Banks and fintech firms are launching prepaid cards to boost financial inclusion in the Middle East in 2023

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In the Middle East, the prepaid card ecosystem has been growing at a rapid rate over the last few years. The growing percentage of the tech-savvy population is driving the adoption of prepaid cards. With smartphone penetration projected to further grow in the Middle East in 2023, banks and fintech firms are leveraging the increasing smartphone penetration to drive financial inclusion across the region by launching digital prepaid cards.

Qatar Islamic Bank, for instance, announced the launch of the Himyan prepaid card in March 2023. The prepaid card solution is an initiative of the digital bank to develop electronic payment services and support financial inclusion in the country. As a result, the bank has made the prepaid card solution available for customers, non-customers, as well as visitors holding a valid QID or visa.

In the Middle East region, the growth of the prepaid card industry has been also driven by digital banks, which have significantly grown in numbers over the last three to four years. These digital-only banks have launched several innovative payment products in the past, and the trend is expected to further continue in 2023.

• ila Bank, one of the fastest-growing digital mobile-only banks in the region, announced the launch of a prepaid card solution in February 2023. The launch of the Bahraini-denominated prepaid card is part of the firm's strategy to boost financial inclusion and facilitate a cashless digital economy.

To drive the adoption of its prepaid card offerings in Bahrain, ila Bank is targeting different consumer segments, including students and travelers. The firm has specifically designed a student-focused prepaid card with tailored benefits. This includes the offering of cashbacks on transactions completed in school cafeterias that are operated by the Eastern Bakery. For travelers, the prepaid card offers a host of other benefits including access to medical insurance and discounts and offers via partner stores and merchants in Bahrain.

Al Salam Bank, another financial institution in Bahrain, launched a revamped multi-currency prepaid card campaign in February 2023. The new campaign comes on the back of the success of the last year’s campaign.

• The campaign, which allows cardholders to win BD 1,000 in monthly rewards when spending BD 50 through the Visa prepaid card, will run until December 2023. To make the prepaid card offering more attractive, the bank is also offering cardholders the ability to earn loyalty points and receive discounts on the Bahrain Life platform.

Such campaigns are expected to not only accelerate the financial inclusion in Bahrain, but also the growth of the prepaid card transaction value and volume from the short to medium-term perspective.

Along with banking institutions, fintech firms are also seeking to boost financial inclusion in the region, through their innovative prepaid card products that are launched in strategic collaboration with global payments giants. For instance,

• In March 2023, e& money, the financial services arm of e&, announced that the firm had entered into a strategic collaboration with Mastercard to launch a prepaid card solution. The prepaid payment instrument is part of the firm's super app strategy and is targeted toward driving financial inclusion in the United Arab Emirates. With the Mastercard tie-up, cardholders will be able to make transactions at all merchants that accept Mastercard globally.

Initially, the firm has only launched a virtual prepaid card that cardholders can use for online transactions. However, the firm is also expected to launch a physical prepaid card for offline payments from the short-term perspective. The fintech firm has also linked the prepaid card solution with the loyalty program, thereby enabling cardholders to earn cashback and rewards for every dirham spent. In turn, cardholders can redeem their points for free data, minutes, and discount codes, among other benefits.

In another prepaid card offering, Nomo, the international digital Islamic bank based in the United Kingdom, launched a multi-currency card in March 2023. Initially, the card has been launched in Kuwait and is planned for a further rollout to customers across the GCC region. Since its launch in 2021, Nomo has become a popular payment method among Kuwaiti customers spending time internationally. With cross-border payments growing at a rapid rate, PayNXT360 expects the digital bank to record strong growth in 2023.

From the short to medium-term perspective, PayNXT360 also expects many more digital banks and fintech firms to launch prepaid card solutions catering to the needs of different consumer segments in the Middle East market.

To know more and gain a deeper understanding of the prepaid card in the Middle East, click here.