Visa International announced globally the launch of the International Travel Card in China, with the potential to serve 10 million outbound Chinese travelers. Visa estimates this opportunity represents just a fraction of the $2.3 trillion global market for prepaid, the newest, most dynamic category of payment products. With nine product categories and more than 100 programs and pilots underway across its six Regions worldwide, Visa’s global prepaid platform is demonstrating the potential for Visa’s 21,000 member financial institutions to deliver the added convenience and security of payment products to more than three billion people worldwide, including those who do not have traditional banking relationships. “Prepaid is Visa’s newest category of everyday payments and a significant expansion of our debit program,” said Malcolm Williamson, president and CEO, Visa International. “Prepaid is part of Visa’s ongoing evolution into a full service payment solutions provider. Prepaid products allow our Members to give customers a full range of payment choices — pay now, pay later or pay before. Our prepaid platform enables our Members to bring Visa choice, convenience, and control to transactions totaling US$2.3 trillion that are today primarily conducted in cash or vouchers.”
International Travel Card in China
Visa introduced the International Travel Card in China after market research showed only five percent of the 10 million annual outbound travelers from China own international payment cards. The study also found more than half of outbound travelers carry over US$1,000 in cash on each trip, facing the inconvenience and security concerns of carrying and converting such large quantities of funds. To make both foreign and domestic travel safer and more convenient, Visa introduced the International Travel Card, which can be purchased using cash, checks, or a credit account and are accepted at more than 29 million physical locations around the world, including more than 800,000 ATMs.
The Prepaid Platform
Visa’s prepaid platform includes industry-leading guidelines, product standards, acceptance mark strategy, and enhanced technology infrastructure that provide Visa issuers substantial flexibility to develop applications with the product features best suited to their markets and customers. Visa has recently enhanced its rules to make the prepaid platform more flexible and responsive to new business opportunities. Visa prepaid cards may be non-personalized, have an expiration date, and can exist in the physical or virtual world. They can be reloadable or disposable. They can be instantly issued. This makes it easier for issuers to customize prepaid products and deliver them through new channels of distribution, including merchants, retail chains, major employers, insurance companies, transportation providers, universities, and other businesses.
What defines prepaid is its ability to bring the utility of electronic payment to situations that traditionally involve cumbersome and labor-intensive cash, checks or paper vouchers. Visa sees this opportunity spanning nine distinct categories: travel; gift-giving; consumer rebates and promotions; emergency needs; employee wages and expenses; domestic and cross-border money transfers; government benefits disbursements; money management for young adults; and electronic payments in rural locations and closed venues (e.g. events, university campuses, military bases and shopping malls).
Visa has been proud to be a leader in bringing definition and solutions to the prepaid payments business, and is pleased to announce that Visa issuers have already introduced prepaid products in each of the nine usage categories. Here are examples of both reloadable and non-reloadable/disposable Visa products currently in pilot or in market:
— Travel. A range of Visa travel cards now allow consumers to make purchases wherever Visa Flag or Visa Electron are accepted and provide 24-hour access to funds in any local currency while offering protection from theft or loss.
— Gifts and Promotions. Visa Gift cards, available in the US, Korea, and Indonesia, are faster and safer for consumers to use and are more cost-effective for merchants to manage than traditional paper-based gift certificates and vouchers. In the U.S. and Poland, businesses are using prepaid cards for promotional purposes, for example as a consumer rebate, a sweepstakes prize, or as a thank-you gift.
— Emergency Needs. One airline is piloting an instant-issue disposable card that can be issued to passengers immediately from an airport customer service counter in place of paper-based hotel and meal vouchers. Other opportunities include payment of insurance claims and distribution of disaster assistance.
— Employee Payroll and Expenses. The Visa Payroll card, currently offered in the US and Russia, helps employers reduce costs associated with producing, handling and distributing paychecks as well as the re-issuance of replacement checks. For workers that do not have a banking relationship, Visa Payroll eliminates the need to wait in long lines at check-cashing centers and carry large amounts of cash. Other Visa products increase the efficiency of handling employee travel or other expenses.
— Money Transfer. The e-Wallet is one example of a Visa money transfer product using the prepaid platform. Offered by Bank Bali in Indonesia, students use it to receive money from their parents in lieu of the more cumbersome, expensive process of telegraphic transfers or other traditional funds transfer methods. And next week, a new Visa product will be announced to help individuals living in the United States transfer funds to family members living in Latin America.
— Government Benefits. The Muscovite Social Card offers Moscow pensioners a convenient way to ride the subway, access healthcare benefits and pay for their everyday expenses. A similar prepaid program is being launched in Latin America. Visa Vale allows businesses to distribute social benefits to employees and replaces costly, paper-based voucher systems.
— Money Management for Young Adults. Visa Buxx, offered now in the US and shortly in Latin America, is a reloadable card designed for teens to use for both general spending and emergency needs (such as roadside assistance) anywhere Visa is accepted. In the US, Visa Buxx has been paired with advanced technologies and a financial skills assessment tool to build money management skills.
— Rural Locations and Closed Venues. Visa prepaid products have been used as a payment tool for various events and venues, such as the Olympics. Another innovative product is Visa Horizon, a chip-based cash alternative that addresses many of the challenges encountered in emerging markets, such as less developed telecommunications and banking infrastructures that might otherwise impede payment processing. Visa Horizon is currently used in Ghana for commercial and general purposes and offers recipients a secure alternative to carrying large volumes of cash.
Extending Visa’s Vision for Universal Commerce to Anyone
Visa prepaid products have demonstrated the potential to offer everyday convenience in a variety of circumstances where consumers and businesses have traditionally used cash, checks or payment vouchers. In addition, because there are typically no specific qualifications to purchase a prepaid card, this category offers first-time cardholders a gateway into mainstream banking. More than three billion consumers around the world — from youth and the elderly to migrant workers and low-income individuals — have traditionally been unable to enjoy the convenience and safety of payment cards. Often with no choice but to use cash exclusively, these individuals encounter difficulties with safeguarding their cash, making travel reservations, or participating in e-commerce. Prepaid is therefore integral to extending Visa’s vision of u-commerce — which is the ability to conduct commerce anywhere, anytime and anyway — to anyone.
To help capture the US$2.3 trillion prepaid opportunity, Visa is continuing to work closely with industry participants to develop a cost/benefit framework for accessing new markets and enhancing relationships with existing customers.
About Visa Visa is the world’s leading payment brand. Visa-branded cards generate more than US$2.3 trillion in annual volume and are accepted at more than 29 million physical locations around the world, including more than 800,000 ATMs. The Visa organization plays a pivotal role in developing innovative payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa is a leader in Internet based payments and is pioneering the creation of u-commerce, or universal commerce — the ability to conduct commerce anywhere, anytime, and any way. For more information, visit [www.corporate.visa.com].