Shoppers in Poland are increasingly likely to buy fresh pierogi in Krakow or a bus ride in Gdansk with a prepaid card.

Prepaid is gaining favor with the formerly cash-loving Polish people, since prepaid cards allow them to make purchases online and via mobile, spend money at major events and ride mass transit — with or without a bank account. In Poland, the number of prepaid cards increased by 15% in 2012, with a much bigger rise in the number of open-loop prepaid cards (22%) compared to closed-loop ones (10%), according to Euromonitor International.

Until very recently, cash has been king in Poland. According to Euromonitor's research, debit cards – the most popular type of financial cards in Poland – reached only 0.69 card per capita of the population (credit cards are far less pervasive). In 2011, Poland ranked 17th out of 27 EU members in the average number of electronic transactions per capita, according to research by University of Warsaw.

While the number of cards in circulation today may appear relatively small — just 1.9 million open-loop and 2.3 million closed-loop as of the end of last year, says Euromonitor — bankers and industry experts see tremendous growth opportunities for prepaid in this country, both due to a broadening range of applications and acceptance for the cards (especially in contactless form) and a coming improvement in the country's overall economic health.

"Contactless functionality is expected to serve as an important advantage for the Polish prepaid card market, especially when it comes to the replacement of cash payments on public transit or at big sporting events," says Michelle Evans, consumer finance industry analyst for Euromonitor International. "Prepaid cards have been developing rapidly in Poland mostly due to the implementation and rising popularity of electronic transportation tickets in urban areas."

This trend, in turn, has given Polish consumers "confidence in the use of cards for payments and they are willing to use them in retail and service outlets," Evans says. Euromonitor International expects that the number of prepaid cards will grow at an 8% compound annual growth rate from 2012 to 2017, with open-loop prepaid cards growing twice as fast as closed-loop.

MasterCard has nine banks in Poland issuing its cards, and prepaid use is growing slightly faster in Poland than in other European markets, says Michal Skowronek, MasterCard Europe's general manager for Poland, Ukraine, Czech Republic and Slovakia.

Polish banks only began issuing mainstream contactless cards (with a Visa or MasterCard operator logo) in 2007, and it was only last year that real infrastructure changes made their use more feasible at major chains and retailers, according to Evans. PKO Bank Polski SA, mBank (BRE Bank SA) and Pekao SA are among the large Polish banks issuing prepaid cards. BRE Bank, one of Poland's top issuers of prepaid cards, began offering the cards to customers in 2009, according to Dariusz Nalepa, head of the transactional banking department at BRE Bank SA. Since then, Nalepa says the bank has issued more than 600,000 prepaid cards.

Its Visa prepaid cards "were provided to the [business] customers who wanted to pay any extra bonuses or cash awards to the employee or clients," Nalepa says. "These cards were very often used also as different kinds of loyalty cards." Nalepa estimates that his bank alone should be "extending the base of potential prepaid card owners by as many as 200,000 users each year."

Banks see businesses as a big driver: "After the success of corporate prepaid cards BRE decided in 2010 to extend the offer by prepaid cards based on the electronic money formula," says Nalepa. With these eMoney Cards, issued by BRE Bank, the user is anonymous, so the experience is more like the familiar cash transaction to card-wary Poles. BRE, for example, issues hundreds of different loyalty prepaid cards for events, companies, and mobile phone usage, Nalepa says.

"We believe that within the next years prepaid cards will have serious impact [on] the understanding of finances among young users …very often prepaid cards are presented to the kids by parents and used by safe mean of payment," says Nalepa. "This will extend the overall usage of the card as payment instrument."

Poles want to use prepaid cards to shop on their PCs and their mobile phones. They want to go to sporting and music events, where prepaid cards are increasing issued for identification and payment. They are using prepaid cards to ride the bus or the train, and receiving them as gifts or workplace bonuses. Polish research firm PMR says that seven out of 10 young Poles have shopped online in the past six months, making Poland one of the fastest growing electronic commerce markets in Europe. Meanwhile, the value of m-commerce grew 24% between 2011 and 2012 (to PLN2.1 billion), according to Euromonitor.

And growth is likely to increase due to a number of factors, including more stability in the growth of the Polish economy and the rise of a younger and more technology- and card-accepting population. 

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