Page 60 - Pay Magazine s2014

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Italy Uncorked
which it promotes via social me- dia. Within two months, the bank had issued more than 13,000 cards and was named best pre- paid product in a customer survey from financial research firm
OF Osservatorio Finanziaro.
The remittance market is another significant prepaid opportunity. Over the past decade, Italy has seen a surge in immigration, with the number of immigrants increas- ing from fewer than 2.5 million in 2005 to more than 6.5 million in 2012, according to the World Bank. Outbound remittance flows from Italy have tracked that growth, increasing 180 percent to ap- proximately €7 billion during
the same period.
Prepaid also is carving out a space on the B2B side, as companies seek to control expenses for things like business-related meals and travel. Several Italian banks also offer prepaid cards to their SMB clients as part of their corporate banking services. Overall, Master- Card projects the corporate pre- paid segment will reach nearly
$6 billion in load volume by 2017 —tops in continental Europe and about equal to the U.K.
Mobile Matters
With an average of nearly two mobile phones per citizen, Italy has potential to become a hotbed of mobile commerce. Already there are signs of progress in m-commerce, especially around loyalty and en- gagement, notes Giannetto. “Smart- phone penetration is high in Italy,
government support
The Italian government has continued to be a prime supporter of the pre- paid industry and electronic payments.
The government owns a controlling stake in Poste Italiane and, given the success of Postepay, it’s no surprise that the Italian government also tapped Poste Italiane to run its Carta Acquisti benefits program for seniors and parents of young children. Benefit funds are loaded onto a prepaid Master- Card and, at the time of Carta Acquisti’s 2008 debut, it was the largest prepaid social benefits program ever launched in Europe.
In 2011, Prime Minister Mario Monti banned cash payments over €1,000
as part of an effort to curb the country’s long-established “gray market,”
in which Italians often paid in cash for goods and services, such as home repairs and doctor visits, partially to avoid paying taxes. The lost revenue from this shadow economy was estimated to be as high as €100 billion a year, with an additional €10 billion a year in increased security and labor needed
to support cash transactions.
The government also is pushing retailers to move away from cash. A 2014 law requires merchants to accept electronic payments for amounts over €30. The mandate for electronic payments has led directly to the creation of at least one new prepaid product. Shortly before the law took effect, UBI Banca and prepaid provider CartaSi launched an m-POS platform with the goal of offering small businesses and independent professionals a way to accept electronic payments. The Paybefore Award-winning program, known as
Enjoy Business H3G, enables revenue to be loaded onto a MasterCard- branded prepaid card, eliminating the need for merchant clients to open
a full settlement account—another way banks are using prepaid to expand their customer base.
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and we see a strong convergence between loyalty and engagement programs through mobile, including using social media and iBeacons.
“Mobile enables any retailer to offer powerful loyalty and relationship marketing technology at a low cost,” he adds. And Apple Pay’s expected arrival in Italy this year will intro- duce more Italians to the concept
of mobile payments.
Buoyed by cultural acceptance of the prepaid concept, government backing (see above) and providers dedicated to spreading awareness,
the Italian prepaid market has had some favorable years over the past decade. But there are plenty of signs to suggest that the country’s finest vintages are yet to come.
Prepaid providers in other coun- tries may not enjoy the benefits of the Italian climate, instead facing wary regulators and a lack of familiarity with the prepaid con- cept. Other elements of Italy’s prepaid success—such as a spirit of innovation and a relentless focus on improving the customer experi- ence—are seeds that will bear fruit in any environment.