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Poste Italiane boasts the most successful prepaid card in the world, with 5 million prepaid cards issued and a 70% stake in the Italian prepaid market. Since the first card was issued in 2003, the Post Office’s portfolio of prepaid products has increased dramatically to offer a range of services for different customer segments. Earlier this week, I spoke to Flavio Mastrangelo, Marketing Manager for Poste Italiane’s prepaid products to gain an insight into how the Italian Post Office has become the world market leader in prepaid.
Flavio will keynote at the first ever prepaid conference in Central and Eastern Europe, Prepaid Cards & E-Money CEE, on 16th September.
Which products do you currently offer customers and who are they aimed at?
Today we offer a wide range of products from check account to cards to mortgages, insurances etc. Now we have 5 million prepaid cards, almost 70% of the national market share. All banks are issuing prepaid cards; the main segment is the unbanked. Many customers also have a bank account, also use prepaid cards online, part of e-commerce and to travel abroad. Another segment is immigrants, especially from Eastern Europe, North Africa and South America. They used the card like a virtual bank account to make international money transfers. Trust is a big issue, especially for young people and the verification of the product, especially addressing new technology, e.g. contactless. We are moving from the youth market to a mature segment. E-commerce and micropayments give a general overview of our portfolio.
Why has Poste Italiane been successful? Is it something unique about Italy? Why haven’t the banks been as successful?
We have a vast agent network, 14,000 branches spread out around the country. Our strengths are that we offer convenience to all consumers and we have a cheaper price structure. The top-up and the acceptance networks are other key strengths in our success. We have appealed first of all to the young and unbanked, it’s easier for them to come into the post office, we have a more transparent relationship with the people.
How has Poste Italiane managed to establish a trusted brand?
We have built up a trusted image because historically we were the institution that had always offered safe investments and we kept this value in all our products, also the innovative ones. The financial crisis has also helped increase confidence; our marketing campaign and the transparency of our products have helped build trust.
Which marketing channels have worked well for you?
We have used general marketing tools, a combination of above and below the line advertising. We launched the first prepaid card in November 2003; there had been some products available on the market beforehand. The concept of prepaid had already been established by telcos, 99% of Italians have a prepaid sim card.
We have spent a lot of time investing in educating the masses on prepaid cards and using cards in general. We made a big effort to educate people about debit and prepaid cards, as well as how to withdraw money and use an ATM. This is still ongoing; we are now trying to focus on customer segmentation. We are looking at our customer portfolio, addressing a different message to different customers in order to increase the use of cards. We are now moving to a direct mail marketing campaign which will go out to different customer segments. In this way, we can address a specific target market with a tailored message to make them see the benefit of the product for their needs.
Which trials did you go through to identify your customers and what they felt about prepaid cards and Poste Italiane?
1 year ago we ran a segmentation exercise and studied the behaviour of the customer in order to find which would be the best way to promote the usage of the card. We asked customers about how they would use a prepaid card and which products do they currently own etc. We also did an analysis looking at customer care and how consumers perceive Poste Italiane.
Which has been your most successful product to date?
Our general purpose prepaid card has been the most successful. Our success is till growing from our first launch in 2003. The key drivers for our product are the easy usability, convenience factor and wide accessibility- our products are available in thousands of branches nationwide and our fees are clear and transparent.
Which new channels are you using to appeal to a modern public?
Last year we launched our MVNO, 1 million sim cards have been issued and you can make financial transactions with them. We offer mobile commerce, so that the sim card can be connected to a prepaid card and an account. You can withdraw cash from all ATMs where Visa and MasterCard is accepted. We are also running a contactless pilot, by using what we learnt from multi functional cards- we want to combine payments with transit and address new customers.
Many commentators assess that there is great deal of opportunity for the gift card market in Italy. Tell us a bit about Poste Italiane’s gift card and your view on the market.
Generally the gift-card (disposable cards) market is not so developed. Our new product is a reloadable gift card, but there are some restrictions in place due to the AML legislation imposed in 2007. However, I think the market will grow and take off, there is much room in the market and larger target segments that can be addressed.
What are the current and future challenges you need to will need to overcome?
