Report: European Prepaid Maturing, Open-Loop Spend to Hit €112 Billion by 2020 (March 11, 2014)
Prepaid products now have a proven track record in many major European countries, where the industry has begun the process of transitioning from its adolescent phase into one of mature, stable growth. That was among the key themes of a new report by PSE Consulting, titled European Prepaid 2013: Accelerating Performance, which follows the company’s previous survey of European prepaid, released in March 2011.
Since the previous edition of the report, the prepaid sector in Europe has grown to offer a full complement of products and services that are useful to audiences, including the underbanked, small businesses and governments. And the future looks bright. By 2020, the report projects there will be €112 billion (US$155 billion) spent annually using open-loop prepaid in Europe, Russia and Turkey, with more than 2 billion transactions, from a card base of more than 200 million. Of that total spend, underbanked-targeted GPR products are expected to account for 34 percent, with online products comprising 17 percent and corporate reloadable cards 12 percent. The average transaction value is projected to reach €52 (US$72) by 2020, compared to €48 (US$67) for a traditional debit card by that year.
Of all European markets, the U.K. is expected to generate the largest prepaid numbers over the next six years, with Italy following closely behind—largely because of the dominant role played by Poste Italiane in delivering prepaid products there.
Despite the predicted growth, the report cautions that the business case for prepaid “remains a challenge,” with high costs of development and setup, card production, processing and account maintenance. With those challenges in mind, “issuers may well benefit from taking a view of their entire prepaid product portfolio, rather than just a monoline perspective,” the report suggests.