China Prepaid In Brief: What You Need to Know

Prepaid TV™ unpeels an appealing, but complex market

By Marc Dresner, IIR

At an estimated 13-17% CAGR, China’s prepaid market (approx. US$230 billion in 2010) is poised to overtake the US as the world’s largest before the decade ends.

It’s a not the model we’re accustomed to in the West—and not without its quirks—but with such a rapid adoption rate, China’s prepaid market has legs and is running fast!

Take gas cards, for example. The two major State-owned gas station operators don’t take credit cards, and dealing in cash is becoming increasingly cumbersome as more and more members of China’s expanding middle class take to the roads in cars. Solution: prepaid petrol cards! And they’re being aggressively pushed.

According to Terry Xie, Director of the International Payments Advisory Service at Mercator Advisory Group, while barriers to entry can prove daunting, China offers significant opportunities for foreign players with the right amount of capital who understand the market.

And Xie says don’t be intimidated by China's increasingly tight regulatory environment; it may actually catalyze growth!

In a three-part interview with Prepaid TV™ – the official streamcast network of Prepaid Expo — Xie provides a blueprint for navigating the world’s second largest prepaid market and some considerations for foreign interests who would like to do business in the People’s Republic.


Click on the links below to tune in!

Part I: China’s Massive Prepaid Market

Part II: Understanding Open Loop

Part III: The Regulatory Environment for Prepaid

ABOUT PREPAID TV™
Prepaid TV™ is an executive interview series featuring the leading voices in prepaid today, along with a few rising stars that you should know about.

Each month, we’ll deliver fresh insights and answers from a variety of perspectives – networks, banks, retailers, programs and providers – on the forward-facing issues that matter most to the prepaid industry.

Prepaid TV™ is produced by Prepaid Expo, the world’s largest, most comprehensive and independent forum dedicated to meeting the information and business needs of the entire stored value community.

For more information or to register for Prepaid Expo taking place March 12-14 in Las Vegas, please visit www.iirusa.com/prepaid


ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner is IIR USA's communication lead. His background is in trade journalism and marketing research. Prior to joining IIR, Dresner was the executive editor of Research Business Report, a confidential newsletter for the marketing research and consumer insights industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

Share this article with your social network, just click below to share now!

Share |

Study Says Prepaid is Primed For International Expansion

By Marc Dresner, IIR USA

If there’s any truth to the old business adage, “You’re either growing or you’re dying, “ then the prepaid industry is living LARGE overseas!

I recently received some topline stats from Mercator Advisory Group’s inaugural Global Prepaid Card Market Potential Ranking (2010), and the numbers make a compelling case for crossing the pond.

While the U.S. prepaid market – with roughly $330B in loads since 2009 – will likely remain the undisputed 600lb gorilla for years to come, Mercator’s results indicate the rest of the world is primed for prepaid.

The study pegged the aggregate prepaid market opportunity for the top 30 non-U.S. markets at a – cough – respectable $762.2B over time.

(Note: the italics indicate a caveat. Mercator emphasized that the figure above and those that follow are based on a series of relative assumptions and not projectible to a specific year, so please do not go galloping into, say, Eastern Europe without a coat and due diligence.)

BRIC markets have captured the attention and imagination of just about every industry eyeing international expansion – and they show tremendous promise for prepaid – but there is a reason they’re still referred to as “emerging” markets. Mercator’s study suggests that, at least short-term, the best investment opportunities lie in Western Europe.

The top five most promising markets for prepaid expansion are:

1. Germany ($111.0B)
2. Italy (100.7B)
3. France ($74.5B)
4. U.K. ($74.4B)
5. Spain ($45.3B)

It’s a political cliché, but this much is true of Europe: government is BIG, as in capital “B” billions big for prepaid. And this trend is not isolated to Europe. Across all 30 markets Mercator examined, government appears to be the best prospect for prepaid.

Global prepaid opportunity estimates by segment:

1. Government ($425.3B)
2. Store Gift ($164.5B)
3. Open Gift/GPR ($59.6B)
4. Payroll ($51.8B)
5. Incentive Cards ($42.4B)
6. Campus Cards ($18.6B)

Of course, the extent to which each of these segments proves fruitful for expansion differs by country and is subject to a plethora of complex market, cultural and regulatory factors.

International expansion is an intimidating and complicated undertaking, but the numbers paint a promising picture for prepaid.

So…to help U.S. players navigate this new frontier, IIR USA’s Prepaid Expo will close Wednesday March 9th with a series of presentations specially focused on international expansion.

If this particular study is of interest, you’ll be pleased to know that Mercator’s director of international advisory services, Terry Xie, will be among those speakers. Xie plans to review the study findings and implications in detail and offer strategic recommendations for prepaid companies looking to cross borders.

Two final notes:

First, I’m sure some of you took issue with my comment about the relative nascence of BRICs for prepaid. I’m just the messenger. India, for example, ranked 13th out of 30 markets studied.

A panel also slated for Wednesday March 9th at the Prepaid Expo will focus exclusively on India, and will provide deeper insight into the country’s growth potential as well as barriers to entry.

Second, if you are not already aware, IIR USA has joined forces with the UK’s Gift Card and Voucher Association to bring you The Gift Card, Gift Voucher, and Reloadable Card Event on March 30 in London. If Mercator is correct, you won’t want to miss the most comprehensive prepaid event on the continent!


Marc Dresner is an IIR USA communication lead with a background in trade journalism and marketing. He is the former executive editor of Research Business Report, a confidential newsletter for the marketing research and consumer insights industry. He may be reached at mdresner@iirusa.com

Share this article with your social network, just click below to share now!

Share |