Italy’s Postepay is a prepaid stored-value card that operates on the Visa Electron network. It is being viewed by Visa Europe as one of the most successful prepaid cards in use and will serve as the model that will be copied by the rest of the industry.
Visa Europe has based its plans for prepaid cards on Postepay, which is available as a reloadable Visa-branded or MasterCard-branded card. These cards can be used at ATMs or stores, for payments on Italy’s equivalent of eBay, or with Microsoft’s Xbox game console. Over 2.2 million Postepay cards are in circulation in Italy, and 20,000 new cards are issued each week by the post office for a 70 per cent share of the country’s entire prepaid card market.
Poste Italiane (the post office) has a further edge over banks that issue their own prepaid cards in having 14,000 locations, while the country’s largest retail bank has about 3,000 branches. Any fraud attempts on Postepay cards are also detected on Poste Italiane’s real-time back-office operations, whereas a bank may not necessarily have this fraud-detecting capability. Postepay cards are used in over 20 million financial transactions per day, such as pension, bill or mortgage payments. This broad spectrum usage confirms the opportunity for other prepaid card issuers in Europe to create innovative payments products in response to the needs of specific markets or demographics.
The move by First Data and Banca Nazionale del Lavoro (BNL) to announce a joint-venture in January 2006 may be an early attempt to win share in Italy’s stored-value and other card markets. Fundamentally, First Data and BNL plan to use the joint merchant-acquiring venture to expand BNL’s merchant business in Italy, and to deliver new services in an endeavor to be a ‘change’ agent in the national payments market. Given First Data’s expertise in providing a comprehensive range of card services, stored-value cards are almost certainly on the agenda, with hopes of opening new card services to previously untapped markets.
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