitor's view on which markets offer the biggest opportunities for the issuers in the future.HighlightsBased on the analysis in this report, it is evident that the prepaid card market has already defined a place for itself within the payment card industry.
Furthermore, while others have been identified to offer only limited opportunities, certain market segments have already proved to be capable of becoming successful in the long run.
The requirement of such programs and their success within different targeted market segments will partly depend on the fact that prepaid cards would be able to provide a better alternative to other options currently available in the market.
Players in the prepaid card market must continue to concentrate on marketing their products and making the product more easily accessible in order for prepaid cards to succeed and reach their full potential.Reasons to PurchaseUnderstand different prepaid card programs available in the marketplace today.
Learn key features and characteristics of various prepaid card programs available globally.
Find out, which markets issuers are targeting now and should be targeting in the future.

Sommaire
 
Overview 1
Catalyst 1
Summary 1
Methodology 1
Table of Contents 2
Table of figures 3
Table of tables 4
Introduction to prepaid cards 5
What is this report about? 5
Who is the target reader? 5
How to use this report 5
Defining prepaid cards 5
This report will only focus on general purpose prepaid cards 6
Opportunities in prepaid cards 7
Introduction 7
Growth has been rapid in several markets 7
In the US, transaction volumes on Visa-branded prepaid cards has doubled during 2005 7
In Latin America, Visa-branded cards rose to 3.3 million by March 2006 7
In Europe, Visa-branded prepaid cards were the fastest growing payment card segment in 2006 7
Prepaid cards can be divided into two segments 7
Opportunities in prepaid cards issued directly to consumers 9
Teen cards have been introduced to capture the teen segment 9
There are two categories of teen products 9
Targeting the teens through the internet 10
The teen segment is also a potential market for POS purchases 10
The take-up of teen cards varies according to the market where it is issued 10
Teen cards issuers at a glance 11
Case study: Visa Buxx - surviving in the volatile US teen market 12
Visa Buxx issuers at a glance 13
The ability to go overdrawn on the card is a potential loophole 15
Datamonitor Cards and Payments Team view 15
General purpose gift card programs are becoming widespread 16
Gift cards are advanced in the US 16
There has been growth in the number of gifts cards available outside of the US 16
Case study: Discover Gift Card - a gift card suitable for any occasion 17
Datamonitor Cards and Payments Team view 17
A similar approached to gift cards has been adopted to replace traveler's cheques 18
Travel card issuers at a glance 18
Case study: American Express Travelers Cheque Card - a safe way of carrying money abroad 18
The Travelers Cheque card offers additional benefits compared to traditional traveler's cheques 19
The fees may prove an obstacle to take-up and there are a number of limitations 20
Datamonitor Cards and Payments Team view 20
Virtual prepaid cards target consumers, who are wary of entering personal details online 21
Case study: Visa 3V card - a unique prepaid card program with virtual applications 21
Datamonitor Cards and Payments Team view 22
There are a number of prepaid card programs aimed particularly at unbanked consumers 23
General purpose card issuers for the unbanked at a glance 23
Case study: MasterCard CashPlus Gold - a card with a multitude of applications for the unbanked 23
The MasterCard CashPlus Gold card offers the unbanked the facilities of a current account 24
However the product is costly and has usage limitations 24
Datamonitor Cards and Payments Team view 26
Opportunities in prepaid cards issued to beneficiaries 26
Payroll cards have been designed as an alternatives to traditional payroll cheques 27
Payroll cards were first introduced in the US market 27
The UK has seen development in payroll cards 28
Case study: Bank of America Visa CashPay card - a prepaid card program for employees without a current account 28
Datamonitor Cards and Payments Team view 29
Prepaid card programs have been adopted to enable insurance and reimbursement payouts 29
Case study: KLM MasterCard CashCard - a prepaid card that helps businesses to improve customer relations 29
Datamonitor Cards and Payments Team view 30
Governments see the benefits of introducing prepaid card programs to replace paper-based processes 30
Prepaid card programs have been extended to provide disaster relief payouts 31
Case study: PKO Bank Polski Maestro Municipal card - a cost-effective alternative to distribute social benefits 31
Citibank Hadlowy also operates a social card program in Poland 31
Datamonitor Cards and Payments Team view 31
Case study: American Red Cross Chase MasterCard card - a prepaid card program developed to provide disaster relief assistance 32
Hurricane Katrina was the major test for prepaid card programs designed to provide disaster assistance 32
Bank of America developed emergency relief cards based for businesses to distribute to employees 32
Datamonitor Cards and Payments Team view 33
Conclusions 34
Introduction 34
Prepaid cards have the greatest potential where they replace a more costly alternative 34
The government sector arises as the prominent market to benefit from prepaid card programs 34
Private sector also offers numerous opportunities for prepaid card issuers 34
Payroll cards are the main example of prepaid cards that employers would find attractive 34
Prepaid cards have potential to be implemented in insurance payouts and reimbursements 35
Prepaid cards issued directly to consumers are likely to remain a niche market, but there are some opportunities 35
Travel cards present the biggest opportunity within cards issued directly to consumers area 35
Commercial clients may see the benefits of introducing prepaid cards for gifts, promotions and rebates 35
By contrast, gift cards are unlikely to appeal to consumers at large because of the fees involved 36
Teen and virtual cards offer limited opportunities, although capturing the teen has its benefits for issuers 36
High fees associated with prepaid cards aimed at the unbaked may restrict take-up of these products 36
However, security remains a concern and will need to be addressed 37
This may lead to tighter regulation of the sector 37
APPENDIX 38
Definitions 38
ATM-only card 38
Co-branded card 38
Credit card 38
Debit card 38
ePurse 38
POS terminal 38
Prepaid card 38
A card that cardholders can load up and then only spend the amount that is loaded on the card. Some prepaid cards can be reloaded, while others can be used once only. There are different types of prepaid card, ranging from ePurses to gift cards to travel cards. 38
Methodology 39
Primary research 39
Secondary research 39
Further reading 40
Ask the analyst 41
Datamonitor consulting 41
Disclaimer 41
List of Tables
Table 1: Examples of issuers in the teen prepaid market, 2007 11
Table 2: Main issuers of Visa Buxx in the US, 2007 13
Table 3: Fees associated with Visa Buxx issued by U.S. Bank, 2007 15
Table 4: Examples of issuers in the travel card market, 2007 18
Table 5: Fees and limits for the Travelers Cheque card in the US, 2007 19
Table 6: Fees and limits for the 3V Visa prepaid vouchers, 2007 22
Table 7: Examples of issuers offering prepaid cards for the unbanked, 2007 23
Table 8: Fees and limits for the MasterCard CashPlus Gold cards, 2007 25
Table 9: Visa payroll cards issuers in the US, 2007 28
Table 10: Current relevant Datamonitor publications, 2007 40
Table 11: Future relevant Datamonitor publications, 2007 40
List of Figures
Figure 1: The two sub-categories of general purpose prepaid cards, 2007 8
Figure 2: Financial quiz on US Bank website teaches teens how to manage a budget in real life 14
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