John Yeomans, general manager of prepaid and debit at payment processor Fidelity Information Services, describes how pioneering online payments company Moneybookers has integrated prepaid card functionality with its e-wallet to attract a mainstream audience.
Once considered the new kids on the financial service providers’ block, e-wallet companies – epitomised by Moneybookers – are certainly making their mark in the highly competitive online payments sector.
The first e-money issuer in the UK to be authorised by the Financial Services Authority (FSA), Moneybookers offers a range of online payment options and an email person-to-person (P2P) money transfer service, and recently has been named by global business consultancy Deloitte to be the UK’s fastest-growing private equity-backed company. Currently, around 60,000 merchants use Moneybookers’ payments service, including global partners such as eBay.com, Skype and Thomas Cook.
The company provides business access through its network to more than 80 payment options in over 200 countries and last year achieved a transaction volume of €4.5 billion ($6.1 billion). Thanks to a combination of a fast-expanding customer base in current and additional geographic markets and deployment of new services, Moneybookers has built a solid base of well over 11 million account holders. The company is growing by 13,000 new accounts daily and is aiming for another record year during 2010.
A key element in Moneybookers’ success is its astute use of technology to ensure round-the-clock availability, security and ease of use for its web-based service – as well as to enable the expeditious launch of innovative new products. Last October, for example, Fidelity Information Services (FIS) helped the company to launch a prepaid card that provides Moneybookers’ online accountholders with instant access to their cash through the global MasterCard ATM network.
The prepaid cards are issued by Moneybookers’ bank partner, Newcastle Building Society, and processed by FIS. Customers can retrieve money from ATMs displaying the MasterCard acceptance mark anywhere in the world as soon as they have received funds in their Moneybookers’ account, or use the card to buy goods and services, both at point of sale and online. This means that for the first time, customers do not have to put up with a delay while waiting for the money to be transferred through a national clearing system into a separate account.
Unlike other prepaid cards, customers using the Moneybookers prepaid MasterCard do not have to split funds and separately preload the card. Instead, the card synchronises automatically in real time with the funds in the customer’s Moneybookers e-wallet.
The Moneybookers MasterCard can be issued to customers across the EU and they can choose from four different card currencies: euros, sterling, dollars and zlotych. The card application is available in 12 languages, which allows Moneybookers to mirror the geographic reach and localisation of its services – and target emerging markets that have low banking, credit and card penetration.
FIS and Moneybookers team up
When Santander acquired Alliance & Leicester and announced it would be withdrawing support to Moneybookers, the company needed to replace its card issuer and transaction processing partners as quickly as possible to maintain its business development momentum. So flexibility, fast system build, and rapid deployment of a solution with straight-through processing, real-time authorisation and a raft of supporting services were also major factors.
The FIS solution was up and running from a standing start within six months. Moneybookers took a conservative view of how many cards would be issued in the first year of operation – with a target of around 50,000 – but take-up over the months since launch has been considerably higher than anticipated. Yet regardless of whether customer numbers go up or down, as operating costs are aligned to transaction volumes, Moneybookers pays only for what it uses. The system is infinitely scalable, with no limit on how many cards and transactions that can be handled – and importantly, without any degradation or interruption of service.
From an operational perspective, e-wallet customers benefit from greater security as they do not have to expose their credit card details on every website from which they purchase. It is more convenient as payments can be made simply by entering their email address and password. Superior cost control is achieved as customers can only spend the money in their e-wallet, therefore defining the exposed risk themselves, while robust fraud protection is built into the system.
Martin Ott, co-CEO of Moneybookers, said that with FIS providing the company with processing for the prepaid card, customers gain access to a low-cost, real-time money transmission service.
Given the current buoyancy of the prepaid market, this is a great application for prepaid cards. Research has suggested that we would see the number of prepaid cards issued in the UK reach 10.8 million as we enter 2010, with a total card spend value of over a billion dollars1.
As the use of online payments grows, consumers are expecting more sophisticated services such as instant access to their money. The Moneybookers money transfer service is at the leading edge of online payments and its prepaid card is a smart innovation, allowing customers to get instant access to their funds through an online transaction.
(1) Prepaid Card Growth Beneficial To Migrant Workers, Onlyfinance.com. 9 October 2008