With 25 million prepaid cards issued, Italy is the largest prepaid country in the world. It is seen by many as a case study of what can be achieved by prepaid cards and a laboratory for new successful products. Unlike in other regions, where prepaid cards are used by a small proportion of under banked consumers, in Italy these are truly mass-market payment tools.
Prepaid cards success in Italy is due to several reasons:
In Italy the majority of prepaid cards are issued by retail banks as general purpose cards, not targeted at specific consumer segments. Things are changing though: a growing number of non-banking institutions and service providers are looking towards the prepaid card market as a way to introduce innovative services and gain traction in the payments arena.
Reflecting country’s preference for cash, prepaid cards are used mainly occasionally, for online purchases or as travels pocket. Hence the total value of transactions still remains limited.
Given the record high penetration rate of prepaid cards, financial players face the challenge to increase cards’ utilization rate and move customers from plain vanilla prepaid cards to richer and more engaging products. Light accounts are a big step in the right direction: different pricing and additional services enabled by IBAN code allow for everyday usage and higher revenues. The market is already crowded, but new important products, such as Postepay Evolution from Poste Italiane, continue to emerge.
What is next? Innovative features will become a requirement for new successful products:
We believe the prepaid space will stay as a profitable entry level for retail banks in the next years; increasing synergies between prepaid cards and smartphone applications will also ease the transition towards the approaching proximity mobile payments revolution.