Prepaid as Everyday Money Mastercard Matt Lanford 2.18MB

Matt Lanford, Head of Prepaid Europe
15 June 2010
Prepaid Comes of Age:
Prepaid as Everyday Money
Prepaid 2010 Conference and Expo
ADVANCING PAYMENTS
ADVANCING COMMERCE
New players and innovation are dramatically increasing the pace of change in the payments
industry
The industry has historically moved at a steady, predictable pace with very few disruptive changes over the last 50 years
1950
1970
1985
2002
Diners Club
Established
Establishment of
standards for the
magnetic stripe
Discover Established
Bill Me Later
Established
1958
1974
American Express
issues its first charge
card
NACHA formed.
Nationwide ACH
rules approved
1950
1960
1970
1980
1973
Bank AmeriCard
Launched
The first online
transaction auth
system is introduced
Master Charge
program introduced
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2008
First mobile-based
Google Checkout
payments introduced Trends launched
2007/8
in US
MA launches
rePower
1994
2003
2007
networks
First version of the First proximity
Revolution Money
EMV system was payment device Launched
released
introduced
1990
2000
2010
2017
840
1996/2001
1959
1966
2006
1976
The first prepaid
telephone card
launched
MA introduces first
prepaid card
1985
1998
2005
First rewards card
launched
PayPal Founded
First real-time auth MasterCard IPO
risk scoring system
developed
2008/9
1989
Budapest
Independence
2006
2003
2006
Plastics overtake
cash as preferred
method of payment
Google Checkout
Launched
©2010 MasterCard.
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2
MA launches
scale social
benefits, payroll
programs
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Rapid changes are also being driven by several potentially disruptive trends
Trend
Pace
1
Increasing government regulation or involvement in
payment card pricing
2
Introduction of new transaction origination form factors or
processes (mobile, biometric, near field etc.)
3
Strong interest by governments & corporates to
electronify all payments to reduce costs
Probability
Impact
High
High
High
Low
Med
Med
High
High
Med
4
Increasing consumer demand for simplified electronic
payments available anytime & anywhere
Low
High
Med
5
Growing interest by merchants in driving loyalty and
consumer understanding through electronic payments
Med
Med
Med
6
Growing integration of the value chain and accelerating
scale resulting in availability of prepaid through new channels
Med
High
Med
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©2010 MasterCard.
15 June 2010
Page 3
Prepaid Global Market Sizing Report-2010
This is a global prepaid study and it is in no way a reflection of how MasterCard performs in the prepaid arena
An in-depth, comprehensive study of the bulk of world-wide
prepaid spend:
–
45 countries comprising approximately 90% of global GDV
–
Includes open and closed loop volume
A research-based projection of GDV to 2017:
–
Adoption rate analyses based on customized inputs for each category and country
Assessment of all major prepaid card functionalities:
–
Includes a breakdown of 18 categories of prepaid spend (e.g., government, payroll, general
purpose consumer reloadable, etc.)
Study conducted by Boston Consulting Group leveraging BCG’s local market
experts, proprietary research, triangulation of multiple external resources.
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©2010 MasterCard.
15 June 2010
Page 3
Prepaid is Growing Globally
2017 Open Loop GDV estimated at $840B
Europe
$156B
U.S./Canada
$457B
APMEA
$146B
LAC
$81B
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
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©2010 MasterCard.
15 June 2010
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The Prepaid Opportunity Can Be Categorized into Three Broad MacroVerticals
$273B
$243B
Consumer
Public
Sector
Consumer reloadable
Travel
Online
Campus
Remittances
Gift
$324B
Corporate
Programs
Public Benefit &
Welfare programs
Business travel &
entertainment
Emergency assistance
& disaster relief
Meal vouchers
Pension & Social
Security
Travel & cash
management
Corporate purchasing
Payroll
Corporate Incentives &
Promotions
Payroll & incentives
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
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©2010 MasterCard.
15 June 2010
Page 6
Top Three Markets Account for Over 50% of Open Loop
Opportunity
RoE
8%
2017 European Open Loop GDV
by Market
Next 5 Markets
37%
$12.3
$155.7
Rest of
Europe
Total
Europe
$9.3
$10.0
$10.1
$11.3
Top 3 Markets
56%
$16.1
$16.7
$30.6
11%
20%
$Billions
$39.3
25%
UK
Italy
Russia Germany
Iberia
CEE
France
Nordic
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
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©2010 MasterCard.
