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Waste Management
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Prepaid Credit Cards

This business will translate the recent explosion in financial instruments such as prepaid credit cards in the USA and Western Europe in to the Gulf region.

Market Opportunity

Establishing a model operation in the financial centre of Bahrain will demonstrate the business and permit rapid expansion through the region.

Prepaid credit cards offer the functionality and flexibility of a globally accepted credit card to those excluded from the traditional product offerings. Being fee based and not interest charging, there is no risk of over-spending, no risk of fraud and is shariah compliant.

  • The system will offer a range of stored value debit cards. These offer a full service credit card once funds are allocated to the account.
  • Prepaid credit cards are transforming the domestic financial services market, expected to account for 10% of all credit card expenditure in the USA. This is a new product, as communications technology has permitted the instant verification of the card and account status.
  • Prepaid credit cards offer the convenience of a credit card without the risks of mis-management and over-spending.
  • Prepaid credit cards offer internet purchasing without the risk of major fraud, as only allocated amounts can be used.
  • Prepaid credit cards can be used for low cost money transfer.
  • No bank account is required, card may be anonymous.
  • Card may be reloaded at retail outlet, by bank transfer or by card online.
  • Up to 5 cards per account, transfer funds by SMS, by phone or online

Long Term Aim of the Business

The intention is that this company will become the pre-eminent issuer of prepaid cards in the region. With the support of our card processor, we have the capabilities and the desire to dominate the sector.

The Bahrain operation will be used as a template and demonstration model to full regional expansion.

Objectives

Bahrain Management Centre can introduce a dedicated product within 4 months of commencement. The initial target is to achieve a positive operational cash-flow within 6 months on issuing cards, approximately 8,000 cards in use. After 15 months of operation (11 months of issuance) the company will be generating profits.

Target Market

As in all markets, there are several sub-markets to consider. In the Gulf Region, one specific market is the shariah compliant customer. This is as, by its construction, the prepaid card is compliant as no riba is involved at any stage. The growth of Islamic banking has demonstrated the potential for these products. This market may be quantified as all those households who hold such an account.

The migrant labour market is of huge potential. Prepaid credit cards offer tremendous advantages to these customers – access to low cost flights, secure money management and low cost instant money transfer. Prepaid cards also appeal to the employer as costs can be reduced and made more secure.

The third sector is more diffuse, but may be considered as the usual market in Europe or the USA. These include family financial management, travel use, and Internet spending.

Market Trends

The prepaid market is expanding rapidly in all markets where it has been introduced. The forecasts for the Gulf surpasses the overall credit card trend as the market is under-developed compared to Western Europe and parts of Asia. This is often explained by cultural objections to the credit card system. As stated, the prepaid system removes these objections.

Recent intervention by the Bahrain Central Bank to dampen credit growth is beneficial to our product as it demonstrates the risks of standard credit cards.

Future trends will possibly see a transition from plastic cards to mobile devices. We are insulated from risk as our technology and processing partners are embedded in such developments and can offer future proofing.

Profile of Competitors

There are no competitors offering a full prepaid card. At the present time, 3 banks offer a debit card which is linked to the user’s bank account. These are marketed as internet cards or travel cards. For example, BBK offer a Visa Electron card, Citibank offer the Visa debit card.

These banks are substantial players, with large market share. The card offering is not so successful, as it is somewhat restricted. The problem for traditional banks is their lack of familiarity with the cash sector. This is our role as we do have that experience and contact base. A very potential exit mechanism is such a bank purchasing the business to gain entry.

Competitive Advantage

Bahrain Management Centre offers two very critical advantages in this market:

  • Market Leading Infrastructure
  • Experienced Management Team

With our processing partners, our retail network and efficient customer support operation, we can offer a very cost effective product.

The management team has worked in the prepaid sector for many years. The role of cash in people’s lives is understood, as is the peculiar requirements involved in the management of a cash business.

We have devised a price structure which is very competitive and attractive to our customer base. There are two price models:

  • Pay As You Go
  • Monthly Fee

An issuance fee is charged to validate the customer details (to satisfy anti-money laundering laws) and print and issue the card.

The prepaid card is absolutely identical to a standard credit card, there are no physical differences. The card can be used in any card authorizing system and the retailer will not be able to know it is prepaid.

Benefits to Clients

The benefits may be grouped into distinct areas:

  • Religious: A shariah compliant card, all the benefits of a credit card.
  • Convenience: Safe and secure, if stolen value can be cancelled and Transferred to a new card. To spend on the card a PIN is required.
  • Savings: Internet purchases can generate significant savings.
  • Money Transfer: Can be conducted instantly at a minimal cost.
  • Travel: Airline tickets more often require credit card payment manage budgets by companies for expenses.
  • Bill Payment: Pay utility bills from home.
  • Family Budget and manage monies for family members.

 
 
 

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