The staggering growth that the prepaid industry is experiencing in the Middle East echoed in the rooms of the Shangri-La Hotel, which hosted the Prepaid Summit: Middle East 2013 in Dubai. Sara Perria reports on this geographical trend.
The Middle East is clearly set to lead the global growth of prepaid: according to data presented by Visa during Dubai’s Prepaid Summit: Middle East 2013, the scheme’s prepaid total volume grew by 127% between 2007 and 2012, with an exponential acceleration that hit a 92% growth year-on-year in 2012.
Go deeper with GlobalData
There are now 10m Visa prepaid cards in the Middle East, ten product types and over a hundred active programmes.
This is why Visa general manager, MENA region, Kamran Siddiqi opened the summit stressing that prepaid is a priority for Visa’s future strategy.
"Prepaid can change people’s behaviour, moving it from cash to electronic payments and we are very excited about its potentials," he says.
This conclusion was shared by the panellists, who discussed the implications of government policies, regulation and the development of prepaid with the advent of mobile payments.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataFrancesco Burelli, partner at Value Partners, said: "Prepaid is growing at a double digit growth, with Russia and the Middle East growing at the fastest rate, up by 144% and 28% respectively."
"The 28% CAGR from 2010 to 2012 is down from the 34% of the previous two years, reflecting the overall economic climate but still showing much more resilience than other geographies such as North America and Western Europe ."
What’s more, Burelli said, the Middle East offers a large number of untapped opportunities, from travel and online to specific segments such as youth and unbanked.
Indeed the population in the Middle East is extremely young, with almost a third under-16. This adds to a large unbanked population, almost 60% vs a global 46% figure.
At the same time, Internet connection is growing fast, fostering e-commerce; smartphones penetration is forecasted to increase by 23% in the coming year, extending the opportunities that can come from prepaid wallets.
New regulation in the Middle East is driving prepaid growth as well, following the UAE government’s decision to adopt this tool for pay rolls. In Visa’s case, payroll represents 50% of the prepaid business, according to its Visanet Operating Certificate report.
Scott Salmon, head of prepaid products in the CEMEA region said: "We made enormous progress in the past two years in the Middle East, to the point that this region has overtaken India as our first prepaid market."
The growth has been fostered by government regulation on payroll, leading to a 92% growth in Visa prepaid total volume year on year for the fiscal ending September 2012. Ten million prepaid Visa cards have been issued and there are over a hundred active programmes and over ten prepaid product types.
Salary cards – in the UAE only – have registered over 50% growth.
Visa believes that future opportunities within the prepaid business will come from travel cards, government agencies and general purpose and virtual prepaid cards.
The Middle East region is very suitable for travel cards but this is a largely untapped opportunity: we expect big things to come from it. At the same time, government agencies are seeking more efficient solutions to displace services.
The high number of youngsters means that there is scope to engage this segment of the population as well, Salmon said.
The head of prepaid product in the CEMEA also highlights some critical guidelines that have to be followed to generate a successful business case:
"The value proposition is central, meaning it has to be understood who the customer is and why a prepaid card would allow him to do what he wants to do better."
Diversification is also central, both in terms of customers and delivery channels: "Being prefunded the distribution is much wider and it includes new stakeholders and partnerships, from airlines, to post offices to governments," he added.
Visa director of prepaid in the CEMEA region Richard Bialek focused on the opportunities coming from travel cards, "an appealing proposition in terms of convenience and safety".
David Parker, chief executive of Polymath Consulting invited the public to see prepaid not solely as a product per se, but more as a feature of other products and offers: for example you can have a student ID card or a football season ticket, with a prepaid feature.
The student will use his card primarily as an ID, to purchase goods or access to night clubs, for example. This card, though, will be much more than a simple document and it will allow you to purchase goods and track expenses.
The speakers also debated about the future of mobile payments and its links to prepaid. A division emerged between those convinced that mobile payments will be a reality in the near future and those who believe it will take at least ten years for this technology to take off.
The reason is simple: the current working generation, namely those in charge of the majority of payments, have a close relationship with mobile technology. Their children and the younger generation in general – teenagers for example – have a symbiotic relationship with their smart phones. They will not do anything without it and the guess – and hope – of the payment industry is that they will pay with their device as well, as soon as they will be the ones ‘in charge’.
"Prepaid Summit in the Middle East is a reminder of how prepaid has gained ground. The prepaid sector has grown by 50% in the MENA region over the last 12 months and today is the accepted solution across many industries such as healthcare and insurance, among others," Siddiqi said.
"From our perspective in Visa, prepaid allows us to reach consumers who don’t have access to credit or debit cards – there is a huge growth opportunity, more so with the sector’s synergy with mobile payments. As a trusted partner, Visa continues to work with governments and regulators to ensure the safety, convenience and efficiency of the payment networks," he said..
Timetric group publisher and chairman of the event Andy Cook concluded: "It is clear that this region offers tremendous opportunities and that prepaid is growing steadily. As for mobile payments, it is not a question of if but of when and how," he said.
The 2013 summit is the best event in terms of participation and the range of expert sessions we had. This is the fourth prepaid summit in Dubai and clearly the market has come a long way from when we introduced this event to the market," said Cook
VRL Prepaid Middle East Awards 2013
The winners of the VRL Prepaid Middle East Awards 2013 were also announced during the one-day conference in Dubai.
The ceremony followed VRL’s Prepaid Summit Middle East, sponsored by Visa and aimed at celebrating the most dynamic players in the prepaid industry, as the region is quickly becoming a centre for innovation.
The winner of the outstanding Innovation in Prepaid award is:
Bayani Card from RAK Bank
The Marketing Campaign of the Year award, which saw a significant rise in entries this year, went to:
MAF Finance for the MyNet Card campaign
Industry Partner of the Year is:
MAF Finance
Closed-loop or Retailer Programme of the year is:
Abu Dhabi Islamic Bank’s Landmark Gift Card
Open-loop Prepaid Card Programme of the year is:
The Sharjah Islamic Bank COOP Prepaid Card
The last award – Industry Contributor of the Year – recognises the most outstanding achievement from an individual working in the industry.
This year the award was given to Commercial Bank of Dubai ‘s head of cards, Souheil Joesph Yammine.
Timetric group publisher and chairman of the event Andy Cook said, "It is clear that this region offers tremendous opportunities and that prepaid is growing steadily. As for mobile payments, it is not a question of if but of when and how."
Francesco Burelli, partner at Value Partners agreed, stating that "prepaid is growing at double digits, with Russia and the Middle East growing at the fastest rate, up by 144% and 28% respectively."
The judging panel included: David Parker, chief executive of Polymath Consulting, Walter Kleinschmidt, President of R2E Consultants, Josef Szekeres, Head of Financial Services at CGI Business Consulting, Amjed Shacker, Client Partner & Country Manager for Saudi Arabia at Pedersen & Partners, and James Ratcliff, who chaired the panel.
