At VRL‘s third annual Prepaid Summit Middle East the
conversation focused on the realities of business planning and
identifying the true value proposition of prepaid. Delegates were
concerned that lack of education could be a hindrance but the
consensus was that the region still holds great
potential
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The Middle East, and the Gulf Cooperation
Council region in particular, has begun to embrace prepaid in a big
way. The third annual Prepaid Summit Middle East clearly reflected
this. Where in previous years, the conference explored
market-sizing, opportunities and case studies from outside the
region, this year’s event was focused on the detail of launching
and managing prepaid programmes. The key message? The opportunities
for prepaid are clear and undeniable, the question is, how to
capitalise?
The biggest banks’ cards departments, in every
market, are looking for the answer. Certainly, when compared in
straightforward terms with a credit card product, it is hard to see
the appeal of prepaid. But, as delegates and speakers discussed in
the lively sessions at the Dubai Westin, that is where most banks
go wrong: prepaid is not comparable with credit, it must be treated
very differently.
Following an introduction from Visa’s Senior
Business Leader for Prepaid Product Development (APCEMEA) Michael
Mingee, which set the tone for the day – focussing minds on the
importance of effective business planning – Richard Bialek, the
network’s Director of Prepaid Product (CEMEA) got down to details.
Richard used his keynote address to emphasise the fact that, rather
than emulating credit products, prepaid can provide a platform for
innovation, giving issuers significant flexibility and room to
grow.
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By GlobalDataThe mobile opportunity
It is not surprising that, when it comes to
building on this prepaid platform, mobile payments is the area of
greatest interest. On the day, 80% of delegates said they
recognised mobile opportunities in the region, and it was
identified as the single biggest opportunity within prepaid
by more than a 25% of delegates.
Francesco Burelli, partner at Value Partners
Management Consulting, presented research on the mobile
opportunity, a key to prepaid growth. He suggested that Middle
Eastern countries could lead innovation in this area.
Burelli said mobile payments were bound to
thrive in the Middle East region, where average mobile penetration
is over 120%, one of the highest in the world. “Almost 40 per cent
of the region’s population is below 19 years old, and 70% of the
total population is unbanked, which makes the region a hotspot for
prepaid growth,” he said.
Travel and FX
Another area for growth in the Middle East is
travel cards and foreign exchange products. Although a number of
products have been successfully launched in this vertical, the
consensus was that potential remains.
Mohamed Moussa, of research agency TNS MENA,
brought some exclusive consumer research to the event, which
identified the potential of travel prepaid, especially among
outbound tourists and business travellers. About 80% of UAE-based
travellers used cash while travelling internationally, he said. The
right product could easily convert them into prepaid users. This
view was supported by case studies from Ibrahim Ahmed, head of
prepaid cards and electronic payments at Al Fardan Exchange, and
Johan Aras Bin Ibrahim, CEO of Tune Money’s AirAsia payments and
loyalty card product BIG.
Education and awareness
The call for more education for consumers and
stakeholders came from speakers and delegates alike. Some 36% of
delegates (polled on site) said education was a crucial factor in
successful launches. Close to half felt that stakeholders,
including banks, lacked the necessary awareness on how to construct
a successful mobile prepaid product.
“Prepaid is a low cost and efficient payment
mechanism but education of consumers and stakeholders is one of the
key issues that need to be addressed,” said Kunal Bist, director of
treasury and trade solutions at Citigroup Global Markets.
The future of prepaid lies primarily in
non-banking segments – mobile, remittance, shopping and travel. As
such, banks must enable programme managers, with their
vertical-specific knowledge and ability to market products
effectively, to come to the fore.
Only one programme – the Dubai Airport DBX
card – currently runs on this model. And that is the real
opportunity for banks. Not managing programmes ‘soup to nuts’, but
in sponsoring programme managers and issuers well-positioned to
innovate.
Middle East Prepaid
Awards – Rewarding excellence
The success of the first Middle East Prepaid
Awards demonstrates that a strong platform for growth has been
built in the region. The volume of nominations, and the quality of
the winning the winning programmes places the region’s issuers
among the most innovative in the world
The inaugural Middle East Prepaid Awards took
place during this year’s conference. Recent years has seen an
explosion of prepaid programmes in Middle East region, and it is
now the home to some of the most impressive and innovative
programmes in the world.
The awards, sponsored by Visa, have been
designed to recognise and reward the most outstanding companies and
individuals operating within the region’s prepaid industry.
They identify those organisations that are
running unique and successful programmes in the area or which have
shown drive and innovation in this rapidly expanding industry. The
success of these programmes represents a very strong start for what
is still a very new area of payments technology.
