It’s here - the UK’s first prepaid card with chip and PIN, says Liz Hamson
Next week sees the official launch of a new prepaid card aimed at immigrants and the so-called ‘unbanked’ community. The cashplus-badged MasterCard, the first such product in the UK that is chip and PIN enabled, is based on a model widely used in the US and is the brainchild of Advanced Payment Solutions.
It can be used in exactly the same way as a credit or debit card but does not require the holder to open a bank account. It will initially be offered through 200 internet, international phonecard-selling and money-lending outlets. Top-up facilities will be available at these and 14,500 Post Office outlets, following a deal signed this week.
Although no grocery retailers have yet been signed up, chief executive Rich Wagner confirms the company is in negotiations with several mid-tier chains. He wouldn’t say which, but Spar and Iceland are among those understood to be interested.
Wagner says: “These types of cards have been a huge success in the US. We’re looking to migrate into areas where immigrants shop - obviously one of them is grocery. It is an opportunity to reduce the amount of cash retailers handle and to increase footfall.”
There is also an opportunity for the top multiples to offer their own branded cards, he believes. “One of the great problems with existing supermarket credit card schemes is that they run the risk of undermining the customer base because they have to decline up to 50% of applications,” he says.
“This type of product is a great alternative for customers who are declined. It’s also an opportunity for the likes of Sainsbury and Tesco to create their own branded card - a product extension they don’t currently have.”
For the customer, the attractions are equally obvious, he says. Where it would normally take six months or more to accumulate sufficient data to open a bank account, they can sign up for a card instantly on presentation of proof of ID and address. Once signed up, they not only dispense with the need to carry large sums of cash, but also gain access to the global network of outlets and ATMs that accept MasterCard.
The downside is that the card has no overdraft facility, offers no interest and comes at a price. It costs £9.95, plus either £4.95 a month to cover unlimited transactions or £1 a transaction.
However, Wagner is confident it will take off in the UK, just as it has in the US - where $160bn was spent on prepaid cards last year and the market is believed to be worth $2.5 trillion.
He says: “Datamonitor statistics show that seven million of the UK population are unbanked - that’s 15%. They’re unbanked for three reasons: they don’t want an account, they’ve tried to open one and failed, or they want the control of a prepaid card. This is a safe way to carry cash and it’s simple to use.”
Next week sees the official launch of a new prepaid card aimed at immigrants and the so-called ‘unbanked’ community. The cashplus-badged MasterCard, the first such product in the UK that is chip and PIN enabled, is based on a model widely used in the US and is the brainchild of Advanced Payment Solutions.
It can be used in exactly the same way as a credit or debit card but does not require the holder to open a bank account. It will initially be offered through 200 internet, international phonecard-selling and money-lending outlets. Top-up facilities will be available at these and 14,500 Post Office outlets, following a deal signed this week.
Although no grocery retailers have yet been signed up, chief executive Rich Wagner confirms the company is in negotiations with several mid-tier chains. He wouldn’t say which, but Spar and Iceland are among those understood to be interested.
Wagner says: “These types of cards have been a huge success in the US. We’re looking to migrate into areas where immigrants shop - obviously one of them is grocery. It is an opportunity to reduce the amount of cash retailers handle and to increase footfall.”
There is also an opportunity for the top multiples to offer their own branded cards, he believes. “One of the great problems with existing supermarket credit card schemes is that they run the risk of undermining the customer base because they have to decline up to 50% of applications,” he says.
“This type of product is a great alternative for customers who are declined. It’s also an opportunity for the likes of Sainsbury and Tesco to create their own branded card - a product extension they don’t currently have.”
For the customer, the attractions are equally obvious, he says. Where it would normally take six months or more to accumulate sufficient data to open a bank account, they can sign up for a card instantly on presentation of proof of ID and address. Once signed up, they not only dispense with the need to carry large sums of cash, but also gain access to the global network of outlets and ATMs that accept MasterCard.
The downside is that the card has no overdraft facility, offers no interest and comes at a price. It costs £9.95, plus either £4.95 a month to cover unlimited transactions or £1 a transaction.
However, Wagner is confident it will take off in the UK, just as it has in the US - where $160bn was spent on prepaid cards last year and the market is believed to be worth $2.5 trillion.
He says: “Datamonitor statistics show that seven million of the UK population are unbanked - that’s 15%. They’re unbanked for three reasons: they don’t want an account, they’ve tried to open one and failed, or they want the control of a prepaid card. This is a safe way to carry cash and it’s simple to use.”
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