MasterCard Europe has announced the launch of the Prepaid MasterCard Gift Card and the Prepaid MasterCard Travel Card.
Prepaid cards are payment cards that work just like credit or debit cards, but they are preloaded with funds. These cards have no line of credit, and provide users with a secure alternative to cash and all the convenience of a credit or debit card, but without the risk of running up debt. Both cards can be used wherever MasterCard® is accepted.
MasterCard-sponsored research shows that the overwhelming majority of customers (ratio of 7 to 1) prefer more flexible gift cards that can be used across a broad range of retailers than those that have restricted use, and when asked why they prefer to use traveller's cheques rather than cash, consumers typically mentioned improved safety, better exchange rates, and the opportunity to have a separate source of travel funds. When these factors are combined with Prepaid's greater functionality, Prepaid cards will increasingly displace gift vouchers, traveller's cheques and foreign currency sales.
Chris Reddish, the Head of Prepaid for MasterCard Europe says:
"Consumer demand for gift and travel cards is growing. Although consumers have become accustomed to using gift vouchers and traveller's cheques, they are now looking for solutions that are more globally accepted, convenient, and secure than cash and vouchers. These new Prepaid MasterCard Cards provide the perfect solution in each of these areas."
Since the first prepaid cards appeared in the 1990s, MasterCard has developed a strong Prepaid offering across multiple market areas, including gift cards, travel cards, corporate cards, expense cards and cards for government pay-outs. Financial experts indicate that, along with youth and 'unbanked', Prepaid gift card and travel products will become two of the most successful sectors in Europe. According to research conducted by PSE Consulting, by 2010 the European Prepaid gifting market is forecasted to have a turnover of around €19 billion and the European Prepaid travel market is forecasted to have a turnover of arouround €11 billion.
As prepaid cards are not linked to a current account, they also play an important role in opening up the payment system to new groups of consumers, including the 'unbanked', the youth segment and those budget-savvy shoppers looking for a tool to help them manage their available funds. Consumers can buy prepaid cards at local shops, load their money, ringfence funds to manage their daily or weekly spend, and make ATM withdrawals, POS transactions and online and telephone transactions at any of the 24 million merchant locations around the world where MasterCard is accepted. The cards have no overdraft, credit or cheque facility, so there is no risk of building up debt.