Abstract
Mercator Advisory Group is pleased to announce that its first International
Prepaid Market Readiness report is now available. This report is designed to
provide an overview of the "state of readiness" for prepaid adoption to assist
firms assessing international activity. The report:
1. Examines 72 nations to gauge their market capacity for prepaid payments
based on urban population, infrastructure potential (a Mercator Advisory ratio
combining telecommunications connections and retail banking ubiquity) and the
financial information infrastructure index, a World Bank data series indicator
to banking sector risk.
2. Selects the Top 25 nations exhibiting prepaid market readiness and
provides further risk assessment for these nations based on the recently
released World Economic Forum' s global competitiveness 2006 ranking the World
Bank' s Doing Business 2007 report that evaluates the ease of doing business by
country.
3. Contains descriptions of sample prepaid activity in each of the Top 25
countries as well as a number of the 72 candidate nations.
4. Provides global and regional overviews of market activity.
5. Discusses the potential impact of smartcards and mobile payments on
prepaid' s global spread and includes recommendations on a range of
go-to-market issues.
Attributes of the Top 25 countries include:
- Market size/population figures, ranging from Eastern European markets with
just 1% of China' s half billion urban market to China itself.
- All Top 25 nations have competent retail banking and telecom
infrastructures.
- All have both mobile prepaid and at least one other prepaid segment
present and have seen strong recent card-based transaction growth ranging from
high single digit to over 30%.
- Wide variability in financial transparency exists even within the Top 25
as recent news from Russia and Thailand underscores the risks of investing in
developing economies.
Globally, prepaid payments are universally led by the beachhead prepaid
application of long distance and mobile prepaid minutes. This is the
application that establishes prepaid in the consumer' s mind. Global mobile
growth rates are at an all time high. Second wave prepaid applications
exhibit wide variability and are a country-by-country, segment-by-segment
function. Closed loop transit based on smartcard technologies is often found
as the initial second wave prepaid application and is growing widespread
throughout Europe, Latin America, and Asia.
Other research predicts SEPA-compliance costs for European banks will exceed
$10 Billion with a concomitant loss of payment revenues ranging from $23 - $37
Billion. This is an opening opportunity for third party payment processors to
provide new capabilities including prepaid products. While others predict a
strong drive by European banks for prepaid revenues to offset SEPA costs,
Mercator Advisory Group believes the risk-averse nature of banks may limit the
promised return of Poste Italiane, the Italian Post Office, and its Postepay
card will certainly encourage other non-FIs to get in on the opportunity.
"There' s so such thing as a global prepaid market - each country and each
market segment within each country has to be addressed as a unique
go-to-market proposition," said George Peabody, Research Manager at Mercator
Advisory Group. "While mobile operators with their prepaid products opened up
the prepaid payment vehicle, they, like banks, are just one of the providers
now. Non-FIs could really dominate in prepaid provided their open debit
products have association branding."
Longer term, silicon-based payment mechanisms, both smartcards and mobile
handsets, are blurring the distinctions of what define prepaid cards. Their
prevalence in international markets suggests that experience with US-based
prepaid card product development and marketing will not readily translate to
other nations and to Asia in particular.
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