Helen Child was struck recently by just how much has changed in the prepay card space since she co founded G-T-P back in 2001.
The following article was originally published in 2009 and even since then there has been a transformational shift in the market place. Have a read of the following and judge for yourself;
This article first appeared in Cards International magazine in June 2009
G-T-P aiming ¬†for the top in prepaid
As one of the UK‚Äôs foremost prepaid solution providers, and a full MasterCard member with its own closed-loop processing capability and heritage in complex systems integration, G-T-P‚Äôs profile is on the rise. Roy Driver caught ¬†up with chief executive ¬†Helen Child to talk about the company, its plans and where it has come from.
Cards International: How is G-T–P structured and what is the history of the company?
In terms of structure, G-T-P has two operating divisions. The closed-loop¬† charge card division has clients including DSGi, Pilkington, Travelodge¬† and Wolsey. For these clients we are the issuer, processor,¬† scheme manager and we manage all debt collection of funds on behalf of the client, including ¬†credit scoring of the customers. The ‚Äòbook‚Äô either still sits with the client or we can arrange for this to be taken off the client‚Äôs balance sheet by working with one of our strategic finance partners.
Helen Child: The company was founded ¬†eight years ago and,¬† as one of the founding ¬†directors, ¬†I am pleased to say we now employ nearly 60 people,¬† with over 6 million cards in the market ¬†through 40-plus programmes.
The other division is the prepaid ¬†division and that ¬†pulls from our heritage¬† of systems integration, and was an extension ¬†in that we moved from doing closed-loop ¬†charge cards to closed-loop ¬†gift cards. Although¬† we went into prepaid starting with closed-loop gift cards, we then with the attainment of a full e-money licence (EML) moved into restricted loop processing of gift cards. We are currently rolling out a restricted¬† loop scheme for the Home Office.
We are delivering our strategy and have extended this again with our MasterCard issuing license.
Our aim is quite simply to listen to our clients‚Äô needs and offer the right choice of pre-paid solution ¬†for them ‚Äì we have the luxury of not having to squeeze a round¬† peg into a square hole!
CI: why did G–t–P become a Mastercard issuer first, rather than a programme manager, which many companies are doing and would seem to be an easier entry point into open-loop prepaid cards?
Helen Child: The logic to our actions¬† is that¬† in our charge card division we are already processing tens of million of pounds¬† of transactions for our clients and the core of this work is all the 100 percent accurate ¬†reconciliation and detailed ¬†compliance ¬†and¬† fraud ¬†monitoring and prevention activity we carry out.
Further, ¬†G-T-P‚Äôs core culture¬† and focus is built around these skill sets. In my mind, reconciliation, compliance and fraud are the three key skills you also need to be a good issuer. It was therefore¬† logical that we take existing skills and expertise and just expand¬† this into MasterCard issuing. The other advantage we would¬† see is that¬† we have in effect entered the value chain at the top rather ¬†than ¬†coming in as a programme manager ¬†and working upwards.
As the issuer we have the direct relationship with MasterCard and this will enable us to ensure at all times that we can give clients the best possible service with the deepest knowledge of MasterCard‚Äôs requirements.
CI: Given the recent announcement by Visa that they will now also allow full eML holders to obtain Visa membership, will you also be applying for this as well?
Helen Child:¬† We obviously ¬†continually review all options based on client needs and the business case. Our focus for the short term though is to ensure we deliver the very best MasterCard issuer service to the market.
Having said this, it does clearly fit with the corporate strategy of being able to offer our clients a choice, in as much as we now are able to offer clients the choice of closed, restricted or open-loop prepaid ¬†solutions. Never say never.
CI: In which countries does G–t–P currently¬†operate programmes?
Helen Child: Our platform is multi-currency, thus we have been client-driven¬† in terms of the markets we work in. We work a lot in mainland Europe ¬†including ¬†working ¬†with¬† a leading French bank to create a customised¬† solution for the French market. ¬†In addition to Europe we are also rolling¬† out ¬†programmes in the Middle East and in South Africa.
CI: In the short term do you see the greatest growth for G–t-P coming from the charge card division, closed-loop prepaid or the new open- loop issuer area?
HC: The forecasts and analysts seem to suggest that as an overall market ¬†it is split 50:50 between open and closed-loop ¬†cards. So we see ourselves being able to offer clients what- ever they want with an excellence of service and product.
To this end, we focus on both,¬† so I believe what we are in a position to do is take advantage of where the market moves.
