The Belgian post office bpaid general purpose reloadable prepaid card was launched earlier this year and sold far beyond expectations. Sara Perria asks whether the post-office ingredient is enough to guarantee a success that can be replicated elsewhere
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The Belgian post office bpaid general purpose reloadable prepaid card has sold 60,000 units since it launched in February 2012. The growth-trend is set to continue and, although it took 16 months to develop the idea, the result was far beyond expectations for a small country with no prepaid industry to speak of.
This success shows of how sensitive prepaid is to cultural and regional differences. The idea of a prepaid issued by a post office recalls an icon of this industry: Italy’s Poste Italiane postepay.
Both operators had to find new ways of driving revenues, having had to face a significant volume-decline in their traditional core activity, mail.
The secret of an innovative source of revenue may then appear to be simple and ready to be replicated elsewhere, since post offices have high brand equity and a large distribution network.
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By GlobalData
Post offices and prepaid: is this enough?
To introduce the unexpected take-up of the MasterCard bpaid card, bpost director of marketing Jan Smets says: "Belgium is not famous for many things. Among these, it is not famous for prepaid".
Introducing a prepaid card in this country of 11m inhabitants was a gamble. There were no other success stories. E-commerce was not a big driver in Belgium, where short distances and high density mean small shops are the favourite destination and the web accounts for only a 2% of consumers’ retail expenditures.
However, other characteristics of the Belgium market seemed to make it ideal for this type of product: over 75% of payment transactions are done with cash, while less than 50% of citizens own a credit card, a 2010 study presented by Smets has shown. Solvency issues are the main reason stopping consumers from using credit.
The decision was made to launch the bpaid card as a no-frills, general purpose card with a simple message: it will help you to manage expenses. But is that enough?
"It depends on the context of the country," Smets says. "In both Italy and Belgium, the post office branch network is a widely spread and very dense network with a very trustworthy reliable image," he says.
Belgium post office has 1,400 branches: 700 are directly owned by the post office and the others are within retail outlets. It receives 40m visits a year, meaning each Belgian visits the post office an average of four times a year.
"We therefore have the three necessary characteristics: proximity, reliability, modernisation. We may be perceived as less than sexy, we may not be adventurous, but we are reliable," Smets says, stressing this has been a relevant factor during the banking crisis.
High density of offices and high level of trustfulness are the two ‘traditional’ ingredients of the bpaid success.
However, had the post office remained always the same, it probably would not have been able to support the expansion and the launch of new financial products.
"The third condition that we have met is that the branch-personnel have evolved," Smets explains.
"The post office of ten or twenty years ago, with employees counting the hours to go home, would not have been able to sell cards and push the product," Smets says.
"Nobody is going to enter the post office and say ‘I want a prepaid’, but the staff can present the product and kindle the interest of a client who has entered into one of the many premises for something else.
"Our 3,000 employees have been trained to develop a commercial attitude and are commercially skilled and able to sell the cards and push the product," Smits stresses.
"In other countries we see post offices in financial trouble, or without their own network: this is why the connection may not always work," Smits says.
"Also, if the prepaid market is already mature, it is more difficult to gain a slice of the market: this was not the case in Belgium, where we have been one of the first ones to have the idea," he says.
Estimates provided by bpost highlight that the overall Benelux prepaid market is now projected to grow 20% per annum to 2017.
The card: low profile, high appeal
The bpaid is a simple product, following an explicit marketing plan. It is presented as a general purpose card that guarantees access to the entire MasterCard network.
"I don’t believe in taking a card and packaging it differently, as an e-commerce card or a youth card for example, while it is always the same card, and we will continue developing our marketing strategy in this direction," Smets tells Cards International.
The card is issued instantly in-branch in three minutes.
Instead of paying for the card, the user receives it for free and pays an annual subscription of EUR12. It can be paid at the post office, through a bank transfer or the internet. The charging fees vary accordingly and are free in the case of a bank transfer, while it costs up to EUR3 when recharged in a post office.
The withdrawal of money at an ATM is charged at EUR1.50 in Belgium, with an additional 1.75% outside the country, depending on local fees.
Additional services include the monitoring of expenses via sms, phone or the internet.
The simplicity of the packaging is reflected in the marketing campaign.
"When you launch a prepaid programme you can focus on the long list of reasons why this product should be appealing. But it is impossible to communicate all the benefits, as these are not always true at the same time for all customers," Smets says. "We decided to focus on budget control."
The card is presented as a powerful tool to control and track expenditure and the image of a woman and her many, many shoes is used to carry the message.
Despite e-commerce not being a favourite retail channel in Belgium, the card is also presented as a safe tool to purchase on the internet. There are no data available to show whether the success of the programme has benefited e-commerce in the country, but the link is made very explicit in the card’s marketing material.
‘With the prepaid MasterCard bpaid you no longer need a credit card to make purchases on the internet’, the introductory section on the bpaid website says.
‘It allows you to shop online safely because it is not linked to your bank account,’ the advertisement says.
The message continues highlighting the other benefits of a prepaid: ‘Reload your card whenever you want and determine the amount that suits your budget. Bpaid is simple, you recharge your card and use it across the MasterCard network,’ the introductory section states.
The fact that cardholders are except from many surcharges made by budget airlines is also listed as one of the ‘exceptional’ advantages, as it is by the Italian Postepay.
The revenue issue
In the 16 months spent to conceive how to structure the bpaid, there was one element that was taken for granted: the revenue model.
The decision was made to follow what was considered the most remunerative option, and the post office chose to become both the BIN owner and the issuer.
Has this been a wise decision? Despite the great success, a question mark on whether the prepaid card is driving enough revenue remains.
"In that context, we could also have made different choices, such as charging for the card itself," Smets admits.
The director stresses there is always an upfront investment, the size of which depends on the model you choose to implement.
However, "no good money would be thrown in, if this product weren’t economically viable."
The lesson
The prepaid card was presented as a case study during the Prepaid Summit Europe 2012 in Prague. One of the lessons of the summit has been that prepaid is not simply a card, but a concept. A platform that can be applied to different technologies.
However, before this and together with this, the understanding of regional characteristics is an even stronger priority.
The Belgium bpaid shows this. Its success lays in having made the most of what was already there, as well as being capable of evolving. It shows the characteristics of that regional reality have been read in an accurate and intelligent manner. Nothing has been added. It is probably one of the simplest prepaid products circulating in Europe. But it has been tailored to the mentality of the users.
Not as simple as it seems, if this has become a case study.