Customer education, agent network training and competition not only from banks but other payment institutions. We have invested in a huge amount of training and education. It is important to invest time in making sure agents sell our products effectively, so we ensure that training is given extensively, especially once a new product is launched.
Flavio Mastrangelo is keynote speaker at Prepaid Cards & E-Money CEE, Warsaw, September 15-16. To register to attend, click here.
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Since 2002 Citi Handlowy has been a market leader, supplying thousands of prepaid cards to the hottest corporate brands in Poland. Now, the corporate prepaid division have big plans to offer new products and to extend the programme internationally. In this exclusive interview, Piotr Lipiñski, Head of Commercial Cards, has revealed to us, why their prepaid programme has been so successful and what the future holds for this bank that knows no limits.
Citi have been offering corporate prepaid products for almost 8 years now. How did you identify the opportunity?
In 2002, Citi Handlowy was Poland’s first bank to issue a prepaid payment card to corporate customers in the Visa system. Case studies presented by Visa, showed us that it was a good idea. Prepaid cards are a good opportunity to build loyalty for corporate clients. A company can create their own card, and send money directly to their employees, who can chose what to buy as a reward for their work. Today, we still offer prepaid cards only to corporate customers. Owing to the Visa Electron prepaid card system, companies and institutions can limit their costs and, at the same time, manage their loyalty, motivation and promotion programs in a more efficient way. Citi Handlowy has issued about 300 thousand prepaid cards to institutional clients.
Why don’t you offer prepaid cards to consumers directly?
Currently we are focused on prepaid cards for corporate customers only as we see this model as more profitable. You can issue 1000’s of cards to just one customer. The key to prepaid’s success lies in volume, and this can only be amassed by serving corporate companies.
Who has been your most successful customer? Can you say why they have been successful?
Without mentioning the name, one of our clients, who is the biggest distributer of vouchers in Poland have been very successful. Let me mention our other achievements I would like to mention Damian Plus, the first medical prepaid card in Poland, launched by Citi Handlowy in cooperation with the Damian Medical Center. The card functions as an electronic wallet. The possibility to pay for medical appointments and surgery guarantees comfort and safety for clients – they don’t need to have cash on them any more, and each transaction requires the cardholder’s signature only. The Damian Plus card is a perfect offer for companies. It is a modern marketing tool to build relationships with employees and an ideal solution to ensure financial resources for medical treatment of all family members. Another novelty, already launched on the market, is a gift card issued by Citi Handlowy for the “Arkadia” Shopping Mall. The objective of this banking and marketing tool, unique on the Polish market, is to support building client loyalty and to encourage people to shop there. The holders of the Arkadia gift card can use it at all shops accepting Visa cards. The card can make an excellent gift for family and friends, and it is a convenient solution to be used as reward and incentive for employees. About a thousand gift cards were sold at Arkadia in the pre-Christmas period.
What methods have Citi used to promote prepaid cards?
Well, we used our sales force to offer this product to existing clients, and we demonstrated our solution at various seminars and conferences. We also publicised in the press, but not in TV commercials, because that was too expensive. Moreover, there is no real benefit for an extensive marketing campaign because we are corporate and are not allowed to offer products directly to the consumer. So, for now, our customer is responsible for marketing the prepaid card under their own brand, directly to the consumer. We may co-operate with our customer to develop a b2b2c business model and partner to make TV adverts and promote the cards through them to the consumer.
What makes Citi’s prepaid card service unique and different from your competitors?
Citi Handlowy prepaid cards offer a wide range of possibilities – ranging from loyalty cards, through to promotion cards, electronic shopping vouchers, benefit cards, debit scholarship cards, to gift and medical cards. Our model created from the beginning offers corporate customers many unique benefits that our competitors do not offer. For instance there is one account per programme. When a customer wishes to make a money transfer or top up the card, they perform only one transaction. So, this saves a lot of costs, usually you would have to pay for each transaction separately, but with our system, you can perform multiple transactions in one go. Also, we offer huge flexibility to our co-brands. We have 100s of co-brands and we allow the customer complete control over the card design, where Citi’s logo does not feature.
How has Citi made prepaid a profitable enterprise?
