Our latest Gx Seminar – the UK Prepaid Club – has been covered by industry news blog PaymentEye.

Read the article online here. 

Over the last three months, Gx has undertaken a number of consumer surveys that have analysed the behaviour and attitudes of consumers in two continents to the use of mobile phones as a payment device. Our focus in Europe has been on four countries specifically; the UK, France, Germany and Italy.

In Africa, we have undertaken studies in two countries that have seen different results in terms of uptake of mobile payments. Unlike our European survey, our African respondents comprised microenterprises rather than consumers. Our research has shown that the success of M-Pesa has not been replicated in Tanzania for several reasons. First, Tanzania is far more rural and has a lower population density than Kenya. Tanzania also has a less developed banking system and lower financial literacy among its population.

Consistent with the Technology Acceptance Model (first proposed by Fred Davis after studying peoples’ adoption of email in the eighties), we felt that the differences in usage between Kenya and Tanzania resulted in a large part by differences in perceptions about the ease of use. There is a wide discrepancy in attitudes expressed in the two countries.

The results below are dramatic with nearly twice as many entrepreneurs in Kenya agreement that use is easy.  Importantly, less than 2% disagree.  In Tanzania, agreement about the ease of use approaches half but one would expect this to be much higher given the length of time mobile payments have been available to micro-entrepreneurs in Tanzania.

It is critical to understand that the Kenyan responses are likely to be the result of “strongly held” attitudes which have developed based on actual experience.  In Tanzania, the attitudes are probably “weakly held” as they would more often be based upon second-hand information rather than personal experience.  As such, we are, to a degree, comparing apples to oranges or rather experiences to perceptions.

Importantly, we measured several outcome variables to assess whether micro-entrepreneurs felt that the new technology was having its predicted impact.  One factor we measured was if mobile payments were positively affecting business growth.

Many looked at the success of M-PESA in Kenya and jumped to the conclusion that the success there could be mimicked easily in other markets.  Our conclusions based on extensive study and consumer data suggest that more caution is appropriate.  While we measured many more dimensions than are reported in this blog, there is a consistent set of facts that suggests that attitudinal and behavioural differences are keys which must be effectively addressed before widespread adoption takes place. The current, “build it and they will come” strategy appears naïve the face of the actual data.

For more information on this research project, please contact Dan Horne at dan.horne@yourgx.com.

Gx has just released our Mobile Payments Europe 2013 report. This is a significant study that marries primary industry and consumer data with market sizing information and examples of interesting and innovative mobile payments products. An executive summary of this report can be downloaded here.

The 4 country consumer survey that we undertook in Germany, France, Italy and the UK had a number of highlights for us.  We split the 1,400 respondent sample into those who have made mobile payments on their mobile phone and those who have not. Around 30% of respondents in the UK, Italy & Germany had used their mobile phone to make a payments whilst 25% of French consumers had made a payment using their mobile phone.

What is interesting is that for those who have made a payment using their mobile phone, the level of satisfaction with the experience is high.

Satisfaction is an indicator of the consumer’s global evaluation of the consumption experience.  It serves as an excellent predictor of both intention to continue to use the service and intention to speak positively to others about the product.  As such, levels of satisfaction are forward indicators of future business.

The current data are promising in that levels of dissatisfaction are relatively low.  Two out of three users in the UK and France are satisfied, while somewhat lesser levels are indicated in Germany and Italy.  The newness of the product leaves many uncertain about the product at this stage.  This was especially apparent in Germany.  In general, however, these data bode well for future uptake.

Another highlight of the survey was the awareness of transaction fees linked to a transaction. Consumer awareness of fees fluctuates across the four countries. Awareness of fees that were charged for each transaction is split into two distinct results that are partly dictated by cultural considerations.

Awareness is high in Italy. From a cultural perspective, Italians pay high fees and charges for current accounts, credit and debit cards, and ATM withdrawals. ATM withdrawals can be as high as €2. Therefore, Italians are more likely to be aware of any transaction fees tied to a payment instrument. Similarly in Germany, awareness is high. Use of credit cards is low in Germany with transaction fees and charges being key considerations. Germans in general are more aware of their charges and transaction fees.

Awareness in the UK and France is low compared to the other two countries. This may stem from cultural factors and a general lack of awareness as to charges incurred on other payment instruments such as credit, debit, and account charges.

These are just two of the highlights from the Gx Mobile Payments Europe 2013. The report itself is a highly comprehensive and valuable resource in helping understand the behaviour and attitudes of consumers to mobile payments. If you would like to learn more about the report, please download the Executive Summary here or contact Neil Brennan at neil.brennan@yourgx.com or call 020 7928 0040

Our gift card research takes us around Europe and around the globe. We have just released 8 reports on gift cards and incentives across Europe profiling France, Germany, the Netherlands, Russia & the Ukraine, Czech Republic, Poland, Spain and Italy. These reports focus primarily on the opportunities around closed and restricted loop gift cards in these countries

As with other countries that we have profiled this, we have looked at the distribution of gift cards in the Netherlands. Most retailers offer some form of gift card or voucher to customers, some also offer eGift codes associated to a physical gift card which can be redeemed online. In addition gift card malls are rapidly expanding in the major retail chains such as Albert Heijn.

In the Dutch market we have looked at other distribution channels as well such as shopping malls and online gift card malls to see what is popular in terms of distribution channels.  In the table below we have listed the top 10 shopping malls in the Netherlands by size to see if they offer a gift application (card or voucher).

The majority of the top 10 shopping malls in the Netherlands do not offer a gift card or certificate. The Stadshart mall in Zoetermeer did offer a voucher but this has been discontinued with the owners of the mall stating that they are looking to build a more modern application to be launched in 2013. This may be a Mastercard or Visa branded mall card that will be restricted to use at the mall. No further details are currently available on these plans yet.

