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Washington DC, September 16, 2009 Harish Natarajan Payment Systems Development Group The World Bank

Prepaid Cards- An Overview. Washington DC, September 16, 2009 Harish Natarajan Payment Systems Development Group The World Bank. Payment Systems and Remittances: Services . Help develop sound and efficient payment, remittance and Securities Settlement systems, to:

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Washington DC, September 16, 2009 Harish Natarajan Payment Systems Development Group The World Bank

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  1. Prepaid Cards- An Overview Washington DC, September 16, 2009 Harish Natarajan Payment Systems Development Group The World Bank

  2. Payment Systems and Remittances: Services Help develop sound and efficient payment, remittance and Securities Settlement systems, to: 1. Strengthen Financial Stability 2. Support Access to Finance Stocktaking & Policy Advice Implementation Support Vision & Strategy Legal Framework Large-Value Systems Retail Payment Systems Government Payments Remittances Securities Settlement Oversight & Cooperation Financing: WB loans-grants, fee-based and other TA, Regional Initiatives, FSAPs, support to FIRST-funded Initiatives, Others 2

  3. In the retail payment area, the PSDG supports: • Creation of comprehensive retail payment system strategies • Implementation of an efficient clearing and settlement infrastructure for ALL retail payments • Efforts to improve the efficiency of the market for international remittances, through the implementation of the WB-BIS General Principles for International Remittances Services • Reforms of the legal and regulatory framework • Inclusion of the public sector in the retail space to enhance the efficiency of government payments • Creation of an effective payment system oversight function and an inclusive cooperative framework

  4. Prepaid Cards - Characteristics • “Pay Before” • Usually Magnetic Stripe based; Value resides at host • No prior banking relationship • Usage at ATM, POS and internet • Re-loadable • Open Loop Vs Proprietary • Variants : • Chip variant: To address infrastructure constraints • Value stored on Card (Chip Card) • Authentication using PIN/Biometric • Re-Load and Cash-out at “agents” • Virtual: Accessed through mobile phone

  5. Customer 4 Customer Service 3 Issuance/Load Usage 5 Account set-up &settlement, MIS Authorization. &Settlement Re-ordering Inventory check, MIS 1 2 Distribution Production Prepaid cards- Process d Prepaid host

  6. Prepaid Cards • Mechanism to address varied needs:

  7. Prepaid Cards – A better alternative

  8. Prepaid Cards – Success stories • Delivery of US Social security benefits- Direct Express • Delivery of Italian social security benefits- PosteItaliane • American Red Cross Disaster Relief • Russian Pension disbursement – Muscovite Card • Employee Benefits- Visa Vale • 30 US states deliver child support, unemployment benefits

  9. Implementation considerations • One Card Vs Multiple cards • Open loop / Closed Loop • Access Mechanism: Magnetic Stripe / Chip • Banking Partner • Enrollment procedure • Policies • Economics

  10. Retail payment systems and instruments: PSDG key resources Retail Payment Instruments and Systems: Outcomes of the “World Bank Global Payment System Survey 2008” & Cirasino-Garcia “Measuring Payment System Development” “Balancing Cooperation and Competition in Retail Payment Systems”: A World Bank study coordinated by Mario Guadamillas, which includes a framework for a reform agenda and guidelines for proper cooperation and competition Guidance Note for the Implementation of the GPs for International Remittance Services (upcoming) Guidance Note for the proper inclusion of Government Payments in the NPS (upcoming) Retail payment system strategy for the NPS (upcoming)

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