As one of the UK’s foremost
prepaid solution providers, and a full MasterCard member with its
own closed-loop processing capability and heritage in complex
systems integration, G-T-P’s profile is on the rise. Roy Driver caught up with chief
executive Helen Child to talk about the company, its plans and
where it has come from.
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Cards International: How is G-T-P
structured and what is the history of the company?
Helen Child: The company was founded
eight years ago and, as one of the founding directors, I am pleased
to say we now employ nearly 60 people, with over 6 million cards in
the market through 40-plus programmes.
In terms of structure, G-T-P has two
operating divisions. The closed-loop charge card division has
clients including DSGi, Pilkington, Travelodge and Wolsey. For
these clients we are the issuer, processor, scheme manager and we
manage all debt collection of funds on behalf of the client,
including credit scoring of the customers. The ‘book’ either still
sits with the client or we can arrange for this to be taken off the
client’s balance sheet by working with one of our strategic finance
partners.
The other division is the prepaid division and
that pulls from our heritage of systems integration, and was an
extension in that we moved from doing closed-loop charge cards to
closed-loop gift cards. Although we went into prepaid starting with
closed-loop gift cards, we then with the attainment of a full
e-money licence (EML) moved into restricted loop processing of gift
cards. We are currently rolling out a restricted loop scheme for
the Home Office.
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By GlobalDataWe are delivering our strategy and have
extended this again with our MasterCard issuing license.
Our aim is quite simply to listen to our
clients’ needs and offer the right choice of prepaid solution for
them – we have the luxury of not having to squeeze a round peg into
a square hole!
CI: Why did G-T-P become a MasterCard
issuer first, rather than a programme manager, which many companies
are doing and would seem to be an easier entry point into open-loop
prepaid cards?
HC: The logic to our actions is that
in our charge card division we are already processing tens of
million of pounds of transactions for our clients and the core of
this work is all the 100 percent accurate reconciliation and
detailed compliance and fraud monitoring and prevention activity we
carry out.
Further, G-T-P’s core culture and focus is
built around these skill sets. In my mind, reconciliation,
compliance and fraud are the three key skills you also need to be a
good issuer. It was therefore logical that we take existing skills
and expertise and just expand this into MasterCard issuing. The
other advantage we would see is that we have in effect entered the
value chain at the top rather than coming in as a programme manager
and working upwards.
As the issuer we have the direct relationship
with MasterCard and this will enable us to ensure at all times that
we can give clients the best possible service with the deepest
knowledge of MasterCard’s requirements.
CI: Given the recent announcement by
Visa that they will now also allow full EML holders to obtain Visa
membership, will you also be applying for this as
well?
HC: We obviously continually review
all options based on client needs and the business case. Our focus
for the short term though is to ensure we deliver the very best
MasterCard issuer service to the market.
Having said this, it does clearly
fit with the corporate strategy of being able to offer our clients
a choice, in as much as we now are able to offer clients the choice
of closed, restricted or open-loop prepaid solutions. Never say
never.
CI: In which countries does
G-T-P currently operate programmes?
HC: Our platform is multi-currency,
thus we have been client-driven in terms of the markets we work in.
We work a lot in mainland Europe including working with a leading
French bank to create a customised solution for the French market.
In addition to Europe we are also rolling out programmes in the
Middle East and in South Africa.
CI: In the short term do you
see the greatest growth for G-T-P coming from the charge card
division, closed-loop prepaid or the new open-loop issuer
area?
HC: The forecasts and analysts seem
to suggest that as an overall market it is split 50:50 between open
and closed-loop cards. So we see ourselves being able to offer
clients whatever they want with an excellence of service and
product.
To this end, we focus on both, so I
believe what we are in a position to do is take advantage of where
the market moves.
Given the current economic climate and
uncertainties, I feel that many opportunities and challenges for
clients will arise and it is important that you can offer choices
to those clients on how to address these requirements and fully
meet their needs.