Key takeaways of the report:

• The majority of the major retailers in the Netherlands are offering gift cards. Gift card malls are also becoming more popular amongst the larger retail chains in the Netherlands.

• There are numerous multi-retail vouchers available in the Dutch market. These are primarily available for the B2C market. However, the organisations that provide these vouchers also offer them to the B2B market as well.

• We have seen segmentation of these vouchers across two specific product sets. First, vouchers that can be used across multiple retailers to procure multiple types of products. Second, there are multi-retail vouchers available that are targeted specifically at particular product types. For instance, a national voucher exists that can be redeemed in the majority of book shops across the Netherlands.

• From a corporate incentives perspective, gift cards and vouchers are not offered by the majority of incentive houses across the country. Instead, experiential products, or even physical products, are offered.

• Christmas savings products are not available in the form we are used in the UK. However, Christmas is an occasion where incentive houses are offering gift packs that contain physical products.

• Important to note: Charitable gift donations are popular in the Netherlands. A number of incentive houses, such as Edenred and Sodexo, offer an opportunity to donate products to charity that are received by employees. This also applies to cards and vouchers where cards can be purchased for charitable causes.  We have seen something very similar in Italy as well.

For more information on this report, and the other reports in this series please contact Andrea Ferranti at andrea.ferranti@yourgx.com or call 020 7928 0040

There is a train of thought in prepaid that consumers in different countries are different in terms of their use of prepaid instruments. We at Gx have often said that prepaid is global but that its application is entirely local. For the majority of prepaid instruments this is true. Consumer behaviour and attitudes differ dependent on the maturity of the market, infrastructure that accepts the mechanism that is available in the market (e.g. NFC-enabled POS terminals for contactless payments) and the instruments themselves must be shown to solve a consumer problem.

Previously, I had analysed the spend over gift card value in the French and Canadian markets and highlighted that there was little, if any,difference between the two countries. I will now compare these two results with the same question from our UK consumer study.

The results above show that there is very little difference between these three countries and consumer spend over the value of gift cards. In the UK, 32% of survey respondents stated that they spent 20% or more over the value of gift cards received. Canada sees a 20% + spend over card value of 37% whilst in France this total is 30%. There is really not a significant amount of difference in these countries for a number of reasons. First, the market for consumer gift in these countries is mature with a significant proportion of retailers offering gift cards in store, through third party malls, online and digitally. Second, retailers are actively promoting their cards through a variety of channels that makes them a) much more visible to consumers and b) a solution to gifting problems particularly around specific events. From a retailers perspective, gift is a tool that can lead to incremental spend in-store.

These are interesting results for retailers and once again illustrate the importance of actively placing and promoting gift cards so that consumers are aware of their presence and also are aware that they can help them solve problems when looking to purchase gifts for friends or family.

If you are interested in finding out more about Gx and these consumer results then contact neil.brennan@yourgx.com or phone 020 7928 0040

Gx have been talking to Consult Hyperion about our views on where the industry is going and the changes we have ahead of us.

To hear the podcast, just click on this link:

http://test.dgwbirch.com/Testing_Site/Podcasts/Podcasts.html 

Check out the latest from Tony Craddock,  CEO at Gx, who’s been chatting with Card and Payments World about the future of the industry and how Prepaid is no longer where the action is.  

View the article here: Cardworld_Feb 2013_Gx

In the last few blog posts I’ve analysed consumer data from three developed gift card markets. In this post I’d like to highlight a developing European market for gift cards – Turkey. In conjunction with our valued member Ceridian SVS, Gx has completed a major country report on Turkey that highlights opportunities for gift cards there. This includes a granular analysis of economic and gift card trends as well as a significant study of Turkish consumer gift card behaviour and attitudes.

Without wishing to write an exposition on the Turkish economy, it is fair to say that it has grown significantly over the last ten years. As a result of this increase in economic fortunes, Turkey’s retail sector has also seen a growth with a combination of heavyweight domestic players such as BIM, Migros and Boyner competing with international retailers to capture growing shares of the Turkish market.

Gift cards remain a developing product in Turkey, but the signs are evident that it is set to grow. Yet Turkish consumer are not only aware of the product and purchasing, but in 2012, they stated their intent to purchase in terms of volume.

There was a dramatic increase in the number of gift cards Turkey’s consumers predicted they would purchase over the number they purchased in the previous year.  Half of the respondents predicted that they would buy three or more gift cards in 2012 versus less than 20% in 2011.

In total, respondents report the intention to purchase more than twice as many cards in 2012. While behaviour and behavioural intentions are not perfectly related, the optimism demonstrated is, at the very least, a strong indicator of how positively these products are viewed.  Accordingly, the rate of change reported here suggests this is an excellent time for retailers to harness some of the positive attitudes.

It also must be noted that these respondents were at least familiar with the concept of gift cards through prior exposure.  Previous research studies on gift card introductions in the UK, Australia, Germany, and South Africa have all clearly demonstrated that positive consumer experiences with gift cards yield an increase in intention to purchase the cards in the future.  The following chart provides an indication of this relationship.

As critical as the 60% agreement is, the most important aspect of this finding is that, to date, less than 15% have had poor experiences with gift cards.  This is despite what we have observed in many retail settings where current execution of gift card programmes is poor.  15% is not a terrible number, but it needs to be driven down.  Other markets see figures of significantly less than 10%, and smaller percentages in the neutral classification as well. Well-executed programmes at retail are a must for this category to reach its near-term potential for growth and profitability.

For more information about the Gift Card Market Assessment: Turkey 2012, please contact Neil Brennan the Research Manager at Gx at neil.brennan@yourgx.com or you can download an Executive Summary of this report here.