Given the current ¬†economic¬† climate and uncertainties, I feel that many opportunities and challenges for clients will arise and it is important that you can offer choices to those clients on how to address these requirements and fully meet their needs.
CI: If you look at the Us, issuing has become very competitive ‚Äì almost commoditised. Do you see this happening in the UK and Europe¬†as more companies enter the market?
Helen Child:¬† I think ¬†it would ¬†be very dangerous if issuing became ¬†in effect a commodity due to the need for excellence in reconciliation, fraud management and compliance ¬†required. I would¬† argue that¬† while you can automate some of these functions¬† and aspects, particularly in reconciliation, the core of what¬† is required cannot be commoditised.
Furthermore, I think the current economic climate makes apparent the challenges that you¬† have ¬†being ¬†a MasterCard issuer. ¬†To commoditise these would almost belittle the importance and role in the value chain. The key here of course is that ultimately the issuer is accountable to MasterCard and also the Financial¬† Services Authority for all compliance and settlement of funds.
CI: Given that G–t–P is the latest entrant to become a Mastercard issuer and will now be competing against many others who have been doing it for far longer or who are far bigger, how do you see G–t–P differentiating its offer¬†in the marketplace?
Helen Child: We certainly¬† are happy¬† to benchmark ourselves against the very best in the industry and the standards they have set. Where we would differentiate is that we will potentially be swifter ‚Äì more fleet-footed to market.
I also feel that ¬†as we are smaller, ¬†and ¬†in some ways closer to many end customers, we can listen better to what the customers ¬†want; whether ¬†these are end users or programme managers‚Äô needs. We can also often be more flexible and ¬†adaptable in terms ¬†of pricing structures to meet the requirements and more importantly structure of the clients‚Äô business. We may also have a different view on compliance and risk than some of the other players who are restricted by their overall parent corporate structures.
If I was to sum it up, it is a real attitude of partnership, of listening and adapting to clients‚Äô needs. We certainly feel that the market is big enough, and growing fast enough for all major issuers to write sustainable and profit- able business and for G-T-P to claim a reasonable slice of this pie, so to speak.
CI: Given that you already have issuer accreditation, are you likely to move at any time into offering other services such as full programme management?
Helen Child: Given that in both the charge card and closed-loop prepaid¬† areas we offer the full value chain solution, it would appear ¬†to be a logical move. However, ¬†certainly in the short to medium term, I would not see this as something we will do. We need to maintain our ¬†focus¬† on¬† our current ¬†strategy¬† of becoming¬† the very best MasterCard issuer.
CI: Given the recent announcement by PSE¬†consulting that the UK¬†and European¬†markets in prepaid are growing more slowly than originally forecast, is that a concern?
Helen Child: While PSE has announced the high-level results, ¬†neither ¬†they nor MasterCard have, as far as I am aware,¬† published ¬†the detailed report ¬†and it will be interesting ¬†to see what is
in that. The bottom line though ¬†is, while PSE is stating that the growth ¬†is lower than originally forecast, as Visa stated at the 2008 VRL Prepaid¬† Summit, they are still seeing triple- digit prepaid ¬†growth¬† in Europe year-on-year and there are no signs of it slowing down.
Thus while the forecasts may be been scaled back slightly, overall there is still very significant growth¬† in this sector for all of us, and particularly for G-T-P operating in both closed and open-loop, to take advantage of.
CI: what are your plans for G–t–P‚Äôs expansion globally and where do you believe clients are going to take you next?
Helen Child: On the charge card side we see continued growth coming from Ireland given that ¬†our product is closed-loop and thus does not incur the stamp duty tax on open-loop cards.
Further ¬†to this, in mainland Europe we see further opportunities in France, Italy, Sweden, Poland and Germany.
CI: Visa has started to allow restricted acceptance open-loop prepaid card products. Do you see this as a threat or a complimentary offering to your closed-loop business?
Helen Child: It is a complimentary offering in that it gives clients a choice. To build a restricted loop network is time-consuming and while Visa has led the way with its restricted¬† loop acceptance ¬†strategy, ¬†we will work within the¬†new constraints MasterCard has introduced. To launch the Home Office restricted ¬†loop scheme that I mentioned earlier, has taken significant time, resources and energy.
CI: Do you see any opportunities around combined open and closed-loop cards where a card with a single eMV chip is closed-loop within a chain or area and open-loop¬†elsewhere?
