Prepaid Financial Services’ Narrow Focus Becomes a Global View (February 2013)
By Bill Grabarek, Senior Editor
What started in late 2008 as a reseller operation, consisting of two people in an office offering payroll and corporate cards to small and midsize firms, London-based Prepaid Financial Services (PFS) has evolved into a program manager, e-money issuer, acquirer and provider of turnkey, white-label solutions.
PFS now comprises of 40-plus employees, currently has 45 active white-label programs, with another 35 scheduled for rollout during the first half of this year. Its card portfolio has tripled in the last year, and its reload network has grown from 40,000 locations in 2011 to over 200,000 in 2012. PFS currently operates in 10 countries: Botswana, Canada, France, Germany, Ireland, Italy, Slovenia, Spain, the U.K. and the United States.
“It has been a fairly quick progression over the last four years,” PFS CEO Noel Moran tells Paybefore.
From Reseller to E-Money Issuer
During the early days, the company started selling cards with another company’s brand—orders for 10 cards here, 20 cards there—then PFS decided to launch its own branded corporate expense card for the same market and began adding more functionality to the product, including loading networks, loyalty and rewards, and mobile applications.
“Over time, we had a card program with a lot of functionality and a significant amount of technology linked to it,” Moran says. “We thought that if we can do this for our own card, we can offer it as a turnkey solution for other potential partners looking for a similar white-label solution. That’s how we moved into the program management side of things.”
Working with third-party issuers as BIN sponsors, PFS found strong demand for its solutions and soon the company was managing more than 35 white-label programs. It was then that it became clear to Moran that PFS needed to apply for an e-money license, which would lead to PFS becoming a member of Visa for acquiring and MasterCard for issuing and acquiring.
PFS was granted an e-money license from the U.K.’s Financial Services Authority in early 2012, enabling the firm to become an e-money issuer and, according to Moran at the time, giving PFS the ability to “expand the services we can offer to our partners.”
One result was that nearly all of the company’s clients moved to PFS for issuing. PFS now issues cards for 90 percent of its card programs, according to Moran. Although PFS has practically become a one-stop shop, it doesn’t require its clients to use the company for every facet of their programs.
“We offer BIN sponsorship and program management, but we’re not precious about what services our clients wish to utilize,” Moran says. “We make all the services available. If the partner wishes to use us for both, that’s fine. If they just want to use us for BIN sponsorship only, that’s also fine.”
“Our goal is to build a global prepaid program management entity and we’ve made some inroads.”
For example, PFS signed a deal with European telco Lycamobile at the end of 2012, in which PFS is the BIN sponsor for the Lycamoney product, but Lycamobile acts as its own program manager. Still, Moran notes, “BIN sponsorship is probably going to be one of the key growth areas for us in the next 12 to 18 months.”
Of course, there are benefits for PFS and its clients to work together on all aspects of a program, Moran explains. “It enables us to provide a full turnkey solution, where partners get everything through one provider and they don’t have to look for separate contracts for issuing services; they don’t have to worry about risk and fraud, because we would take care of that as the BIN sponsor. It also enables us to offer more competitive pricing. If we’re providing multiple services, we have the option to reduce our overall pricing and offer lower prices and cost savings to our partners.”
While PFS has its roots in the U.K., the company has aggressive expansion plans, particularly in the Middle East and Africa. In November 2012, it launched the MADI Express Prepaid MasterCard in Botswana through a partnership with Prepaid Debit Card Services Ltd., a Botswana-based prepaid service provider, focused on the underbanked and unbanked market in Botswana. The card, which is issued by Kingdom Bank Africa Ltd., is PFS’s first program in Africa.
Marketing for the card was rolled out in January, so it’s too early to get an indication of how the product is being received, says Moran, who adds that PFS will be launching a travel card in Botswana that can be loaded with South African rand or U.S. dollars. Further products will follow in 2013.
“We’re working with multiple banks, large global banks that have a presence in 10 to 12 different countries, to roll out prepaid solutions throughout the continent,” Moran says. “We would expect to be live in a minimum of five or six more African countries by the end of the year.”
Most recently, PFS and Deutsche Card Services (DeuCS), a Frankfurt-based acquirer, signed a strategic partnership to develop and deliver prepaid card solutions across Europe for corporate clients.
“The initial focus is on Europe,” Moran says. “[DeuCS] has a presence in most European countries and a huge number of corporate clients, so the initial opportunity is to offer prepaid services to these clients.
“Our goal is to build a global prepaid program management entity and we’ve made some inroads into that, but we’re an awful long way from being a global provider,” Moran says. “If someone comes to us looking for a solution for country A, B or C, we should be able to provide that as a prepaid provider and not just be limited to Europe or Africa. There is a long way to go but we are getting there.”