Spending on prepaid payment cards
in Europe is
estimated to reach US$164 billion by 2010, according to new Boston
Consulting Group research commissioned by MasterCard Europe.
The research also reveals that whilst the UK is predicted to become
Europe’s largest
single market for prepaid card payments by volume, Russia and Poland are
set to witness
the deepest penetration of prepaid spending as a proportion of total
spend made using
payment cards.
Meanwhile, the use of prepaid cards for the payment of Government
benefits to the
unbanked and by individuals for gifting is set to play a lead role in
driving growth in the
prepaid segment across the Continent.
The BCG research shows that Europe’s predicted total spending figure
amounts to
US$163 billion, 25.4 per cent of the estimated global total of US$645
billion, leaving it
behind the United States, (US$296 billion and 45.9% of the global
total), but well ahead
of Japan (US$59 billion and 9.1% of the global total).
Analysing the European landscape on a market by market basis, BCG
reveals that the
UK’s predicted total prepaid spend of $34 billion by 2010 (5.3% of the
global total)
positions it as Europe’s largest single market and the fourth largest in
the world.
The UK is closely followed by Italy where total spending is estimated to
hit US$33
billion (5.1% of the global total and the fifth largest in the world)
and France, with an
estimated total spend of US$27 billion (4.2 per cent of the global total
and the seventh
largest in the world).
It is in Eastern Europe, however, where prepaid spending is set to make
the biggest
impact as a proportion of total payment card spend. In Poland, total
prepaid spend is
estimated to reach US$11 billion, equivalent to 14.1% of spend using
payments in the
country as a whole. The BCG research also shows that in Russia, the
anticipated total
prepaid spend of US$23 billion represents a 12.6% share of the domestic
market.
According to the research, both markets rank well ahead of their Western
European
neighbours, including Germany, where domestic market penetration is
estimated to reach
7.7% (US$26 billion).
Commenting on the findings at MasterCard’s first European Prepaid
Conference in
Prague, Czech Republic, Chris Reddish, Head of Prepaid, MasterCard
Europe, said: “The
rapid growth of the prepaid card segment is a clear sign of the fact
that consumers, issuers
and public sector bodies are recognizing the benefits provided by this
form of payment as
well as its ability to meet a diverse range of needs.”
Main market drivers
The research shows that one of the main drivers of prepaid spending in
the upcoming
future will be through Government programmes. Prepaid cards help the
public sector
reduce welfare benefit fraud by driving cash out of the system and
ensuring that payments
reach those they are intended for.
In Russia, 23.2% of total government benefit spending is expected to be
routed through
prepaid cards by 2010, accounting for US$13 billion in that market
alone. Similarly, in
Italy prepaid share of total government spend is predicted to reach 28%
(US$14 billion).
According to BCG, the second biggest category of prepaid spend is
identified in ‘Gifting’,
with France and Germany leading the way in Europe. In Germany prepaid is
expected to
account for 15.7% of overall gift card spending (US$16 billion), while
in France the
prepaid spend in this area will go even further and reach 19.8% of
category spend (US$17
billion).
Chris Reddish added, “Prepaid cards are simple to purchase and easy to
use. They
enfranchise consumers by offering them the financial freedom of using a
payment card
without having to open a bank account or undergo credit referencing.
“This means that a broader range of consumer groups can now participate
in the payment
card system and can purchase goods and services via channels such as the
telephone and
the Internet where cash cannot be used. In today’s environment, the
potential of the
prepaid segment is tremendous.”
Additional key Boston Consultant Group findings
– Corporate prepaid spending is expected to reach at least US$14 billion
by 2010 in
Europe. This is a category that has readily gained traction around the
world and has
significant upside potential as companies have started to use prepaid
cards to monitor
staff expenditure more rigorously than previously possible when using cash.
– For international travelers, prepaid cards act as a financial
passport, offering a global
currency which can be accessed anywhere and at anytime, without the
costs associated
with accessing cash. The research shows that prepaid spend in the
consumer travel
category is predicted to reach US$1 billion in France, Germany and the
UK by 2010.
– While the US presently dominates prepaid spend in University campuses,
this category
has gained traction in Western Europe, where prepaid is expected to
reach US$2
billion in the UK and US$1 billion in France, Germany, Italy and Spain
by 2010.
About MasterCard Europe
MasterCard Europe is the entity responsible for managing MasterCard
Worldwide’s
business in Europe – for Europe. With headquarters in Waterloo, Belgium,
MasterCard
Europe works with 51 European countries organized administratively into
three customer
areas, incorporating the Single Euro Payments Area (SEPA), mature
markets and the
developing markets of Europe, stretching as far afield as the eastern
border of Russia.
Through its network of local offices, MasterCard Europe can understand
and meet the
diverse needs of customers in the very different types of markets
throughout Europe,
enabling people to do business in their own way in their own language.
Through MasterCard Worldwide, MasterCard Europe offers its European
customers and
consumers access to leading payment services throughout the world.
MasterCard
Worldwide advances global commerce by providing a critical economic link
among
financial institutions, businesses, cardholders and merchants worldwide.
As a franchisor,
processor and advisor, MasterCard develops and markets payment
solutions, processes
over 16 billion transactions each year, and provides industry-leading
analysis and
consulting services to financial institution customers and merchants.
Through its family
of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard
serves consumers
and businesses in more than 210 countries and territories. For more
information go to
http://www.mastercard.com.