15 June 2010
Page 7
Future of Prepaid: Realizing its Full Potential
Prepaid Open-Loop Turnover in 2017: $156B
Payroll
12.06
Cons. Other
4.64
Gifts
9.48
Corp. Insur.
travel 1.12
1.17
Corp. Other
1.18
Transit
1.8
Gov’t
41.42
Online
14.21
Gen. use
31.06
Consumer Verticals
Cons. Travel
37.16
Corporate Verticals
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
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©2010 MasterCard.
15 June 2010
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Significant Growth Expected this New Decade
$45.0
$40.0
2009 - 2017 Top Open Loop Markets
$39.3
26% Open Loop CAGR for all of Europe
$35.0
$30.6
$30.0
$25.0
$20.0
$16.7
$15.0
$16.1
$11.5
$11.3
$10.0
$5.0
$2.4
$0.3
$2.2
$1.7
$10.1
$0.7
$UK
Italy
Russia
Germany
Iberia
CEE
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
ADVANCING PAYMENTS
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©2010 MasterCard.
15 June 2010
Page 9
Over $184B GDV in 2017 Closed Loop Prepaid Presents a Sizable
Opportunity
$90
$80
UK is 43% of 2017 European
closed loop opportunity
$70
$60
$50
$40
$184B total closed loop GDV
$79
$69
$30
$20
$10
$20
$16
France
Italy
$-
UK & Ireland
Rest of Europe
Transit
$52
Top Verticals
Gov’t
$47
Cons.
Incent
$1
Government and Gift greatest opportunity
(over 90% of opportunity)Campus
$7
Gifts
$68
Lunch
Vouch.
$8
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
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©2010 MasterCard.
15 June 2010
Page 10
Three Dominant Vertical Markets
2017 Top Open Loop Verticals by Market
Consumer verticals including travel, online and
general purpose reloadable contribute to the
majority volume in Europe
$6
$16
$6
$20
$10
$Billions
$18
UK
$13
$9
$5
$6
Italy
Russia
Public Sector
$1
$3
Germany
Consumer
$6
$3
France
CEE
Corporate
Source: BCG Prepaid Market Sizing Report, May 2010, Research commissioned by MasterCard
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©2010 MasterCard.
15 June 2010
Page 11
Prepaid is at the Core of Channel & Product Innovation
Transit
MasterCard
Retailers
MasterCard®
Labs™
rePower™
Mobile MasterCard®
Mobile
MoneySend
Post Offices
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MasterCard®
inControl
©2010 MasterCard.
15 June 2010
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Simplicity Seizes Market Opportunity
Prepaid has just a few fundamental
building blocks
At their root all prepaid products
are closed loop, restricted loop or
open loop
Then simply a case of customising
card programmes to meet specific
user needs, whether for
consumers, corporates or public
sector organisations
Prepaid applications are limited
only by our collective
imaginations
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©2010 MasterCard.
15 June 2010
Page 13
Selling Prepaid as a Consumer Product
Knowing your consumer and seeing the
world from their perspective is crucial
Success hinges on understanding what
end users want from prepaid and
simplifying the concept for them to see
the immediate benefits
Prepaid needs to:
Meet consumers’ needs, desires and
aspirations
Serve specific purposes for all the
consumers who use it
Create excitement among the people who
sell it, in particular the retail community
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©2010 MasterCard.
15 June 2010
Page 14
The Prepaid opportunity is driven through multiple channels
Corporate
Customer
& End
Consumer
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Post Offices
©2010 MasterCard.
MasterCard “Partners in Prepaid”
“High Engagement” approach to drive prepaid innovation
and Partner growth
Enhanced
Increased investment
Simplified
customer dialogue & in customer growth & customer interaction
success
model
support
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©2010 MasterCard.
15 June 2010
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MasterCard’s “Partners in Prepaid” is a high engagement approach focused on customer
success
Enhanced customer dialogue & support
• Periodic MasterCard surveys to value chain participants to assess market
needs
• Reaching out to co-develop research and innovation agendas
• Sharing global best practices through periodic webinars
• Major program launch support
Increased investment in customer growth & success
• Prepaid specific promotions
• On going collateral and messaging support
• Annual marketing forum to share and seek feedback on proposed activities
Simplified customer interaction model
• Enhance prepaid on-boarding and flexibility
• Accelerate response time
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©2010 MasterCard.
15 June 2010
Page 17
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©2010 MasterCard.