Citi prepaidGlobal banking
giant Citi has made a name for itself in the prepaid segment,
having secured strong footholds in markets like Poland, the Czech
Republic and in the emerging Middle East market. It is now hoping
to establish itself in Australia, a market where prepaid has been
slow to gain traction.

Citi is planning a major push into
Australia by offering corporate incentive prepaid cards to
businesses who will then issue them to customers – the cards will
be branded with the company’s logo.

Citi already provides such cards to
customers of car manufacturer Ford and will shortly unveil deals
with 10 other companies over the next couple of months. Ford
customers who buy a car are rewarded with a card worth A$250
($226), which can be spent at any retail outlet in Australia.

According to Citi Australia’s
prepaid head, Jason Tiede, the size of the consumer retail market
in Australia makes it attractive.

“In terms of the Australian market
we looked at high-level demographics, per capita income, and card
acceptance rates, and we really looked for an environment where
there’s great competition between consumer companies,” Tiede
said.

Citi’s focus will be in the
telecom, consumer electronics, IT, automotive and insurance sectors
– elsewhere in the world, corporate incentive prepaid cards are
already used widely in these segments.

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By GlobalData

According to Tiede, Citi has been
evaluating the market conditions in preparation for the launch for
at least a year, and the prepaid business will operate separately
from Citi’s credit card platform.

“Australia is the first market we
have launched this product in the Asia-Pacific region,” Tiede said.
“We have it in 10 countries and we have 1,300 clients. Instead of
receiving a cheque you receive a branded card, which for the
corporate is practically a billboard in their customer’s
wallet.”

Australian prepaid slow to
take off

Payment numbers chartThe Australian payment card market has been slow to develop
the prepaid segment for a number of reasons.

Firstly, it is similar to the UK in
that credit and debit cards are long established forms of payment
and well over 90 percent of the population is classed as banked,
leaving little room for prepaid to grow in segments that it has
been designed for (including the unbanked and migrant workers).
Secondly, Australian debit cards (otherwise known as EFTPOS cards)
are by far the preferred form of card payment.

Citi is the third bank in Australia
to offer prepaid cards after ANZ Bank and National Australia Bank
(NAB), which issue prepaid gift cards – however, NAB recently
stated its gift cards are “temporarily unavailable” through its
branches.

And despite concerted efforts by
banks and payment networks in the country, Australian consumers
remain wary of prepaid – the collapse of the BOPO prepaid card in
2008 caused widespread media controversy which may have left
consumers afraid of not being able to access funds loaded onto
prepaid cards.

BOPO was launched by e-bill
specialist Bill Express in 2006, but the company went into
administration in July 2008, leaving thousands of cardholders in
limbo as merchants stopped accepting BOPO cards amid uncertainty
over the future of Bill Express.

It appears that, for the time being, the corporate prepaid
market will remain the safer option for companies looking to
promote the uptake of prepaid in Australia – and Citi is taking
this approach until consumer market conditions become more
favourable.