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The Future of Prepaid Cards in Asia-pacific 2006

Published by: Datamonitor

Published: Sep. 25, 2006 - 54 Pages


Table of Contents


Datamonitor's Cards and Payments Knowledge Centre


CHAPTER 1 INTRODUCTION
Scope
Who is the target reader?
How to use this report


CHAPTER 2 THE PURPOSE OF PREPAID CARDS
While prepaid payment cards are a new concept in Asia-Pacific they have their place in the payment card landscape
Prepaid cards have unique features to other payment cards in Asia-Pacific
Prepaid cards are also known as 'pay-before' or 'stored value' cards.
Prepaid cards operate as either a smart chip-based card or a host-based cards
Prepaid cards fit into Asia-Pacific's payment card landscape
Prepaid cards have been introduced in Asia-Pacific although awareness of the product has some way to go
Prepaid cards are very suitable to specific customer groups which in some cases have not yet been targeted
Young consumers, particularly teenagers have historically been overlooked because of their short-term unprofitability; prepaid cards can change this
A prepaid card issuer can target corporate and government client groups because they will appeal to its security and tracking features
Immigrants can have difficulty opening a bank account but still want the functionality of credit and debit cards
Unbanked customers are a potential market for prepaid cards because they do not have credit or debit cards
Issuers can use prepaid cards to target adults who do not own a credit card
Prepaid cards offer credit card facilities to consumers with bad or no credit history
Prepaid card trials conducted by Visa and MasterCard had a positive response Asia-Pacific
Visa and MasterCard chose Australia to trial prepaid card technology
The concept of prepaid cards has been trialed with success in Asia-Pacific

CHAPTER 3 A COMPARISON OF PREPAID CARDS
The few prepaid cards available in Asia-Pacific are limited in comparison to those available in other markets
Visa's 'International Travel' card is China's main prepaid card yet can only be used outside of the country
The Visa International Travel Card is available from selected Chinese banks although it can only be used outside China
Maybank introduced Singapore's first prepaid card and it has recently launched versions that target a specific consumer interests
Maybank offers a generic prepaid card
Both of Maybank's prepaid cards are commendable although they suffer from a small distribution network
AmBank's recently launched 'NexG' MasterCard targets young Malaysians
Ambank's 'NexG' prepaid MasterCard is a card targeting the needs of young people in Malaysia
AmBank has also launched a NexG card that targets football fans with Limited Edition AmBank NexG 2006 FIFA World Cup prepaid MasterCard
AmBank's NexG card is an innovative prepaid card that targets specific consumer groups
Australia's 'Bopo' card uses innovative technology that enhances its appeal to consumers
The Bopo card is likely to be popular if it exploits its advantages
The 'Visa Buxx' card targets teenagers in the US
Visa Buxx targets teenagers with a long term view to profitability
The Visa Buxx card successfully targets teenagers although it needs to convince parents as well
The 'Postepay' initially targeted all Italian consumers and is now focusing on consumer interest groups
Postepay has been very successful as a generic prepaid card
Postepay has been successful because of its wide distribution network and is now introducing different versions of its card to target different consumer segments
Microsoft has partnered with Postepay to offer a card targeting Xbox consumers
The recently launched BBVA MasterCard Tarjetas Recarga Expresas prepaid card specifically targets corporate and government client groups in Spain
BBVA's card can be used in corporate and business environments for incentives, gifts or payroll solutions
BBVA's card is the first corporate prepaid card and it is expected to be popular in other countries

CHAPTER 4 THE FUTURE OF PREPAID CARDS IN ASIA-PACIFIC
Going forward, issuers of prepaid cards in Asia-Pacific should focus on the needs of consumer groups that are presently unmet
Teenagers are well suited to prepaid cards and while they can be unprofitable in the short-term, this changes when they become adults
Understanding the teenage demographic is important before deciding on a marketing package
Initial marketing strategies could include targeting specific schools or suburbs
In terms of countries in Asia-Pacific there is significant potential for prepaid cards targetting the teenage market
Prepaid cards better suit the needs of the corporate and government sectors than traditional corporate credit card
Given that Asia-Pacific holds some of the most business focused cities in the world, corporate prepaid cards have huge potential
The travel cash market is also a future growth area

CHAPTER 5 APPENDIX
Supplementary data
Definitions
Affinity cards
AAGR
Balances outstanding
Branded prepaid cards
CAGR
Co-branded cards
Private-label cards
Research methodology
Primary research
Secondary research
Future readings
Relevant links
Datamonitor's custom research capabilities
Asia-Pacific SPP writing team
How to contact experts in your industry


List of Tables
Table 1: The Visa Buxx fees have been criticised as being too high
Table 2: Youths and their aspirational ages
Table 3: Population split by age group in 2004


List of Figures
Figure 1: Prepaid cards have their place in the current payment card landscape
Figure 2: Malaysia had the highest proportion of individuals aged 14 and under at 32.8%, followed by South Korea with 25.4%, Singapore with 20.2% and Hong Kong with 14.8%
Figure 3: Customer segmentation is beginning to take off in Malaysia as Ambank's NexG prepaid MasterCard targets football fans
Figure 4: The features of AmBank's NexG Prepaid MasterCard meet the needs of Malaysia's youth market
Figure 5: The 'Bopo' card is expected to fill a gap in the Australian cards market
Figure 6: Visa Buxx targets the teenage market
Figure 7: The Visa Buxx card can teach young consumers to budget
Figure 8: Postepay is a relatively cheap prepaid card
Figure 9: BBVA's corporate prepaid card is likely to be adopted in other countries as it fulfills a need
Figure 10 Datamonitor's core consulting capabilities

Abstract

Introduction

Prepaid cards are likely to further increase the competition of Asia Pacific's plastic cards market. This card is set to become the new phenomenon in the market as issuers attempt to increase their market shares. This report analyses the prepaid card market so far and how lessons in the UK, US and Europe can give Asia-Pacific issuers the edge over other competitors

Scope
  • This briefing covers prepaid cards in the financial sector in Asia-Pacific. Prepaid gift cards in the retail sector are not included.
  • It includes extensive information on the different types of prepaid cards in circulation and analyses their strengths and weaknesses.
  • The briefing is based on in depth interviews from prepaid card issuers and extensive secondary research.
Highlights

Branded prepaid cards are relatively widely spread in the US although the concept is only just starting to spread to elsewhere in the world. Among the major European countries, Italy and Spain seem to have taken an interest in prepaid products. In Asia-Pacific, prepaid cards barely exist although retail gift cards have expanded recently.

There are two consumer markets that are likely to be the prepaid card battle group; teenagers and the corporate and government client. Given that more than one current player is investigating both these markets, more prepaid card players are expected to enter the segment in the near future.

An important issue that players need to address in order to increase take-up is the high price involved with prepaid cards. Players need to address each niche separately and consider whether the targeted segment can bear the charges involved. For instance, fees on teen pre-paid cards should be minimized given that teens have a limited budget.

Reasons to Purchase
  • It provides you with a thorough understanding of the prepaid card market and discusses where the opportunities lie.
  • The expert opinion of Datamonitor's Cards Team on the future of each prepaid product type is a definite guide for building up your strategies.
  • The profiles of prepaid players covered in the briefing provide you with valuable information on winning strategies.



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