How Prepaid Cards Can Help Banks to Grow Despite the Pandemic

How Cards Prepaid prepaid cards can help banks to grow despite the pandemic 1A multi-case study Despite the pandemic, the prepaid cards market is showing positive dynamics. In 2020, the sector is estimated to grow Prepaid Cards Prepaid half as fast as last year, and in the next six years, it will achieve an annual growth rate of 11.69%. This pace almost equals to what was forecast before the pandemic. The market concentration is relatively low, with three top issuers of prepaid cards taking no more than 13.5% of the global market. Some B2B customers appear to be the most promising for adopting new prepaid products. Projects targeting government, retail, and corporate segments are expected to enjoy an even higher growth rate than issuance of general-purpose prepaid cards. Transport-related projects seem attractive as well. This multi-case study explores how issuing banks and processors can make successful prepaid products for governments, transport authorities, retailers, and corporates. What technologies and business advantages are needed to launch viable and profitable solutions? Here is an overview of best practices. To skip to a particular chapter, click on its name on the next page. 2 Contents Prepaid Cards Prepaid Prepaid Cards Prepaid Deliver government assistance safely Leave out irrelevant features and communicate and efficiently with prepaid cards ...........................4 the prepaid card’s value clearly ...............................................13 Allow beneficiaries to receive aid with no delay, Help businesses to deliver payrolls no charge, and less health risk ................................................. 4 and control corporate expenses in real time .... 14 Provide governments with full control of disbursements to reach social objectives ......................................................... 4 Facilitate international business connections with a multi-currency option ....................................................15 Make interoperable and marketable Enable real-time and instant features for prepaid solutions for transport .................................7 the new generation of clients ..................................................16 Consider the needs of unbanked Create a prepaid product compatible with several and underbanked employees ...................................................16 means of transport .................................................................... 7 Launch into a well-developed and regulated market .............. 8 Learn more: analytical reports, news, Provide exclusive access to transport services ..................... 9 and industry articles .....................................................17 Include the features to benefit transport owners and passengers .......................................................................... 9 Launch a co-branded prepaid product with a retailer ...................................................................11 Choose a promising co-branding partner ................................11 Offer a prepaid product that retailers can’t manage on their own .......................................................12 3 Allow beneficiaries to receive of fees, which means the government can Deliver government aid with no delay, no charge, spend money earmarked for recipients assistance safely and less health risk more effectively. Prepaid Cards Prepaid Instant disbursements and immediate Contactless payments make prepaid and efficiently with access to funds are the first criteria cards safer than cash in terms of hygiene. prepaid cards that a prepaid card commissioned by Financial aid recipients often belong to the government has to meet. Italian the most vulnerable groups during an municipalities, for example, chose Soldo epidemic, such as senior citizens, who Care cards to distribute financial support face restrictions on movement. That is to more than 20,000 families. Recipients why many governments are switching to could use the cards immediately at any contactless prepaid cards to distribute merchant that accepts Mastercard regular welfare payments. In Chile, for payments. example, social services are going to issue Many governments this year have 400,000 prepaid cards for pensioners and responded to the global pandemic by Despite its convenience, the instant low-income earners by the end of the year. distributing large volumes of aid packages disbursement feature is not quite quickly and securely. Some authorities common for such projects. For example, Provide governments with full in the US it is available to only 13% have transferred up to $1,400 to the control of disbursements to reach of private consumers and 8% of affected citizens as one-time payments, social objectives microbusinesses. while in other countries, aid payments A prepaid card platform must be agile , have been recurring since the start of the To achieve social objectives, prepaid cards since authorities may need to quickly pandemic. With lockdown restrictions and should have no service charges. Soldo adapt the basic infrastructure to the local hygienic recommendations, contact-free Care cards used by Italian authorities budget, types of beneficiaries, or terms of delivery of funds is the best option. Many meet this requirement. They allow free- prepaid card use. In Italy, the Soldo Care governments are commissioning prepaid of-charge reloading, which is beneficial prepaid card was first rolled out by the cards to support their citizens with no for unbanked recipients who can continue Municipality of Milan, then 21 more exclusion for the unbanked. What require- using the card for their needs. No part of regions joined, adapting the prepaid 4 ments do such cards have to meet? the aid budget is diverted to the payment card to their needs. Prepaid cards are usually issued with geographic and time limits on prepaid card use. The British island of Jersey, for ID CARD example, commissioned 105,000 prepaid Prepaid Cards Prepaid cards for £100 each which could be used for purchases exclusively at local businesses until October 31, 2020. In ! this way, the local government aimed to support the island’s inhabitants and spur economic activity. Such restrictions allow governments to control the use of funds: BANK prepaid cards containing childcare prepaid card payments may only be accepted in baby stores, and student cards containing educational loans may only be used 8322 9004 8736 6643 to pay in university offices. AMIR JAFARI 02/25 The security of the platform is critical for the government and the issuing bank. More and more cards are equipped with the biometric identification feature, as one of the strongest methods of fraud protection. In Iraq, for example, the state has suffered financial losses from people using fake IDs to receive illicit monetary support meant for state employees and welfare allowance recipients. To stop 5 fraudulent transactions, the country is adopting a biometric ID system and has an issuing bank to adapt an existing card expertise. Way4 eliminates this obstacle, introduced the national QI Card with product or create a new one from scratch allowing banks to deliver an affordable, embedded fingerprint data. Biometric to fit the needs of a particular project, yet secure and modern payment product identification takes place at every region, or type of beneficiaries. Besides to governments and social organizations. Prepaid Cards Prepaid payment, including transactions prepaid cards, the Way4 Social Cards Way4 Social Cards is part of the with prepaid Qi Cards. solution allows to issue credit and debit same platform that powers issuing of cards for individuals and businesses. commercial cards, so it enables the same The abovementioned features are the top high level of fraud protection and the requirements for a prepaid card serving a Governments and social organizations same stack of payment innovations. government project. They can be all met often lack access to reliable state-of-the- with Way4 Social Cards, a flexible payment art financial technologies as they don’t software solution from OpenWay. It allows always have enough funding or banking 6 Make interoperable and marketable prepaid Prepaid Cards Prepaid solutions for transport This year has shown how quickly trans- Under these unstable conditions, is port services. For example, Whim users port consumption trends can change. it sustainable to make a prepaid card can opt for daily commuting or solely Remember how before the pandemic, for transport? The answer can be yes weekend trips. This flexibility makes the ecologically engaged individuals and city if an issuer implements some of the Whim’s offer sustainable despite travel authorities promoted the use of public below ideas. restrictions or consumer preferences as transport over privately-owned vehi- it is up to customers to decide when and cles? This year, the situation has turned Create a prepaid product how they are going to use their prepaid upside down. First, we observed a natural compatible with several trips or loaded money. decrease in mobility during lockdown. In means of transport In the three years since launch, Whim the French city of Lyon, for example, only The brightest example is an all-inclusive users have completed over eight million 4% of citizens were moving around the transport app named Whim, supported by trips, and now the mobility-as-a-ser- city at the end of March, when mobility the cloud-based processor Enfuce. Whim vice app is aiming to get even broader restrictions were set in action, compared users

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