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January 31, 2010

Visa aims for prepaid penetration

As prepaid solutions make their way to Middle Eastern markets, payment networks, banks and other stakeholders are joining forces to smooth the path ahead Visa CEMEA recently launched one of the first prepaid gift cards in the region and is confident many more will be rolled out soon

By Verdict Staff

As prepaid solutions make their way to Middle Eastern markets, payment networks, banks and other stakeholders are joining forces to smooth the path ahead. Visa CEMEA recently launched one of the first prepaid gift cards in the region and is confident many more will be rolled out soon. Victoria Conroy reports.


The Ibn Battuta Mall prepaid gift card was launched in August 2009, in conjunction with Visa CEMEA, Nakheel Retail Shopping Malls (owner of the Ibn Battuta Mall), and payment processor Global Processing Services. The card, launched on the Visa Electron platform, is issued by Union National Bank (UNB), based in the United Arab Emirates (UAE), and is available to purchase at all the mall’s information counters.

UNB was the first bank in the UAE to introduce the prepaid card concept with its Hadiya gift card offering, launched in 2006, which incorporates several card designs and the option for cardholders to personalise the card. The Hadiya card is valid for six months and allow a maximum load value of AED3,500 ($953).

Middle East’s first open-loop gift card

The Ibn Battuta Mall gift card is the first prepaid open-loop gift card to be launched in the Middle East and is also the first prepaid product of any type to be co-branded and distributed by a third party and not directly by a bank.

The Ibn Battuta Mall is one of the largest shopping malls in the Middle East region, covering 1.2 million square feet. Comprising six separately-themed courts, it is host to a wide range of retail and entertainment merchants including the UAE’s first IMAX cinema, and restaurants. There is space for over 5,000 cars, taking the total site space up to 5.4 million square feet. There is considerable clout behind Nakheel Retail as it is part of Retail Corp which itself is part of Dubai World, one of the largest conglomerates in the Middle East and one of the most powerful real estate developers.

According to Marc Jones, marketing manager of brands and distribution at Retail Corp (parent company of Nakheel), there are plans to roll out the card at other locations.

“We are launching a new card at our in-house sports brand Go Sport in March [stores are located at Ibn Battuta mall, Mall of Emirates and the soon-to-open at Mirdiff City Centre & Khaladiya Mall in Abu Dhabi],” he told CI.

The launch of the card was timed to coincide with Eid, the Muslim holy festival, but it is being promoted as a gift idea for other events such as birthdays, weddings, and holiday shopping. It can also be used as a company reward and incentive proposition. Given that prepaid is a relatively new concept for the UAE and the wider Middle East region, stakeholders in the Ibn Battuta card have embarked upon a comprehensive consumer and employee education campaign.

“As well as in-store and customer service training, we undertook a large-scale media campaign and have extensive POS and communications in the mall and on our website,” Jones told CI. “One of the quick-win successes has been the amount of corporate sales and incentive schemes that small businesses have bought into.”

He added that Retail Corp aims to sell around 220 cards per month with an average card value of AED400 ($108).

Visa confident about prepaid prospects

In the Middle East, corporate, payroll and remittance prepaid solutions are expected to grow strongly over the next few years, but according to Stuart Isted, business development manager at Visa CEMEA, consumer prepaid offerings such as the Ibn Battuta gift card have positive prospects too.

“The benefit of the prepaid category is that it has a broad spectrum of product propositions which provide an effective way to extend financial services in segments that have previously relied on cash,” Isted told CI.

“Consumer prepaid is a significant part of the prepaid product set. The focus at Visa is to ensure we have the capability to support our partners in products that are right for them, whichever segment[s] that issuer is targeting.

“In brief, each issuer will have their specific business objectives whether that is to deepen corporate relationships or to identify new consumer customers or cross-sell to an existing base. The Ibn Battuta card is a hybrid of all these factors as it supports the mall in reducing cost of cash and developing a wider brand preference and supports the issuer in their corporate and consumer relationships.

“I am confident with Visa support issuers will be able to identify the prepaid markets that are right for them, that meet their individual business objectives, whether that be in the corporate environment, consumer or both.”

Consumer education a key factor

For Visa CEMEA, the advent of new payment technology will undoubtedly help access and usage of prepaid solutions, but it is consumer education above everything else which will drive growth.

“The key aspect for any prepaid sector is consumer awareness, bringing those who are underserved into financial services and explaining the benefits of prepaid and remittances is important in developing the segment,” Isted said.

“We are focused on our partnerships with stakeholders, helping them to succeed in their implementations across a variety of distribution channels and mediums. I believe each product has the right mix of channels to make it successful, and our job as an industry is to ensure we provide the right solution that meets the end users requirements.”

Although Visa CEMEA does not have a figure for the number of live prepaid programmes in the Middle East region, Isted said the market is ripe for further growth.

“The market is continually evolving for prepaid and as we have seen over the past few months there have been a number of launches across a variety of product categories within prepaid,” he added. “Visa’s leadership role in continuing the development of prepaid in the region is to create awareness both at a bank and a consumer level.

“The scope of prepaid products means that there are a wide variety of areas which issuers can tap and I expect that the prepaid category will continue to replace cash as issuers become more adept at identifying opportunities that resonate with them. Our aim at Visa is to support stakeholders and help them to develop winning propositions.

“By doing this I expect the market will continue to see new products and launches across a variety of segments.”

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