Open loop prepaid cards from transport sector expected to drive growth of industry over the forecast period
Global open loop prepaid cards market size is expected to reach USD 1.3 trillion by 2022 which is driven by large section of unbanked consumers across every market, innovative service features, increased adoption of online transactions, and convenient e-payment solutions. Among emerging markets, key countries in Asia Pacific and Latin America have seen steady growth of prepaid cards in past couple of years. One of the popular usage of prepaid cards has been towards international travel, public transport, online or offline retail purchases and as part of rewards system.Recently, transport companies in emerging markets have taken initiative of venturing into open loop prepaid card segment. Below are two key initiatives, explaining this up-coming trend.
- Uber Bankaool Debit Card was launched in Mexico in partnership with Uber, Mexican online bank Bankaool and MasterCard which is linked to mobile payment application of Uber. To attract customers, additional benefits were also provided such as first ride free, compatibility with physical retail stores as well as e-commerce sites and fund transfers, and other financial services similar to banking. The Mexico Prepaid Cards is also now popular which offers some additional benefits to the user. This shows strengthening of payment infrastructure for transport companies along with venturing into financial service segment for alternative business expansion.
- Bengaluru Metropolitan Transport Corporation (BMTC) has launched Axis Bank BMTC Smart card in association with Axis Bank which is India’s first open loop EMV contactless smart card. This prepaid transit card integrated with digital wallet can be used at any transport service such as metro, cabs and auto and is also workable across 1.2 million merchant locations across India. The card was made available at BMTC issuance counters such as pass counters, Traffic and Transit Management Centres (TTMC) and other touch points across the city for prepaid balance of up to INR 10,000 (USD 150 approx.). For a balance higher than that, KYC documents are required.
These offerings reflect the strategy adopted by transport companies and other prepaid card partners (both banks and non-financial institutions), where the attempt is to establish a relationship with the consumer. In a highly competitive environment in growth markets, cost of consumer acquisition is impacting profit margin. As a result, such partnerships are emerging as key to drive consumer acquisition at low cost and also enhance revenue growth through up-selling opportunities.