PARIS–MasterCard Worldwide is planning to buy the prepaid card business of Travelex Holdings Ltd. of London, the card brand announced Dec. 9. The $458 million acquisition, which MasterCard expects to close in the first half of 2011, should improve its business in overseas market, officials from the card company say.
“Travelex has a global footprint,” Matthew Lanford, senior business leader and head of prepaid at MasterCard in Europe, said in a Dec. 9 interview here at the Cartes & Identification conference and exhibition.” This allows us to help deliver better products at scale for our prepaid clients around the world.”
In foreign markets, “this gives us a [fuller] prepaid-product suite that our partners, whether they’re program managers or issuers, can leverage to better support the prepaid market globally,” Lanford said.
MasterCard will use the technology and systems it is acquiring to continue focusing on cross-border travel products for consumers and for corporate travel, primarily focused on the maritime and airline industry, Lanford said.
The card brand could apply some of its existing technology services, such as its inControl product that issuer banks can offer cardholders to set limits on their spending, and its PayPass technology for contactless payments to expand the cross-border products that banks and program managers offer, he added.
Loads into prepaid card accounts could reach $840 billion globally by 2017, according to a report released this year by Boston Consulting Group and commissioned by MasterCard (see story).
“Prepaid for us is a very important product,” Lanford said. “We just want to make sure that the product category is successful and that we can help all the partners in the value chain do what they need to do to push prepaid forward and be in a strong position.”
Gwenn Bézard, research director at Aite Group LLC, said in a statement the acquisition seems to put MasterCard directly into the business of issuing and marketing prepaid cards.
"Given the price tag, I'd be shocked if the acquisition is merely about adding technology to support its existing issuers and program managers," Bézard said. "If MasterCard is effectively entering prepaid card issuing and marketing, it's a significant, albeit not unexpected, shift in direction as it will likely compete with existing customers and partners in that segment."
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