We were the first bank to issue Visa prepaid cards in CEMEA, we focussed on corporate customer, because we had seen the business in prepaid and the huge volumes to be achieved, right from the beginning. Our competitors didn’t, they focussed their business model on the consumer, which is less profitable. This is a simple solution that allows one customer to top up as many cards as they wish.
What made Citi recognise the opportunity in prepaid before going live with a programme?
One customer came to us with a huge problem, the company produces refrigerators and their existing loyalty programme only offered employees a refrigerator. Employees were not motivated to sell for the company because all their families already had refrigerators - the employees wanted something else. So the customer came to us for a modern solution and we offered them prepaid cards because it is a more sexy and attractive loyalty platform. The idea to use prepaid cards came from Visa and the customer’s request.
How would you sell your product to prospect buyers?
This is a simple programme to manage, you do not need additional staff, this is attractive from the end user’s perspective. The cardholder chooses the prize and how to spend the money- clients can tailor make the card and promote themselves as a modern company. The card can be accepted at every POS and ATM that accepts Visa domestically.
What are Citi’s future plans for prepaid?
The Polish prepaid card market is developing very fast. Citi Handlowy in Poland has a 73% share in the prepaid card market, which means that we shape it to a considerable extent and indicate directions for its further development. We plan to open prepaid cards for international transactions (currently domestic use only). Cash is still king for many people, but a prepaid card can help customers going abroad. Transactions are easy to make and the card is secure, if it is lost or stolen, it can be blocked so the customer does not lose any money.
Piotr Lipiñski is a keynote speaker at Prepaid Cards & E-Money CEE, Warsaw, September 15-16. To register to attend, click here.
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In April 2009, Posta Romana made history by launching the first ever prepaid card product, ‘Cashplus’ on to the Romanian market.
The product appeals to Romanian’s vast unbanked population, as there is no requirement to have a bank account to use the product. The card can be used like a regular debit or credit card to make purchases or withdraw cash from atm machines. pay utility and other bills online.
Consumers can by the card at any of the six Posta Romana branches in Bucharest. Rollout will be expanded further across 7,000 branches in July.
Cristina Catai, Project Manager for Cashplus at Posta Romana was kind enough to speak to us about the product’s journey from inception to completion. Cristina will keynote at the first ever prepaid conference in Central and Eastern Europe, Prepaid Cards & E-Money CEE, on 16th September.
Why did Posta Romana decide to enter the prepaid market? What was the value proposition?
There was no prepaid market, only debit or credit cards existed in the Romanian market. Posta Romana did not have the same income stream from financial services, in comparison to peers in neighbouring countries and further afield, e.g. Italy and Great Britain. Posta Romana wanted to gain a greater share of income from financial services, not linked to the usual services that Post Offices offer, such as pensions, insurance and loans. It took a long road to get the contract signed and for us to launch Cashplus. 22 million people are still relying on cash, we wanted to strengthen our relationship with the Romanian people. We had come to see the advantages of prepaid as a good product for family budgeting, instant access to funds for the unbanked and a foreign exchange product to use abroad.
Why did Posta Romana enter the market at this moment in time?
The financial services market in Romania can be divided between rural and urban areas. However, there is very little penetration of financial products in rural areas; the financial infrastructure is too basic. The Post Office is the only vast and economical financial network; banks do not operate in rural villages and alternative retailers can be expensive. Posta Romana is able to reach all prospect customers, including the unbanked. By launching a prepaid card on to the market, (unsophisticated and easy to use) a perfect target for the unbanked, greater profitability can be achieved.
Why did you decide to work with APS and not launch on your own?
There were no prerogatives given by the National Bank of Romania, Posta Romana cannot issue account services alone, we needed to join forces with somebody approved by the NBR. Therefore, in order to issue a prepaid card, there needed to be a middle man, in the form of Advanced Payment Solutions. The software, programme management and regulatory obligations are all priorities for APS. Posta Romana are only concerned with the distribution of the product, expanding merchant networks and driving sales. Posta Romana’s involvement with APS has made a nationwide impact- on the level of product visibility, educating the mass market about prepaid and contributing to the development of financial services. We act very responsibly for our products on the market, maintaining consumer confidence.
What were some of the challenges you faced at your end?
