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European market for pre-paid cards set to soar

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Pre-paid Payment cards set to soar in Europe

Finextra, May 11, 2007

Spending on pre-paid payment cards in Europe is estimated to reach US$164 billion by 2010, according to new Boston Consulting Group (BCG) research commissioned by MasterCard Europe.

On a country-by-country basis, BCG reveals that the UK's predicted total pre-paid spend of $34 billion by 2010 positions it as Europe's largest single market and the fourth largest in the world.

The UK is closely followed by Italy where total spending is estimated to hit US$33 billion, and France, with an estimated total spend of US$27 billion.

It is in Eastern Europe, however, where pre-paid spending is set to make the biggest impact. In Poland, total prepaid spend is estimated to reach US$11 billion, equivalent to 14.1% of spend using payments in the country as a whole. The BCG research also shows that in Russia, the anticipated total pre-paid spend of US$23 billion represents a 12.6% share of the domestic market.

One of the main drivers of pre-paid spending will be through Government programmes. In Russia, for instance, 23.2% of total government benefit spending is expected to be routed through pre-paid cards by 2010, accounting for US$13 billion in that market alone. Similarly, in Italy pre-paid share of total government spend is predicted to reach 28% (US$14 billion).

"Pre-paid cards are simple to purchase and easy to use. They enfranchise consumers by offering them the financial freedom of using a payment card without having to open a bank account or undergo credit referencing, says Chris reddish, head of pre-paid, MasterCard Europe. "This means that a broader range of consumer groups can now participate in the payment card system and can purchase goods and services via channels such as the telephone and the Internet where cash cannot be used. In today's environment, the potential of the pre-paid segment is tremendous.'

Other market sectors expected to experience strong pre-pay penetration include, gift cards, corporate cards, travel cards and campus cards.

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