Helen Child: ¬†Possibly, ¬†however ¬†I feel the¬† prepaid market¬† needs to focus on volume and large programmes rather ¬†than looking for niche or new technological solutions ¬†to try and drive the market forward.
But what we are finding in the closed-loop charge card market ¬†is that¬† clients are experiencing a high rate of declines from credit scoring and prepaid ¬†is a real option ¬†with an upgrade strategy for those end users. This enables us to deliver to clients a complete suite of products, enabling the right end customer ¬†to get the right card.
CI: Many of us have seen the advertising by Visa and Mastercard regarding contactless. Do you believe there is more that the networks should be doing to promote prepaid cards and consumer understanding of them? If not, whose responsibility is it?
Helen Child: I believe it is very disappointing that Visa and MasterCard have not used their strength in the market place and significant marketing budgets to educate the market on prepaid.
I believe if they had put greater¬† resources into¬† education then¬† the market ¬†would ¬†be much further developed and we would be seeing far greater adoption by consumers of prepaid. It is interesting ¬†to note that there is still considerable confusion on what is prepaid.
VRL‚Äôs research at the 2008 Prepaid Summit stated that 12 percent of consumers¬† believed they had purchased a Visa/MasterCard/Maestro prepaid card. As penetration levels are far lower than this, it just demonstrates further that consumers really don‚Äôt understand what prepaid cards are.
As we currently sit in what I would call the pioneering ¬†stage of the growth¬† curve then we all, as in programme managers, ¬†brands ¬†and issuers, also have a responsibility, but as each one of us is relatively small the only overriding brands, ¬†and thus educators, are MasterCard and Visa.
CI: Given the increasing regulation and¬†compliance in the UK, do you see this as a challenge or opportunity for the prepaid sector?
Helen Child: I see it as real opportunity for G-T-P as although we are the ‚Äònew girls‚Äô on the block so to speak in terms of issuing, we come from a heritage of having to manage risk, reconcile and do settlement for clients as well as having had a full EML for some time.
Thus regulation and compliance will always be a requirement of the financial services sec- tor and what I feel we at G-T-P do very well is understand how to implement the regulations effectively and properly¬† but at the same time understand what opportunities still exist for our clients.
Working ¬†with clients as true partners enables you to understand not¬† just what ¬†they ask you for but ¬†also what ¬†is really behind the question, and through this you are better able to understand how the regulations might affect them and thus what opportunities are created.
CI: what do you see as the greatest challenges for the prepaid card industry in the UK¬†and Europe¬†over the next 12-24 months?
Helen Child: The challenges are going to be wide and varied; you have the regulatory challenges and the varied interpretations of the Payment Services Directive by different markets and the cascading of these requirements throughout your organisation, including compliance.
On a marketing side education will be a really key industry¬† challenge. We are not just talking about ¬†the UK ‚Äì education of the new and emerging markets needs to be carried out. Perhaps ¬†the biggest challenge for the industry is for everyone to be writing ¬†financially
sustainable business in increasingly challenging economic times. We all know that it is a volume-driven market.
From¬† a consumer ¬†perspective ¬†I see the challenge as being how do we either justify, or get rid of, the many fees associated ¬†with prepaid ¬†cards. Consumers in this climate are going to become increasingly cost-conscious and we need as an industry¬† to develop continually innovative solutions for meeting real consumer needs.
CI: Going forward, what do you believe the greatest challenge for G–t–P will be and where do you hope to take the company in the next 12 months?
Helen Child: Within¬† the next 12 months ¬†we have a very clear strategy and have put in place some key building blocks to deliver on the objectives.
We are looking¬† to further ¬†strengthen our closed-loop ¬†processing platform, which is at the heart of everything we do for our closed- loop market.
On open-loop we will be concentrating on delivering a flexible, fleet-of-foot issuer service to the market, ¬†and on charge cards we expect to see the continuance of the trend of clients outsourcing more of their whole book and not just the collections, thus protecting themselves in this increasingly challenging market.
Ultimately, ¬†the company ¬†has grown¬† very fast over the last eight years and our key challenge has to be to ensure that the great team we have built¬† up continues ¬†to deliver our company values of pride, passion, innovation, excellence and integrity, and that we continue to attract the best and brightest ¬†talent in the payments¬† industry¬† to ensure that we can give our clients real partnerships and great solutions.
Above all our focus will be on increasing volumes and¬† writing ¬†profitable business ¬†‚Äì blindingly obvious maybe, but essential given the current ¬†economic¬† backdrop we are all wrestling with.