Prepaid card provider Rev Asia Pacific entered India's market to expand access to financial services to India's citizens, a long-term goal of the country's government, the top executive of the Australia-based company says.
"We believe prepaid cards will play a critical role in accelerating the expansion of financial services in India," Simon Hilton, Rev Asia Pacific CEO, wrote in an e-mail message to ATM&Debit News. "Financial inclusion is a long-standing commercial and public policy priority in India."
Rev Asia Pacific is a portfolio company owned by MPower Group, a venture fund dedicated to investing in and building companies to serve underserved markets. Brothers Roy and Bertrand Sosa are founding partners of MPower Ventures and MPower Labs. Both Sosas also cofounded Netspend Inc., an Austin, Texas -based prepaid card marketer, that owns Rev Asia Pacific.
On Oct. 16, Rev Asia Pacific began offering two MasterCard prepaid products: a gift card and a "virtual" prepaid card through a partnership with Central Bank of India.
The Mumbai-based bank is making both cards available to individuals who do not have bank accounts. The Rev MasterCard Gift Card and the Rev MasterCard Virtual Card are available at the bank's 3,500 branches and at selected retail outlets across India.
The bank charges 100 rupees (US $2.14) for each card. The cards are not reloadable.For each product, cardholders must load a minimum of 500 rupees (US $10.81) into the accounts, or a maximum of 50,000 rupees, according to Meredith DeSpain Kelsey, a spokesperson for Rev Asia Pacific, which is part of Rev Worldwide of Austin, Texas.
With a virtual prepaid card, the cardholder receives a voucher number and a PIN code via a mobile phone text message or a printed receipt. Individuals can use the card information from the issuing bank to shop online or to make purchases by telephone or by mail order.
The virtual prepaid card is designed to take advantage of India's growing appetite for the Internet, officials of Rev Asia Pacific say. According to ComScore Inc., a Reston,Va.-based market-research company, 28 million Indians logged on to the Internet in 2008, up 27% from 2007.
India presents a huge market opportunity for prepaid cards. Nearly 1.2 billion individuals live there, but only 600 million have access to the country's financial services, only 20% have a payment card, and 80% of transactions are conducted in cash, according to the Prepaid International Forum, a London-based, not-for-profit trade organization for the prepaid card industry that opened a chapter in Mumbai in August.
The number of ATM and point-of-sale terminals in India also is small, with an estimated 44,857 locations in the country at the end of May, according to Rev Asia Pacific.
"We've always have seen prepaid as a payment option that makes sense in any environment where cash is king as a way to migrate from paper to plastic and to transform an economy from one that's dependent on paper currency to one based on electronic currency," Bertrand Sosa wrote in an e-mail message.
Rev Asia Pacific decided to offer prepaid cards in India because consumer incomes are growing, Sosa added.
Though India provides a huge prepaid card market opportunity, companies need a business plan that suits that environment, says Adil Moussa, an analyst for Aite Group LLC, a Boston-based consulting firm. "Companies cannot charge $3 to $5 for a prepaid card and $5 to reload [funds] because the salaries are much lower in India than in the United States," Moussa says, noting issuers would earn revenue instead primarily from interchange.
Despite the challenges, the Prepaid International Forum views India as a key market. "The launch of Prepaid International Forum's new India chapter represents global recognition of India as an emerging prepaid market with tremendous potential for growth and financial inclusion," Amit Sethi, managing director in India and South Asia for Total System Service Inc., or TSYS.
TSYS sponsored the opening of the forum's India chapter. The Columbus, Ga.-based transaction processor is recruiting banks to join the group, Diane Brocklebank, the forum's head of member relations, tells ATM&Debit News.
Sachin Khandelwal, senior general manager of ICICI Bank, India's largest private bank based on assets, is chairman of Prepaid International Forum India, Brocklebank says.
The forum entered India's market after the Reserve Bank of India, the country's central bank, in January published draft guidelines for prepaid card industry regulations. ATM