Growth in the prepaid sector in the UAE is fuelled by customer familiarity and precedent. Prepaid cards combine budget control and ease of use with minimum risk to consumers, and give numerous operational advantages to providers.
At a recent industry event, the annual Prepaid Summit: Middle East 2012 held in Dubai this March, 96 per cent of the polled audience of more than 100 industry experts said they were in favour of launching prepaid cards. When asked which specific mobile prepaid product they are most likely to offer within the next six to nine months, more than a fifth (22 per cent) of respondents said virtual prepaid cards are on the top of their list; almost the same number (20 per cent) said they are more likely to offer a prepaid remittance card product.
“Prepaid cards appeal across the board. Depending on the product, people take the prepaid option because they like the convenience of payment they offer. There are no negative consequences and they are safe,” Rasool Hujair, CEO of Majid Al Futtaim (MAF) Finance tells GN Focus.
Having cut their teeth on convenient offerings such as the RTA’s Nol (prepaid cards for public transport), Salik cards (prepaid toll cards) and payroll services, UAE residents are now ready to use cards designed to meet the needs of specific consumer niches.
Growth seems to be on the cards, across segments. Populations that are commonly targeted by banks and financial institutions include blue collar workers, students and women who are using cash for their transactions. Other popular segments are travel cards and remittances.
Easy travel
Travel is a big segment, not just for inbound passengers but also for those who travel regularly — pretty much everyone in the UAE. At the time of currency fluctuations, when you are getting more rupees for your dirham, a prepaid card offers the perfect solution. “We are planning to launch a white label card for corporate use. Since nearly everyone in the UAE travels, there is a market for individual and corporate travel,” says Gopal Sharma, CEO, Sharaf Exchange.
He says the card’s success will rest on its many salient features. “Credit cards have a limit. With prepaid cards, if you exhaust the amount, it can be loaded via a remote site. It will allow companies to budget and plan. Unlike in credit cards, the exchange rate is blocked. This is an ideal solution for those who are travelling and don’t want to carry cash or be fenced in by credit limits on their credit card,” says Sharma.
The traveller is a perfect customer for prepaid cards. Heeding the needs of the 50 million people travelling through Dubai airport annually, MasterCard Worldwide launched DXB Connect in November, the world’s first airport prepaid MasterCard card, at Dubai Airports.
Packed with deals such as discounts at duty free stores, on hotel stays, spas, F&B outlets and family entertainment venues across Dubai, it not only offers a safer, more convenient alternative to cash but also makes the card pay for itself. As is the trend with packing one card with many applications, this one comes with a ready-to-use Etisalat mobile SIM preloaded with Dh25 credit so travellers instantly have a local phone number on arrival.
More recently, cashU, a secure online payment provider, and Kuwait-based airline Jazeera Airways, announced a new partnership earlier this month that enables Jazeera Airways passengers who do not have a bank account or a credit/debit card to securely complete transactions on jazeeraairways.com using cashU’s prepaid cards and services. These are available at retailers in all countries served by Jazeera Airways.
Lifestyle integration
Increasingly, plastic is being integrated with consumers’ lifestyle requirements. In the UAE, prepaid cards function perfectly as salary cards because they are easy to use and allow banks to expand their consumer base to those who may not access bank accounts but need financial mobility.
And there are willing participants. According to statistics shared at the Dubai summit this March, almost 40 per cent of the region’s population is below 19 years, and 70 per cent of the total population is unbanked, which makes the region a hotspot for prepaid growth.
The Wage Protection System introduced by the government in 2009 triggered a rapid growth in prepaid cards. Last December, in one of the more recent prepaid salary offerings, VoiceTrust, a provider of Digital Payments and Voice Biometric solutions, announced a strategic partnership with Commercial Bank of Dubai to provide the VoiceTrust Visa Prepaid Payroll card programme.
Last month, Mint Technology Corp announced that its subsidiary Mint Global Processing won approval from the UAE Central Bank to be the fourth third-party processor to be authorised to connect to the UAE Central Bank Switch. The company is a vertically integrated prepaid card and payroll services provider with its own ATM network, payment processing platform and proprietary branded card product including microcredit, mobile top-up and money remittance services that will be delivered to workers across the region.
An area which the traditional cards do not cover is e-commerce. Due to security issues, most issuers have banned use of their debit cards for online transactions. MAF Finance is among those tapping into this segment, with the introduction, earlier this month, of MyNetCard (below), a prepaid Visa card only for online purchases.
The card can be purchased over-the-counter at more than 100 outlets across the UAE, and loaded with funds for immediate use. “E-commerce in the UAE amounted to over $2 billion [about Dh7.3 billion] in 2011 alone, and with the introduction of more innovative e-gadgets, this number is expected to increase,” Hujair says, adding that the card is selling strongly. “It really surprised us on how quick the sales went up. It is a virtual account, so there is no plastic. It’s proving to be very popular among young adults,” he says.
MAF Finance offers two other prepaid products, including LoadnShop, a reloadable card, and Just For You, a gift card that made waves when it became the first such product to be sold at petrol stations.
More control
And customers can transfer money from one card to another, Hujair says. “This option is popular with parents or with people who have employees that they want to send shopping. It gives the account holder control.”
The ubiquitous nature of money exchanges in the UAE has prompted interesting partnerships. In March last year, two RakBank Prepaid Card products (Loaded and Bling) were launched for consumers such as students, stay-at-home mothers and new UAE residents who do not hold bank accounts.
Counting on customers’ familiarity with money exchanges, the RakBank cards can be preloaded at their own Electronic Deposit Machines (EDMs) or by making a payment at any of the bank’s exchange partners, including UAE Exchange, Al Fardan Exchange, Redha Al-Ansari Exchange, Wall Street Exchange, Sharaf Exchange and Al Razouki Exchange.
Hybrid cards
With those developments, hybrids can’t be far behind. Emirates NBD’s Go4it card, launched last year, is a creative application of the prepaid concept, creating a wallet within, fuelled by the card. It combines RTA’s Nol application (which allows you to swipe a card for transport use), with an Emirates NBD credit card. Cardholders can set an auto top-up option which connects their Salik or metro wallet to the credit card. Once the amount is below the set limit, it automatically tops up via the credit card.
“We see a lot of opportunity in the under-Dh5,000 salary segment. The current one, because it is a credit card, is limited because according to regulations a credit card is only for those with salaries above Dh5,000. There are lot of people who work in the service or retail industry, whose salaries may not be high but who use the metro a lot. With that segment in mind we will now come up with a debit card in June. This will be linked to a bank account,” says R Sivaram, Senior VP, Head of Cards, Retail Cards Business, from Emirates NBD.
There is so much scope for growth that banks need to keep up with customer appetite for more prepaid products. According to a 2011 survey by TNS Global, just 6 per cent of UAE consumers said they were using a prepaid product in place of cash and credit cards. More than 50 per cent of consumers surveyed said they would welcome a prepaid card — a sentiment that echoes with card issuers.
