paysafecard has expanded its operations significantly in
recent years. Towards the end of a busy 2010, Louise Naughton
caught up with the company’s CEO Michael Mueller to discuss the
company’s penetration of the Latin American and US
markets.
Go deeper with GlobalData
Online payment
method paysafecard has had a busy six months. It has strengthened
its presence in Latin America and has more recently entered the
highly developed and competitive market that is the US.
The organisation was born in 2000
and originated in Austria and Germany. Its prepaid e-vouchers are
now available in 26 countries worldwide and at 300,000 outlets
across Europe, Latin America and the US.
paysafecard made its first mark on
the Latin American market in June 2009 when it launched in
Argentina. It then partnered with online payment service provider
GlobalCollect a year later, allowing it to increase the
availability of its product in the country and secured a base for
its subsequent launch in Mexico in September.
The paysafecard prepaid e-vouchers
allow those unbanked or security-conscious consumers in Europe and
Latin America to make online cash payments in local currencies
without the need for a bank account or credit card.
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By GlobalDataOctober saw the launch of
paysafecard in the US, but with a difference. Due to more stringent
regulations, it was forced to partner with a bank to issue its
products or obtain its own money transmitter/federal banking
license – a time consuming and expensive process, says Michael
Mueller, CEO of paysafecard. So a partnership with Bancorp Bank was
forged to allow paysafecard access to the US market, which meant a
break from the e-voucher’s usual target market of the unbanked.
Louise Naughton (LN) sits down with
Mueller (MM) to find out where is next for the online payment
method and whether there are any risks surrounding its launch in
the US.
LN: You are previously quoted
as claiming the Latin American market potential is “tremendous”.
Can you elaborate?
MM: What we are
seeing in Latin America is the first indicators of the opportunity
for development. In absolute terms, volumes [of paysafecard’s
prepaid e-vouchers] are not comparable to those in Europe but the
region is cash driven with low card penetration. This combined with
the population’s steadily growing income and interest for
international online applications, makes it very interesting for
payment service providers.
The online space in Latin America
is relatively untapped and while credit and debit card products are
growing, alternative payment methods do not share that
presence.
LN: What are paysafecard’s
current issuance figures in Latin America?
MM: We only hold a
small share in the overall payment volume but nevertheless the
growth rates are very interesting. We see double-digit figures on a
monthly basis and I expect this rate to continue for the next two
to three years.
We are looking to Brazil to further
extend our presence in Latin America and are currently analysing
the market. The development phase is anticipated to last around two
years, mirroring that of our launch in Argentina.
LN: Why did you decide to
partner with Bancorp Bank in the US?
MM: The
development of our launch in the US lasted one year and the bulk of
that time was spent understanding its regulatory requirements and
processes. We very quickly found out that in order for us to issue
paysafecard’s products in the US, we would have to either acquire a
money transmitter or federal banking license or partner with a
bank. As the former would have been expensive and time consuming,
we decided the best solution to cope with the regulatory issues we
faced was to partner with Bancorp Bank.
There were a couple of interested
parties that had experience in the prepaid industry but we decided
to team-up with Bancorp Bank as it had shown itself to be a proven
partner and was highly interested in our business model. I believe
we have a good fit with them in terms of being able to structure
the business to move forward and grow the product further.
The core strength of the
paysafecard product in the European and Latin American regions is
offering digital services for those who do not have a bank account.
We have been forced to adapt our offering for the US market but as
we try to ensure our product is as local as possible, we do not see
any harm with not being able to offer the identical approach in
every country we are active in.
LN: What is the focus of
paysafecard in the US?
MM: Our key focus
is the online gaming space and we offer both the prepaid e-voucher
and a physical scratchcard product. We are also looking to extend
our reach beyond gaming and break into other verticals such as
music downloads.
I would envisage this extension to
happen in the next six to 12 months. We do not foresee any issues
in our plans to do this and we will have a better understanding of
consumer interest once we have further explored these
verticals.
As the US is a highly developed
market, there is a lot of competition in open-loop prepaid cards.
It is very difficult to predict any growth rates. We do know that
this is a great of potential in the market for paysafecard products
as we do not charge the consumer any fees, but it is too early to
release any figures.
LN: What is next for
paysafecard in 2011?
MM: The main focus
of the coming year is developing and exploring the potential of the
markets we are currently active in rather than entering new
markets. We plan to increase our marketing and sales activities and
work hard to make a better product offering for our customers.
