MasterCard: Leading the way in Prepaid

I have previously written about the opportunities in prepaid and the truly transformational potential of this product, both for the payments industry and society at large. 

Firstly, it is ideal for underserved markets, such as the unbanked population in emerging markets or the teen market in developed markets, and consequently has enormous scope for growth. 

Secondly, for two important reasons, this market may be a leader within disruptive product innovation; (1) emerging markets do not have a fully developed cards-based infrastructure and may therefore leapfrog to mobile payments and (2) the processing infrastructure for prepaid is relatively new and more open for mobile and online applications.

MasterCard is among the leaders in this space and have announced a number of interesting programs over the last years.  Let’s have a look at a few of these programs that demonstrate different applications of prepaid:

· US Social Security Administration: partnership with the government to replace checks for social security payments.  In addition to being more cost efficient, convenient and safe than checks, prepaid is also a greener alternative

· Walmart: partnership with Walmart to replace cash and checks from their payroll program.  The benefits are similar to the Social Security partnership and the potential is enormous

· Univision: partnership with the largest US-based Hispanic TV channel to market prepaid products to the Hispanic population of the US.  This segment includes many migrant workers and has the potential of including many unbanked people in the financial sector

· TravelEx: MasterCard recently announced it’s acquisition of TravelEx’ portfolio of MasterCard branded multi-currency prepaid cards for $459m.  The product is seen as a convenient and secure alternative to traveller’s checks and is part of an ongoing effort for MasterCard to grow its international business through acquisitions

The combination of tremendous market potential with transformational product innovation is sure to make prepaid one of the most exciting spaces of the payments industry over the next years.  MasterCard has demonstrated its commitment to this opportunity and if it continues to develop its product and strike up exciting partnerships, it will no doubt see huge rewards.