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26 October 2006 European PrePaid: Whats the business? Chris Reddish, Group Head European Prepaid MasterCard International.

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Presentation on theme: "26 October 2006 European PrePaid: Whats the business? Chris Reddish, Group Head European Prepaid MasterCard International."— Presentation transcript:

1 26 October 2006 European PrePaid: Whats the business? Chris Reddish, Group Head European Prepaid MasterCard International

2 26 October 2006MasterCard PrePaid - Innovation Delivered2 Prepaid applications are used in a variety of models and distributed through different channels Promotions Subscription Internet Teenager Incentive Benefits Financial institutions Non-FIs Closed loop (1) Restricted acceptance (2) Open loop (3) Luncheon Distribution channel to end- user Payroll Travel Money share Travel / Per diem Insurance Gift (1)Closed loop = acceptance restricted to a single merchant. (2)Restricted acceptance by geography, type of goods, group of merchants, type of terminals (e.g. POS only, internet only) (3)Open loop = international acceptance and inter-operability Acceptance model

3 26 October 2006MasterCard PrePaid - Innovation Delivered3 Agenda Introduction Opportunity Model Case Studies Key Programme design Parameters Business Case vs Programme Design Main Corporate PrePaid Applications Conclusions

4 26 October 2006MasterCard PrePaid - Innovation Delivered4 Benefits of Prepaid for companies and issuers TO COMPANIES & ORGANISATIONS Cost reduction – Replacement of costly cheques and cash – Allows the organization to focus on core business not distribution of funds Improve information, control and fraud prevention Streamlined processes (electronic card activation loading, reporting) Provide better services to employees TO ISSUERS Generate new revenue stream by moving traditional check and cash purchases to payment cards Build new relationships with companies looking for innovative ways to streamline costly and time consuming paper based transactions Enhance customer relationships and encourage greater loyalty by adding value to existing corporate partnerships New opportunity with minimal changes to existing processes

5 26 October 2006MasterCard PrePaid - Innovation Delivered5 Agenda Introduction Opportunity Model Case Studies Key Programme design Parameters Business Case vs Programme Design Main Corporate PrePaid Applications Conclusions

6 26 October 2006MasterCard PrePaid - Innovation Delivered6 Recent Key European programs UK: Cash2Go travel card APS CashPlus card PPT/NAG Splash Plastic, Western Union travel card Bullring shopping mall card Italy: BNL prepaid card Intesa Flash BPU Libra Cash ICCRI Kalibra Norway: DnB NOR Gavekort Poland: Municipal card Switzerland: EasyCash card Austria: EP Austria travel card World Cup Gift Card NL: ABN-Amro programs with city councils ING: pilot with Tempo Team (Randstad) Spain: BBVA corporate prepaid cards

7 26 October 2006MasterCard PrePaid - Innovation Delivered7 Luncheon Card Product Description / Attributes First Prepaid Bank Card in the world as a true and efficient solution for member participants to deliver a luncheon voucher replacement card MasterCard® Commercial branded card limited by merchant category code to domestic restaurants and amounts. This product is designed in-line with internal regulatory laws Advantages for all the participants in the process: – For employee: more than 200k restaurants accept the card. – More secure than vouchers or cash – For company: easy to load and reduce cost of delivering (only one time every 2 years) – For restaurant: less discount than vouchers, less risk than cash, faster than any other method

8 26 October 2006MasterCard PrePaid - Innovation Delivered8 Results More than 3,000 companies and over 15,000 employees are eating with a BBVA Luncheon MasterCard® card. It expects to get 25,000 cards by the end of 2006 Type of customers: – Small company 50% – Large and Multinational 25% (i.e. Telefónica) – Government (central and local): 25% (i.e Generalitat Catalunya)

9 26 October 2006MasterCard PrePaid - Innovation Delivered9 Per Diem Card Participant Advantages: – For attendees: cash replaced but a simple reload with correct amounts on regular basis. More secure than vouchers or cash. Card can be replaced with residual value if lost/stolen. Can be taken home after meetings/conferences without need to convert currency – For international institutions: easy to load and reduced cost of delivering, a secure way of providing service – For SwissBankers: introduction into Swiss domestic market, allowing quick expansion because of modular set-up. Maestro® branded EMV- chip card to allow wide- spread usage inside and outside Switzerland at POS and ATM. Cardholders balance and transactions can be verified through IVR and web

10 26 October 2006MasterCard PrePaid - Innovation Delivered10 Results Introduced during 1 Q 2006 30,000 cards to be issued in 3 years Acceptance in Switzerland and elsewhere 100% PIN on- line, fully secured at ATMs and POS EMV-chip providing additional security

