First Data Reveals Success Factors for Prepaid Cards in Europe

In a new study of consumer attitudes believed to be unique in its scope, First Data, a global technology and payments processing leader, offers insight into the European prepaid market. Study findings are expected to help banks and retailers build more successful business cases for prepaid products. Conducted in June and July of 2009, the First Data survey asked consumers to evaluate five prepaid card types (gift, general spending, travel, youth and remittance) in four countries representing various stages of market maturity: Germany and Austria are considered to be embryonic, the UK is more established and Italy is the most advanced prepaid market in Europe. “The high level of consumer interest in learning more about prepaid products is, in my opinion, one of the key findings of this research,” said Tony Craddock, CEO of Global Prepaid Exchange. “Consumers are increasingly aware of the products and are now evaluating the benefits; a process that should certainly produce improved sales. When you couple increased interest with consumers’ predictions of their own behaviour, the clear implication is that the industry is set for near-term, significant growth across the countries investigated.” Key findings from the study include: · More than half (57 percent) of consumers who expect to buy a prepaid card within the next 12 months describe themselves as creditworthy consumers with incomes above £/€40,000 annually. They consider themselves to be financially savvy and avid savers. It is clear that prepaid market opportunities extend well beyond consumers who are unable or unwilling to open bank accounts.


In every country, the number of consumers expecting to buy a prepaid card in the next 12 months exceeds the number who did so in the previous 12 months. This indicates good potential for prepaid growth in the markets surveyed.

Fifty-five percent of all respondents see benefit in using a prepaid card to help control spending and manage their money. Marketing messages that focus on the benefits of using prepaid cards for budgeting, and also broad card acceptance, are likely to be very well received by consumers when deciding to purchase prepaid products.

Consumers are more willing to accept charges based on one-off actions such as balance top-up or cash withdrawals than monthly fees or fees charged when making a purchase at the point of sale. In all countries, between 50 percent and 70 percent of respondents indicated a preference for offers featuring fee structures that include an initial purchase fee but no monthly charge.

Thirty-eight percent of consumers surveyed said they would be willing to pay additional fees in order to personalise a prepaid gift card with a customised colour scheme, picture or message. This represents a significant potential, incremental revenue stream for banks and retailers looking to introduce prepaid card offerings. In Germany, the level of interest in personalising a Gift card either by selecting the colour scheme, personal picture or customised message was the highest of all four countries surveyed with 41% of consumers expressing interest.

Consumer preference for individual distribution channels varied by market. In the UK, a strong preference (74 percent of consumers) was shown for supermarkets as a distribution channel – for all except a travel card, which 50 percent of consumers were more comfortable buying at the post office. In Germany, banks are the preferred purchase channel for all card types except gift cards, which consumers would prefer to purchase in department stores. In Italy, the majority of consumers surveyed (50 percent – 64 percent, depending on the prepaid card type) would look to purchase prepaid cards at a post office, probably due to the current dominance of the national PostePay products.

Sixty-four percent of consumers stated that they would prefer to receive information about prepaid offerings through online media. In addition, 46 percent of respondents would like to be able to purchase a prepaid gift card online. Levels were similar for other card types. It is clear from the research that there is a significant opportunity to increase prepaid card sales by using the Internet as a supplementary distribution channel to traditional bricks and mortar outlets.

"Our research suggests strongly that retailers and financial institutions could formulate prepaid sales and marketing strategies that are universal or broad in reach, rather than focusing entirely on selling by product, geography or socio-economic groups,” said Lisa Walker, head of Prepaid for First Data’s international business. “Marketing strategies should include online channels as a priority, clearly describe how the product can be used and, importantly, allow consumers to define their own benefits and card usage.”