Australian prepaid cards: big banks battle for first place

ANZ and Westpac recently introduced schemed prepaid cards within a day of each other, significantly ramping up competition in Australia's payment card market, and indicating the potential of the prepaid market. Smaller players have been offering these cards in Australia for the last year but will clearly have to fight harder for market share now the major banks have joined them.

Prior to the end of 2005, branded prepaid cards were not available in Australia, although interest was gathering due to the success seen overseas. The Bopo card was the first prepaid card to be introduced and, while it was on the market in 2005, its official launch came in August 2006.

The Bopo card is part of Bill Express, which offers bill payment terminals, although very few Australians are aware of the relationship between the two. The Bopo card was expected to be the market leader, but with two of Australia's major retail banks entering the market, Bopo's position now looks threatened.

ANZ's Visa Gift Card was launched on November 23, 2006 and Westpac's MasterCard Gift card was launched the following day. Both companies have clearly timed the launches to cash in on the Christmas rush. ANZ's card costs A$6.50 when purchased online or A$6 when bought in the branch. Westpac's version is cheaper at A$4.95 and it also has a higher allowable value maximum, at A$800, compared to ANZ's A$500.

While ANZ and Westpac have greater brand awareness than Bopo, the latter has one significant advantage over the banks' prepaid offerings; Bopo cards can be reloaded with value, which means that they can be used for other purposes than as a gift card. One potential use in Australia is for teenagers, as parents can regularly reload funds onto the card as pocket money.

Prepaid cards will always remain a niche market, but they are expected to be popular with consumers not satisfied with other payment options. Furthermore, the fact that both ANZ and Westpac have launched schemed prepaid cards indicates that this market has considerable potential. Given this, other Australian issuers are expected to introduce prepaid cards in the near future, perhaps targeting specific consumer groups such as teenagers and travelers.

©2007 Business Review Ltd
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