11 26 October 2006MasterCard PrePaid - Innovation Delivered11 Social Benefits Card Product Description Product setup – Cirrus® or Maestro ® prefunded magstripe card to allow wide spread usage inside and outside the Netherlands at ATM or POS. – Cards are reloaded on a weekly basis replacing cash disbursements and increasing convenience for clients. Also reducing infra-structural costs for the local governments. Advantages for participants: – For cardholders: cash replacement so no longer needed to report to the local office for cash. Card can be replaced with residual value if lost/stolen. – For local government: full control, easy to load and reduced cost of delivering, a secure way of providing service. – For ABN AMRO Bank: introduction into new markets (USP), allowing quick expansion with modular set-up.

12 26 October 2006MasterCard PrePaid - Innovation Delivered12 ABN AMRO Prepaid Card Results Introduced during 2004 in the city of Enschede in the east of the Netherlands. Successfully rolled out in other large cities in the Netherlands, such as Groningen, Apeldoorn, Den Haag and Breda The solution enabled the municipality to end historic practice of handing out cheques or cash through payment windows High usage and satisfaction rates (about 4-5 trxns per month) Acceptance in the Netherlands and elsewhere; 100% PIN on-line, fully secured at ATMs and Maestro POS More than 10,000 cards issued

13 26 October 2006MasterCard PrePaid - Innovation Delivered13 Many opportunities…. All data: Source PSEL Draft Report April 2006

14 26 October 2006MasterCard PrePaid - Innovation Delivered14 Introduction Opportunity Model Case Studies Key Programme design Parameters Business Case vs Programme Design Main Corporate PrePaid Applications Conclusions

15 26 October 2006MasterCard PrePaid - Innovation Delivered15 Key program design parameters Delivery channels – By company to employees – By company to clients Issuing process (batch, instant issuing,…) Value-risk positioning & supporting technology (ex: chip vs mag stripe) Card features (design, expiration date,…) CARD DELIVERYLOADINGSPENDINGSERVICES Re-loadable (salary, travel) vs. Disposable (incentive) Top-up options – Usually bank transfer Restricted acceptance (E.g. incentive) or open loop (E.g. salary, travel) POS, ATM, CAT, internet or Mo/To Domestic use only or international use Balance inquiry, transaction history, card blocking, emergency card replacement, ATM locator, PIN change,… Channels: IVRU, web, customer help desk, physical branches Pricing?

16 26 October 2006MasterCard PrePaid - Innovation Delivered16 Introduction Opportunity Model European Market Report Key Programme design Parameters Business Case vs Programme Design Main Corporate PrePaid Applications Conclusions

17 26 October 2006MasterCard PrePaid - Innovation Delivered17 The business case varies greatly according to the program design Card fees, activation & maintenance fees Cardholder service fees Interchange fees (POS) Forex mark-up Breakage (money never claimed) Float Substitution economics Investments – Technical set-up – Marketing Card production & management – Plastic, chip, PIN management, personalization, distribution,… Operations – Service provider charges – ATM service fees & Network fees Implementation CARD & DELIVERYLOADINGSPENDINGSERVICES TARGETED SEGMENT + VALUE PROPOSITION

18 26 October 2006MasterCard PrePaid - Innovation Delivered18 Introduction Opportunity Model European Market Report Key Programme design Parameters Business Case vs Programme Design Main Corporate PrePaid Applications Conclusions

19 26 October 2006MasterCard PrePaid - Innovation Delivered19 Main Corporate PrePaid applications Travel / Per Diem cards – Typically replaces cash disbursements or employee self-funding – More perceived control that traditional T&E card – Ideal for specific employee/industry segments Incentive, gift and compensation cards – Employee incentives and gifts – Consumer incentives and b2b incentives – Miscellaneous customer disbursements (insurance, compensation) Salary cards & remittance – Low-skilled, migrant and un-banked Government applications – Welfare benefits

20 26 October 2006MasterCard PrePaid - Innovation Delivered20 Introduction Opportunity Model European Market Report Key Programme design Parameters Business Case vs Programme Design Main Corporate PrePaid Applications Conclusion

21 26 October 2006MasterCard PrePaid - Innovation Delivered21 Prepaid and New Technology….

22 26 October 2006MasterCard PrePaid - Innovation Delivered22 Conclusive remarks Business Users are onboard for: Greater access to electronic payment tools Make business easier; Business travel Payment for supplies/services needed in the everyday running of a business. BUT the business target market calls for particularly impactful marketing and communication action : Increasing awareness and knowledge Promoting the Prepaid business case

23 Thank you.


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