Dubai: The prepaid card industry in the Middle East and North Africa (Mena) region will continue to grow strongly, thanks to government initiatives and an increase in e-commerce and consumer spending, a top executive from Visa said yesterday.
Sumit Tyagi, director for prepaid Mena at Visa Middle East, said the prepaid market in the region has grown significantly over the years, with Visa’s prepaid card volumes growing a cumulative annual growth rate (CAGR) of 156 per cent between 2008 and 2013.
As of 2013, there were 3 million Visa prepaid cards in circulation across 24 countries in the Mena region.
“As of last year, we had 82 per cent growth in total volume. I see the growth rate which we have currently to continue over the next few years,” Tyagi told Gulf News on the sidelines of the 5th Annual Prepaid Summit in Dubai yesterday.
Tyagi said the bulk of Visa’s prepaid business is in payroll cards. However, he noted, there are segments in the market that remain untapped and could become profit generators for both the company and prepaid retailers.
“There’s a huge consumer opportunity that remains untapped. We’ve got business and leisure travellers, students and Internet shoppers. The market could grow further by introducing more products targeted towards these types of consumers,” Tyagi said.
“We have a huge expatriate population who travel regularly. There’s a significant number of students coming in and out of the region and consumer spending is high. Currently, even if they have debit or credit card, people still carry cash,” he added.
Tyagi said the prepaid card market in Mena “took off” between 2007 and 2008, when governments in the region started mandating employers to shift from a cash-based to electronic payroll system.
In the UAE, the Wages Protection system (WPS) requires companies to pay workers’ salaries electronically, either through a bank account or a prepaid card.
According to business information provider Timetric’s report, some $18 billion in gross dollar value is likely to flow from prepaid cards in the UAE alone over the next five years. The prepaid card market is driven by the UAE, followed by Saudi Arabia and Egypt.
“The region has been on the heels of the growth trend for five years now,” said Douglas Blakey, group editor for consumer finance at Timetric, adding that the key drivers influencing the prepaid market are mobile-enabled internet use and strong retail growth.
A 2012 report by MasterCard noted that the global prepaid card revenues will likely reach $822 billion by 2017. Prepaid card is gaining popularity because of its “unique and practical ability to solve for almost any payment need.”