Prepaid needs to be tailored to match consumer needs
Instead of viewing prepaid as a generic payment method, card issuers and programme managers need to concentrate on marketing it as an individual solution to match a specific consumer need in order to drive growth in the prepaid sector, according to Matthew Lanford, MasterCard's head of prepaid in Europe.
Lanford drew on recent fandmark research carried out for MasterCard among 4,000 consumers across the five main markets for prepaid in Europe - the UK, France, Germany, Poland and Italy - which found that consumers still do not recognise the prepaid concept, despite the majority of the populations of those countries having used some form of prepaid card, such as a gift card or a travel/transit card.
However, consumers do value the benefits of prepaid where it closely links to the fulfilment of a specific emotional need, such as convenience, reliability or security. MasterCard's research found that 74% of prepaid card users across Europe agreed that prepaid was a secure payment method, and 77% see it as being 'convenient', rising to 83% among users of multifunction prepaid cards.
Prepaid is also seen as a growing replacement for traditional payment methods such as cash and cheques, with 75% of prepaid card users believing that it was the modern alternative to paper vouchers and cheques. Over two-thirds (69%) of prepaid card users responding to MasterCard's survey said they felt that prepaid can help young people learn better budget management skills.
"The industry has to come to terms with the fact that 'prepaid' as a standalone category simply does not exist in the minds of the general public," Lanford says, but he adds that the survey findings show prepaid can flourish where it is marketed as a solution to a particular payment or emotional need among specific consumer groups, rather than as a genera! payment tool.
"The practical and emotional needs prepaid cards can service for individuals and communities alike are huge. Our job is therefore to position prepaid products as servers of those needs. Success hinges upon targeting the right consumers in the right places with an emotionally appealing message that will make prepaid relevant to them," Lanford says.
Separately, MasterCard and UK prepaid card issuer APS Financial have signed a new five-year deal, which will extend their existing collaboration to drive prepaid in Europe. The new deal will place particular emphasis on the small and start-up business segment as a key area for growth.
Payments Cards and Mobile, July | August 2011