Blog: 2014—Diversification for E-Money
As the popularity of prepaid e-money solutions continues to grow in Europe, we’ll see a number of trends emerge in 2014 that will shape the industry.
1. Rise in Loyalty Platform Integration
We will see e-money and loyalty scheme providers leveraging their technology, client portfolios and experience to broker introductions for clients with strategic partners that also operate on their loyalty platform. Through these introductions, clients are able to establish commercial partnerships with other brands, with mutual gain derived from the quick and straightforward integration of systems. This provides e-loyalty clients with new avenues through which to establish additional sales channels for their gift cards, including gift card malls, virtual malls and the sale of virtual cards, together with the bulk sale of gift cards to large enterprises. This can result in cross-brand tie ups—with loyalty points for one shop usable in another, for example—or one-time promotions around an event or season, increasing loyalty and revenues.
2. Unconventional Uses for Prepaid
In 2013 we saw a number of interesting uses for prepaid that capitalized on the flexibility of prepaid e-money accounts; a trend that will continue into 2014 and beyond. For example, airlines like airBaltic now are using network branded cards to offer additional value to their customers. Benefits include an international payment instrument and exclusive incentives, such as flight discounts when the card is used for purchase, miles program integration, competitive e-FX rates and integrated loyalty programs for consumers. In return, these programs ensure the partner receives increased brand recognition, customer engagement and retention, in addition to a new revenue stream.
Prepaid adoption among migrant worker recruitment agencies also will increase in 2014, as these organizations seek to support workers without bank accounts. Prepaid e-money accounts already are revolutionizing payroll delivery for such workers and will be even more relevant across Europe as migration controls are lifted on additional countries, such as Bulgaria and Romania. Agencies can load wages onto cards and issue them to workers, removing the necessity for large amounts of cash to be kept on the premises, making the process simpler and safer for all concerned. The best solutions even enable migrant workers to apply for an additional card to be associated with the account, which can be sent back to their home countries, enabling the family to avoid international money transfer costs by withdrawing funds from an ATM.
3. Curtailing Corporate Credit
Credit is no longer king. In austere times, unnecessary corporate spending is the first area to be reined in. Prepaid cards are an easy and effective way to bring spending back under the control of finance departments. Switching corporate expense systems to prepaid eliminates the possibility of an employee overspending. This system is easier to administer for the finance department through real-time digital reporting. It also enables tighter control over the movement of funds since everything takes place through a single online portal. The flexibility of prepaid expense systems also enables employers to restrict spending to a list of pre-authorized merchants, ensuring loaded funds are only used for the intended purpose.
4. Cross-Border Expansion
Increasingly regional brands will leverage the benefits and flexibility of e-money accounts as a vehicle for brand expansion overseas, through recognition and loyalty. We have already seen airlines offering prepaid cards to customers as a tool to aid expansion into new markets through payment and added value, and this could equally work for organizations like car rental, hotel chains and national retailers.
5. Mobile Marches On
In 2014, we will see e-accounts go mobile, placing quick, convenient and secure money management facilities into consumer’s pockets. Adoption will be quick among consumers as they look to keep even tighter control on their finances while on the move. Taking this one step further, once users are familiar with the process and functionality of mobile money management, we will begin to see tailored loyalty programs offering value direct to app users. Already, retailers are offering tailored discounts to frequent customers and some are even offering location-based deals, leveraging the GPS on customers’ phones to know when they are close and tempting them as they walk past. Expect to see more of this in 2014.
As with so many industries, successful diversification will be the key. 2014 is shaping up to be a big year for e-money and those players with the ability to spot opportunities, and the agility to react to them, will increase market share and thrive.
Mike Fromant is the managing director of Contis Group, a U.K.-based provider of prepaid BIN sponsorship, card issuance, payment processing and administration management. With nearly four decades of experience in the banking and consumer finance sectors, Fromant’s previous executive roles include working with Barclaycard, HFC Bank, Experian, GE Money and TSYS. He can be reached at [email protected].