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.
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.
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,
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.
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