Dubai: The growth in the prepaid card sector in the Middle East and Africa is largely driven by a number of economic and commercial fundamentals, as well as consumer demand for cashless payments, a top regional Visa official said.
Fiona Duncan, head of prepaid for the Central Europe, Middle East and Africa region at Visa, spoke to Gulf News on the sidelines of the sixth Prepaid Summit: Middle East, which was held in Dubai on Wednesday.
She said that the key to success is understanding your customers and helping to make it easy for them to use the service.
In the UAE, she said, the prepaid card has evolved in the form of gift cards and in the UK and Italy, it is a general purpose card.
“Prepaid card[s] should be looked at as part of your portfolio — cash for something, credit and debit cards for something, and prepaid for something else. From [a] consumer perspective, all these cards do different things,” she said.
The Middle East — especially the government in the UAE — is likely to help grow the prepaid market, by using the cards for more electronic payments.
“Innovation in the segment is a key driver for creating a cashless society and is acting as a catalyst for greater financial inclusion. Travel and tourism sectors and rapidly expanding corporate sector, where businesses prefer to use prepaid products to control operating costs such as incentives and per diem payments, are also fuelling the growth,” she said.
According to Visa’s statistics, Visa prepaid products in the region indicated that 80 per cent of spend in 2014 was for the purchase of goods and services, (40 per cent of which was on e-commerce purchases) and only 20 per cent of the total value was withdrawn in cash at ATMs.
In the UAE, she said that 20 per cent of the total spend occurred cross-border, 36 per cent was point of sales payments, and 13 per cent online purchases. According to Timetric Financial Services, the UAE’s prepaid sector is on track to top $18 billion (Dh66 billion) in the next five years.
Cash is “still the king” as e-commerce has not evolved as in the Europe, but it is evolving in the region as people are “cross checking for the cheapest offers” online.
The biggest regulatory challenges she sees are anti-money laundering and knowing your customer.
“We need to know where the money is coming from to the cards and the same way when you deposit to a bank account,” she said.
All the cards [credit, debit and prepaid] are used depending on the culture and “we haven’t reached anywhere near the limits in any of the cards segment.