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will spur new growth for prepaid,” Pourfallah notes. She points to opportunities in consumer travel, online shopping, student, P2P
and budgeting cards. And on the corporate side, prepaid providers will continue displacing checks
for rebates, refunds, incentives, insurance claim payments and B2B expenditures for small and midsize businesses, she suggests.
Corporate and Government Going Strong
Corporate and government prepaid are often considered a clear path to scale, since it’s typically easier to amass large card volumes quickly compared with consumer programs. But in 2014, Chase announced plans to sell its cor- porate and government prepaid portfolio. Many experts believe
the decision has more to do with overall strategy than a sign that the corporate and government sectors are in trouble, especially when other large banks, like Bank of America Merrill Lynch, and smaller ones, like Comerica, remain com- mitted to the space.
“Corporate prepaid is a strategic focus for us,” notes Fiore. “We believe prepaid, especially the corporate and government sector, is an important area for growth. We’re focused on it. And, there are plenty of banks and program managers to work with us.”
Kevin Phalen, head of global card and comprehensive payables at BofA Merrill Lynch says the bank continues to see opportunities
arise from both government and corporate clients looking for payment solutions in health care, higher education and insurance. “This may be done through prepaid cards or other electronic solutions, like our recently announced digital disbursement solution,” he notes.
For Citi Prepaid, which Citi an- nounced in January would become part of Citi Holdings, where the business line is being groomed to become a freestanding entity, it’s an exciting time, according to Deirdre Ives, chief operating officer of Citi’s Global Prepaid Business.
The prepaid business based in Conshohocken, Pa., became part of Citi with the 2007 acquisition of incentives startup Ecount.
“One of the things prepaid has always been for Citi is a fast- growing business,” Ives adds. “It’s an area where we’ve been able to innovate and drive new solutions.” In the first quarter, Citi Prepaid was hiring and investing in its platform. One area Citi Prepaid has pulled back from is state benefits contracts
that require a lot of customization, which can make it difficult to achieve economies of scale, according to Ives. In the European market, Ives says large public sector opportuni- ties haven’t developed as quickly as expected either. So, Citi Prepaid has refocused on its corporate pro- grams. And, insurance is at the top of its list for expansion.
“Insurance is the great frontier,” Ives says. “But when we assess
a market, we’re not just looking for all the ‘cardable’ payments flows. We’re really looking at the advan- tages a card could bring and how we specifically can address the needs of clients in that market.” Insurance payments represent a massive pie, but Ives says Citi will pick and choose its pieces carefully and become expert partners for its clients, as it has with consumer electronics, plasma donation, maritime payroll and telecom.
“What our corporate clients see and what they’re willing to pay for is for us to be there for them,” says Ives. “We’re not just providing them with a product and walking away.”
The ‘Year of PrePaid’ in The u.k.
volume 8 • spring 2015
Despite the challenges interchange reform may present to the prepaid industry in Europe, the Prepaid International Forum has declared 2015 as the U.K.’s “Year of Prepaid.” The not-for-profit trade group cites several statistics that show strong growth in the U.K. prepaid market and in Europe overall:
• 380% increase in the number of prepaid products available to con- sumers over the past eight years, from 50 in 2007, to 240 currently available.
• At of the start of 2015, 35% of U.K. consumers regularly used prepaid cards to pay for goods and services, according to MasterCard.
• About 6% of European consumers use prepaid cards for online shopping.
• Poste Italiane’s Postepay Visa accounts for more than 30% of all e-commerce transactions in Italy—one of Europe’s most successful prepaid markets. (See page 54 for more on the Italian market.)
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