Park your laptop, iPad or gadget of choice in a coffee shop or Internet café, and chances are you’ll unwittingly subject yourself to hearing conversations that revolve around farming, buying cows, barns and tractors, or a special $5 sword meant to defeat and drive your enemy’s “guild” away.
The former bespeaks a famous Facebook game called Farmville, while the latter is none other than the worldwide phenomenon that is the World of Warcraft. Both games feature special products that one can buy to increase the chances of winning and, well, drive faster harvest.
“It’s just a different life than you and I ever lived,” shares an amused and somewhat astounded Iain Jamieson, VISA’s Country Manager for the Philippines and Guam. “Twenty years ago, we did not even know the concept of downloading music. Thirty years ago, it was ping-pong, but now you’ve got millions and millions playing Farmville on Facebook.”
Debit and Prepaid Cards at the Forefront
Indeed, the pace modern technology has taken would astonish even the most experienced world leaders. The rapid rise of the Internet and social media in the last five years has caused many of today’s companies to rethink the way they sell and promote their products and services to the new world market. The very company you see hesitant about taking its business online five years ago would now be commissioning the services of digital media buying agents to advertise and sell its products/services on Facebook and other Social Networking sites.
Consequently, change trickles down to the payment card industry.
“Last year, Visa had a 12 percent growth across the Asia Pacific region in terms of payment volume. These are the cards being used at the Point of Sale (POS), and if we split that out, I would say debit and prepaid cards are the next big opportunity in the country,” shares Jamieson. “Both debit and prepaid are going to see a lot of payment growth—a big net of that revolves around the fact that we have such a young population in the Philippines and they’re looking for a product that will allow them to live this life they are now leading online.”
While credit cards still dominate the online payment industry in terms of international payment, debit and prepaid payment mechanisms are slowly gaining traction especially in younger markets like the Philippines.
“Growth in this market is defined by the opportunity,” Jamieson points out.
“The 22 million ATM users represent the debit market, while the 60 million mobile subscribers represent prepaid.
If you have a population of 93 million, then theoretically the opportunity for prepaid cards is a lot larger than debit in terms of card volume; but in terms of spend, higher amounts will be spent on Debit.”
Educating the Market and its Merchants
Debit and prepaid cards are nothing new. The fact is that significant amounts of the population are already cardholders. The challenge, Jamieson says, is education. “It’s just that a lot of people do not know what these cards can do. In the U.S. market alone, it took the U.S. Visa guys 10 years of consecutively campaigning to convince the population that they did not need to go through the hassle of withdrawing money from the ATM to pay when shopping. It’s really about convincing the market and telling them that this is a product that can be used on the Point of Sale, and that it works.”
For a country foremost known for its overseas remittances, Jamieson says “the Holy Grail, the nirvana, would be to have everyone with a prepaid Visa card. Imagine somebody sitting in the province, with access to local shops that accept card payments, and then his relative, an OFW in Riyadh, sends a transaction almost instantly from his account, which goes into the local banking port in the Philippines—that’s where prepaid can and will go in this market.”
Market education aside, figuring into Jamieson’s to-do list includes forming alliances with banks and merchants. “It’s not an easy project for a bank to do—the IT changes that need to be made are quite significant because you have to link a card management system into the core bank system to make sure when you do a transaction, your checking/savings account gets debited automatically.”
A number of banks are already moving toward Debit and Prepaid payment systems. “To get to the whole round (of banks), before everyone has a debit card in the market, we’re looking at two to three years,” predicts Jamieson, who recently formed a team to handle both marketing and business development for Visa in the Philippines. “In this market, I would be very surprised if everyone doesn’t have a debit card after three years purely because, as in any market, once a competitor has something in the market, you don’t want to be left out. Especially when we’re talking about millions of young customers coming into the banking environment.”