CI: If you look at the US, issuing has
become very competitive – almost commoditised. Do you see this
happening in the UK and Europe as more companies enter the
market?
HC: I think it would be very
dangerous if issuing became in effect a commodity due to the need
for excellence in reconciliation, fraud management and compliance
required. I would argue that while you can automate some of these
functions and aspects, particularly in reconciliation, the core of
what is required cannot be commoditised.
Furthermore, I think the current economic
climate makes apparent the challenges that you have being a
MasterCard issuer. To commoditise these would almost belittle the
importance and role in the value chain. The key here of course is
that ultimately the issuer is accountable to MasterCard and also
the Financial Services Authority for all compliance and settlement
of funds.
CI: Given that G-T-P is the latest
entrant to become a MasterCard issuer and will now be competing
against many others who have been doing it for far longer or who
are far bigger, how do you see G-T-P differentiating its offer in
the marketplace?
HC: We certainly are happy to
benchmark ourselves against the very best in the industry and the
standards they have set. Where we would differentiate is that we
will potentially be swifter – more fleet-footed to market.
I also feel that as we are smaller, and in
some ways closer to many end customers, we can listen better to
what the customers want; whether these are end users or programme
managers’ needs. We can also often be more flexible and adaptable
in terms of pricing structures to meet the requirements and more
importantly structure of the clients’ business.
We may also have a different view on
compliance and risk than some of the other players who are
restricted by their overall parent corporate structures.
If I was to sum it up, it is a real attitude
of partnership, of listening and adapting to clients’ needs. We
certainly feel that the market is big enough, and growing fast
enough for all major issuers to write sustainable and profitable
business and for G-T-P to claim a reasonable slice of this pie, so
to speak.
CI: Given that you already have issuer
accreditation, are you likely to move at any time into offering
other services such as full programme management?
HC: Given that in both the charge
card and closed-loop prepaid areas we offer the full value chain
solution, it would appear to be a logical move. However, certainly
in the short to medium term, I would not see this as something we
will do.
We need to maintain our focus on our
current strategy of becoming the very best MasterCard issuer.
CI: Given the recent
announcement by PSE Consulting that the UK and European markets in
prepaid are growing more slowly than originally forecast, is that a
concern?
HC: While PSE has announced the
high-level results, neither they nor MasterCard have, as far as I
am aware, published the detailed report and it will be interesting
to see what is in that. The bottom line though is, while PSE is
stating that the growth is lower than originally forecast, as Visa
stated at the 2008 VRL Prepaid Summit, they are still seeing
triple-digit prepaid growth in Europe year-on-year and there are no
signs of it slowing down.
Thus while the forecasts may be been scaled
back slightly, overall there is still very significant growth in
this sector for all of us, and particularly for G-T-P operating in
both closed and open-loop, to take advantage of.
CI: What are your plans for G-T-P’s
expansion globally and where do you believe clients are going to
take you next?
HC: On the charge card side we see
continued growth coming from Ireland given that our product is
closed-loop and thus does not incur the stamp duty tax on open-loop
cards.
Further to this, in mainland Europe
we see further opportunities in France, Italy, Sweden, Poland and
Germany.
CI: Visa has started to allow
restricted acceptance open-loop prepaid card products. Do you see
this as a threat or a complimentary offering to your closed-loop
business?
HC: It is a complimentary offering
in that it gives clients a choice. To build a restricted loop
network is time-consuming and while Visa has led the way with its
restricted loop acceptance strategy, we will work within the new
constraints MasterCard has introduced.
To launch the Home Office restricted
loop scheme that I mentioned earlier, has taken significant time,
resources and energy.
CI: Do you see any
opportunities around combined open and closed-loop cards where a
card with a single EMV chip is closed-loop within a chain or area
and open-loop elsewhere?
HC: Possibly, however I feel the
prepaid market needs to focus on volume and large programmes rather
than looking for niche or new technological solutions to try and
drive the market forward.
