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The Future of Prepaid is Cloud Banking

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Last night, in association with Tony Craddock and our friends at the Payments Association, we held a dinner with some of the key leaders in the European Prepaid industry. The wine flowed, the conversation was frank and like all thought provoking discussions I left with as many questions as answers. The crux of the matter was the future of the Prepaid card industry in Europe.

The traditional thesis goes something like this. Prepaid cards are often touted as bank account substitutes, and as such they are directly competing with a loss leading product offered by some of the world’s biggest companies. Even further, they run on bank rails (e-money at the end of the day always sits in a bank account somewhere) and use the same card networks (predominantly Mastercard) so are they even really that innovative? If a Prepaid company or challenger bank is to be able to make any money in a low margin environment, then they will need a huge subscriber base, so the market will inevitably consolidate and may even flounder.

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