The major challenges were related to consumer education and how to make ‘smart sales’. Explaining to people our product offer and why prepaid is different to other financial products, educating them about the benefits- affordability, simplicity to use, reliability and wide acceptability has been crucial. We have played an instrumental role in developing brand trust, Posta Romana is a widely recognised institution and will play a key factor in acquiring customers, but it is still too early to say if people really understand the product as the pilot was only rolled out two months ago. We have six branches in Bucharest at the moment, so it is not that representative, Bucharest is also heavily banked and everyone has at least one bank card. This is just a technical pilot with the aim of getting people used to purchasing cards and making payments with a prepaid card. We will not fully understand how consumers embrace prepaid until the second leg of the pilot starting in Q 3 2009. This will involve the expansion of the product nationwide and the commercial viability will be clearer in Q4, 2009.
Are there any special features or benefits that have been incorporated into Cashplus in Romania?
Not yet, but, eventually we hope to expand the features of the product to incorporate social, pension and child support disbursements. Also as part of the core proposition we recognise the importance of bill payment. Although MasterCard provides global acceptance to pay for products and services online and in-store at over 28 million locations, there are still local merchants, especially utility and telecom suppliers who do not accept MasterCard. Posta Romana has always been known as the most convenient location to pay bills but we look forward to working with APS on providing a solution where the Cashplus prepaid card will be able to pay bills for cardholders online which are normally paid at our branches.. It will take further development in IT and Operations to ensure full support. Support networks need to be expanded and better integration as the database grows. Customer services support would also be crucial as well as thorough communication with clients by explaining the value added services and hopefully the product will become more popular by offering extra facilities.
By adding extra services, do you hope to make Cashplus more mainstream in the future?
Yes, by merging the existing product with other financial products, this will make Cashplus more marketable and certainly more mainstream.
How do you think the global recession will affect the uptake of prepaid cards?
Spending habits have been paradoxical at times, so it is difficult to know what the reaction will be. It is too early to say if the prepaid card answers the typical needs of households and consumers, specifically in a recession in Romania. My guess is that it will probably help Romanian citizens to become more familiar with the prepaid concept and usage patterns, to have discipline over spending, to control personal and family members’ finances and to strengthen an already existing relationship with Posta Romana.
What type of research or consumer analysis drove the product development for Cashplus in Romania?
We surveyed a number of people from the major cities, and asked information related to consumer spending patterns, of using financial products and their opinion on Posta Romana, including our strengths and weaknesses. The survey results were important, the design, logo and profile for Cashplus were all chosen via the results yielded, as well as the card features, commissions, spend limit to have on the card, card usage, and it provided a good insight on the perception of Posta Romana as a brand and a nationwide service provider.
Did you invest a lot of time training staff at the post offices?
There was centralised training with strict discipline for the operators. It was imperative for them to understand the product and software by testing it for themselves. Staff have been trained to sell the card and communicate the benefits of the prepaid card, answer typical questions that customers might ask and how to identify prospect customers for prepaid. This prepaid card is unprecedented and the first launch was very important, a lot of planning and work has gone into getting this right, since all initiatives taken by Posta Romana have major visibility nationwide.. Our company is very big, getting a new product implemented requires multi-disciplinary involvement from sales, operations, IT, network management, marketing, quality control and media services- many departments need to be co-ordinated in an all – encompassing project.
Are you aware of any up and coming competition?
Raiffeisen Bank, a former agricultural bank is now issuing a prepaid card, and has also worked with a partner. By in large it is more expensive, there are higher fees overall. We have observed that many of the features are quite similar to our product although we are quite excited that our product remains a better value at far less cost to the consumer. We have done a comparative review, marketing and testing the product, as I’m sure they have done with us. Posta Romana has been the first to issue prepaid cards in Romania and the Company’s sheer size make all its products very, visible in the media and at consumers levels. We are among the largest economic operators in Romania, with over 35.000 employees. The card was first tested out on the employees to make sure the fundamental features worked adequately before any roll out in Bucharest and the remainder of the country. This product is also assisting in the company’s strategy to educate our own staff to sell more complicated products and to increase the company’s perspective of being one of the major financial services providers in Romania.
Cristina Catai is keynote speaker at Prepaid Cards & E-Money CEE, Warsaw, September 15-16. To register your place, click here.