But what we are finding in the closed-loop
charge card market is that clients are experiencing a high rate of
declines from credit scoring and prepaid is a real option with an
upgrade strategy for those end users. This enables us to deliver to
clients a complete suite of products, enabling the right end
customer to get the right card.
CI: Many of us have seen the
advertising by Visa and MasterCard regarding contactless. Do you
believe there is more that the networks should be doing to promote
prepaid cards and consumer understanding of them? If not, whose
responsibility is it?
HC: I believe it is very
disappointing that Visa and MasterCard have not used their strength
in the market place and significant marketing budgets to educate
the market on prepaid.
I believe if they had put greater resources
into education then the market would be much further developed and
we would be seeing far greater adoption by consumers of prepaid. It
is interesting to note that there is still considerable confusion
on what is prepaid.
VRL’s research at the 2008 Prepaid Summit
stated that 12 percent of consumers believed they had purchased a
Visa/MasterCard/Maestro prepaid card. As penetration levels are far
lower than this, it just demonstrates further that consumers really
don’t understand what prepaid cards are.
As we currently sit in what I would call the
pioneering stage of the growth curve then we all, as in programme
managers, brands and issuers, also have a responsibility, but as
each one of us is relatively small the only overriding brands, and
thus educators, are MasterCard and Visa.
CI: Given the increasing regulation
and compliance in the UK, do you see this as a challenge or
opportunity for the prepaid sector?
HC: I see it as real opportunity for
G-T-P as although we are the ‘new girls’ on the block so to speak
in terms of issuing, we come from a heritage of having to manage
risk, reconcile and do settlement for clients as well as having had
a full EML for some time.
Thus regulation and compliance will always be
a requirement of the financial services sector and what I feel we
at G-T-P do very well is understand how to implement the
regulations effectively and properly but at the same time
understand what opportunities still exist for our clients.
Working with clients as true partners enables
you to understand not just what they ask you for but also what is
really behind the question, and through this you are better able to
understand how the regulations might affect them and thus what
opportunities are created.
CI: What do you see as the greatest
challenges for the prepaid card industry in the UK and Europe over
the next 12-24 months?
HC: The challenges are going to be
wide and varied; you have the regulatory challenges and the varied
interpretations of the Payment Services Directive by different
markets and the cascading of these requirements throughout your
organisation, including compliance.
On a marketing side education will be a really
key industry challenge. We are not just talking about the UK –
education of the new and emerging markets needs to be carried out.
Perhaps the biggest challenge for the industry is for everyone to
be writing financially sustainable business in increasingly
challenging economic times. We all know that it is a volume-driven
market.
From a consumer perspective I see the
challenge as being how do we either justify, or get rid of, the
many fees associated with prepaid cards. Consumers in this climate
are going to become increasingly cost-conscious and we need as an
industry to develop continually innovative solutions for meeting
real consumer needs.
CI: Going forward, what do you believe
the greatest challenge for G-T-P will be and where do you hope to
take the company in the next 12 months?
HC: Within the next 12 months we
have a very clear strategy and have put in place some key building
blocks to deliver on the objectives.
We are looking to further strengthen our
closed-loop processing platform, which is at the heart of
everything we do for our closed-loop market.
On open-loop we will be concentrating on
delivering a flexible, fleet-of-foot issuer service to the market,
and on charge cards we expect to see the continuance of the trend
of clients outsourcing more of their whole book and not just the
collections, thus protecting themselves in this increasingly
challenging market.
Ultimately, the company has grown very fast
over the last eight years and our key challenge has to be to ensure
that the great team we have built up continues to deliver our
company values of pride, passion, innovation, excellence and
integrity, and that we continue to attract the best and brightest
talent in the payments industry to ensure that we can give our
clients real partnerships and great solutions.
Above all our focus will be on increasing
volumes and writing profitable business – blindingly obvious maybe,
but essential given the current economic backdrop we are all
wrestling with.
