You are here

Money Transfer Cards & The Accidental Global Customer

Money Transfer Cards & The Accidental Global Customer

The use of Visa and MasterCard prepaid debit cards for outbound U.S. money transfers has taken off. Money transfer cards will capture 4.4% of the U.S. outbound remittance market in 2007, up from 0.7% in 2005

Boston, MA, August 24, 2005 – In a new report, Money Transfer Cards & The Accidental Global Customer, Aite Group examines the uptake of special-purpose prepaid debit cards for workers' remittances, also called "money transfer cards".

"Money transfer companies and banks' CEOs don't remain awake at night to think about money transfer cards. Yet, they should" argues Gwenn Bézard, a Research Director with Aite Group and author of the report.

 

Most money transmitters are right to consider money transfer cards as just one item on their list of competitive threats. After all, the competition from agent-based networks and from non-card based money transfer bank services represents a more immediate challenge. And most banks are right too to see the cards as a tool among others to win the hearts and wallets of unbanked immigrants, notably Hispanics.

Yet, there is more to it. For money transmitters, the development of the card channel is directed against their core value proposition. Greater usage of cards suggests money transmitters will have to expand more aggressively than they do already in new areas such as cash-based intra-domestic transfers, walk-in bill payments, cash-based e-commerce payments, and beyond those known territories into broader financial services. Meanwhile, they will need to keep growing rapidly their agent network.

Meanwhile, as they race to lure unbanked immigrants, U.S. banks will be tempted to obtain direct access to foreign ATM networks through M&A or partnerships. "With more people using the money transfer cards abroad, U.S. banks will soon realize they have accidentally built a global customer base" adds Bézard. Over the next three years, Aite Group predicts that the most successful U.S. banks at the money transfer card game will start working on this unusual customer franchise.

This is a 14-page Impact Note. Clients of Aite Group's Retail Banking service can download the report.