The Future of Prepaid Cards in Australia 2006

Table of Contents

• LIST OF FIGURES
  • Datamonitor's Cards and Payments Knowledge Centre
• CHAPTER 1 INTRODUCTION
  • Scope
  • Who is the target reader?
  • How to use this report
• CHAPTER 2 PREPAID CARDS AND THEIR PURPOSE
  • While prepaid payment cards are a new concept in Australia they have their place in the payment card landscape
    • Prepaid cards have unique features to other payment cards in Australia
      • Prepaid cards are also known as 'pay-before' or 'stored value' cards.
      • Prepaid cards operate as either a smart chip-based card or a host-based cards
      • Prepaid cards fit into the current Australian payment card landscape
  • Prepaid cards are very suitable to specific customer groups which in some cases have not yet been targeted
    • Young consumers, particularly teenagers have historically been overlooked because of their short-term unprofitability but prepaid cards can improve this in the long term
    • A prepaid card issuer can target corporate and government client groups because they will appeal to its security and tracking features
    • Immigrants can have difficulty opening a bank account but still want the functionality of credit and debit cards
    • Unbanked customers are a potential market for prepaid cards because they do not have credit or debit cards
    • Issuers can use prepaid cards to target adults who do not own a credit card
    • Prepaid cards offer credit card facilities to consumers with bad or no credit history
  • Australians responded positively to trials conducted by Visa and MasterCard
    • Transcard had a successful trial that lasted more than six years
    • Consumers responded positively to the technology in Quicklink's trial
    • Visa and MasterCard chose Australia to trial prepaid card technology
    • More recently, the concept of prepaid cards has been successful with the Coles Myer Gift card
• CHAPTER 3 COMPARING PREPAID CARDS
  • The few prepaid cards offered in Australia target general consumers while cards elsewhere are focusing on customer segmentation
    • The 'Bopo' card is Australia's first branded prepaid card and focuses on the whole market
      • The Bopo card is likely to be popular if it exploits its advantages
  • The Travelex 'Cash Passport' cards have limited usability
    • Travelex targets a specific consumer group
    • The Travelex cards focus on a consumer need however there is room for improvement
  • EMerchant's 'Cashcow' card is an unbranded prepaid card targeted at the general population
    • The Cashcow card offers unique features to the corporate and government sector although its uses are limited
  • The 'Visa Buxx' card targets teenagers in the US
    • Visa Buxx targets teenagers with a long term view to profitability
    • The Visa Buxx card successfully targets teenagers although it needs to convince parents as well
  • The 'Postepay' initially targeted all Italian consumers and is now focusing on consumer interest groups
    • Postepay has been very successful as a generic prepaid card
    • Postepay has been successful because of its wide distribution network and is now introducing different versions of its card to target different consumer segments
    • Microsoft has partnered with Postepay to offer a card targeting Xbox consumers
  • The recently launched BBVA MasterCard Tarjetas Recarga Expresas prepaid card specifically targets corporate and government client groups in Spain
    • BBVA's card can be used in corporate and business environments for incentives, gifts or payroll solutions
    • BBVA's card is the first corporate prepaid card and it is expected to be popular in other countries
• CHAPTER 4 THE FUTURE OF PREPAID CARDS IN AUSTRALIA
  • Going forward, issuers of prepaid cards in Australia should focus on the needs of consumer groups that are presently unmet
    • Teenagers are well suited to prepaid cards and while they can be unprofitable in the short-term, this changes when they become adults
      • Understanding the teenage demographic is important before deciding on a marketing package
      • Initial marketing strategies could include targeting specific schools or suburbs
  • Prepaid cards better suit the needs of the corporate and government sectors than traditional corporate cards
  • The travel cash market has room for improved product features
• CHAPTER 5 APPENDIX
  • Supplementary data
  • Definitions
    • Affinity cards
    • AAGR
    • Balances outstanding
    • CAGR
    • Co-branded cards
    • Private-label cards
  • Research methodology
    • Primary research
    • Secondary research
  • Future readings
  • Relevant links
  • Datamonitor's custom research capabilities
  • Asia-Pacific SPP writing team
  • How to contact experts in your industry
  • List of Tables
    • Table 1: The Visa Buxx fees have been criticised as being too high
    • Table 2: Youths and their aspirational ages
    • Table 3: Australian population divided between those 18 years of age and under and those above this age as at June 2005
    • Table 4: Commercial card accounts and transaction values by brand, 2002-2005e
  • List of Figures
    • Figure 1: Prepaid cards have a place in the payment card landscape
    • Figure 2: Approximately 25% of Australians are 18 years of age or younger, this proportion has remained stable over the 2001-2005 period
    • Figure 3: The 'Bopo' card is expected to fill a gap in the Australian cards market
    • Figure 4: Travelex's Cash Passport is an ATM when foreign currency is loaded onto the card. However, if it loaded with Australian dollars it is accepted everywhere Visa is
    • Figure 5: The 'Cashcow' card is suitable for companies to use as an expense card and the face of the card can be changed to show the company logo
    • Figure 6: Visa Buxx targets the teenage market
    • Figure 7: The Visa Buxx card can teach young consumers to budget
    • Figure 8: Postepay is a relatively cheap prepaid card
    • Figure 9: BBVA's corporate prepaid card is likely to be adopted in other countries as it fulfills a need
    • Figure 10: The commercial card market in Australia is large and growing
    • Figure 11: Datamonitor's core consulting capabilities