The Prepaid Card: Asia’s New Corporate Payment Tool

From tea plantation workers to assembly line workers at manufacturing plants, more staff are receiving their salaries with prepaid payroll cards. Travel cards are growing surprisingly fast, too, and research by Visa indicates that 40% of business travellers in India use prepaid cards. As Visa’s Scott Solomon told Business Traveler, an increasing number of companies see “prepaid travel cards as a more convenient and safe way to provide travel payments for employees around Asia-Pacific.”

Prepaid cards bring a variety of benefits to banks and corporates alike. Along with making payments more efficient, they can increase compliance since companies track payments more easily and can be easier to use for employees who travel frequently or who are in remote locations.

India is one of the larger markets in the region for prepaid cards. MasterCard’s Laura Kelly told Mint that “India’s prepaid card market will grow at 40% every year to US$59bn in 2017 from US$4bn in 2009,” with about US$34bn of that coming from corporate travel, incentives, meal vouchers and payrolls.” Visa’s Neel Nilakantan, forecasting a higher number of US$93bn, said “it’s the fastest growing product for us globally and banks have already taken it up, like Axis Bank achieved a US$1bn volume on our travel prepaid card last year.” ICICI Bank senior general manager Sachin Khandelwal, who is also chairman of the Prepaid International Forum (India) told the Economic Times earlier this year that he estimates that there are 3-4 million prepaid cards in the country, with about half being payroll cards and travel cards the next largest category.

Prepaid cards are growing rapidly in China, too. In announcing its joint venture to issue 10 million prepaid payroll cards over the next three years, for example, Australia-listed Connxion noted that payroll, employee and prepaid cards are a significant business in China. Altogether, they said, “over RMB100bn (US$15bn) worth of prepaid cards are issued in China each year.” They also noted that many Chinese companies issue prepaid cards to employees.

More banks as well as the card schemes have ratcheted up their efforts to launch or promote prepaid cards, too. J.P. Morgan Chase has a variety of prepaid cards for business that it markets in the Asia region and, as far back as 2008, it teamed up with Corporation Bank and Yes Bank in India to launch prepaid new travel cards targeted at companies. In October this year, Citibank launched a new prepaid card in the Philippines that is targeted at corporations which can issue it to probationary employees, trainees, dealers or business partners as a form of compensation, incentive, rebate or disbursement. In Australia, Citbank said “we are also working on a number of other business to employee and business to business applications.” A multitude of other banks in the region, in developing markets as well as developed markets like Australia or Hong Kong, also have new prepaid cards for businesses on the way.

The card schemes in Asia have also put an increasing focus on the prepaid cards for businesses. As part of a reorganisation it announced in October, American Express said that “the growth opportunities for payment forms outside of our traditional charge and credit products such as prepaid, payroll cards, remittances and virtual currencies” is “well in excess of US$1 trillion” around the world. In late October, American Express announced the launch of a prepaid travel card in Australia that it expects to roll out across the region.

While prepaid cards may have received less attention in the past, the market is growing rapidly and growth can be expected to continue.

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