Spending on Prepaid Payment Cards in Europe Estimated to Reach US$164 Billion by 2010
Independent Research Reveals Promising Future for Prepaid in Europe
Pargue, Czech Republic, May 10, 2007 - Spending on prepaid payment cards in Europe is estimated to reach US$164 billion by 2010, according to new Boston Consulting Group (BCG) research commissioned by MasterCard Europe.
The research also reveals that whilst the UK is predicted to become Europe’s largest single market for prepaid card payments by volume, Russia and Poland are set to witness the deepest penetration of prepaid spending as a proportion of total spend made using payment cards.
Meanwhile, the use of prepaid cards for the payment of Government benefits to the unbanked and by individuals for gifting is set to play a lead role in driving growth in the prepaid segment across the Continent.
The BCG research shows that Europe’s predicted total spending figure amounts to US$163 billion, 25.4 per cent of the estimated global total of US$645 billion, leaving it behind the United States, (US$296 billion and 45.9% of the global total), but well ahead of Japan (US$59 billion and 9.1% of the global total).
Analysing the European landscape on a market by market basis, BCG reveals that the UK’s predicted total prepaid spend of $34 billion by 2010 (5.3% of the global total) positions it as Europe’s largest single market and the fourth largest in the world.
The UK is closely followed by Italy where total spending is estimated to hit US$33 billion (5.1% of the global total and the fifth largest in the world) and France, with an estimated total spend of US$27 billion (4.2 per cent of the global total and the seventh largest in the world).
It is in Eastern Europe, however, where prepaid spending is set to make the biggest impact as a proportion of total payment card spend. In Poland, total prepaid spend is estimated to reach US$11 billion, equivalent to 14.1% of spend using payments in the country as a whole. The BCG research also shows that in Russia, the anticipated total prepaid spend of US$23 billion represents a 12.6% share of the domestic market.
According to the research, both markets rank well ahead of their Western European neighbours, including Germany, where domestic market penetration is estimated to reach 7.7% (US$26 billion).
Commenting on the findings at MasterCard’s first European Prepaid Conference in Prague, Czech Republic, Chris Reddish, Head of Prepaid, MasterCard Europe, said: “The rapid growth of the prepaid card segment is a clear sign of the fact that consumers, issuers and public sector bodies are recognizing the benefits provided by this form of payment as well as its ability to meet a diverse range of needs.”
Main Market Drivers
The research shows that one of the main drivers of prepaid spending in the upcoming future will be through Government programmes. Prepaid cards help the public sector reduce welfare benefit fraud by driving cash out of the system and ensuring that payments reach those they are intended for.
In Russia, 23.2% of total government benefit spending is expected to be routed through prepaid cards by 2010, accounting for US$13 billion in that market alone. Similarly, in Italy prepaid share of total government spend is predicted to reach 28% (US$14 billion).
According to BCG, the second biggest category of prepaid spend is identified in ‘Gifting’, with France and Germany leading the way in Europe. In Germany prepaid is expected to account for 15.7% of overall gift card spending (US$16 billion), while in France the prepaid spend in this area will go even further and reach 19.8% of category spend (US$17 billion).
Chris Reddish added, "Prepaid cards are simple to purchase and easy to use. They enfranchise consumers by offering them the financial freedom of using a payment card without having to open a bank account or undergo credit referencing.
"This means that a broader range of consumer groups can now participate in the payment card system and can purchase goods and services via channels such as the telephone and the Internet where cash cannot be used. In today’s environment, the potential of the prepaid segment is tremendous.”
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