Payroll, employee benefits and rewards prepaid cards expected to post strong growth in India

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Indian companies have in the past offered various employee benefits such as health coverage and statutory retirement benefits. However, as the economy progressed, employees have become more mobile and frequently shifting to new employments. In order to retain employees, HR managers have devised new employee benefits such as food coupons/meal vouchers, which work as motivational means. Under income tax rules, meal vouchers are non-taxable up to INR 50 per meal. An estimated 8 to 10 million meal voucher users exists in India. However, only 1 million users are present in the country. Over the forecast period of 2017 to 2021, the corporate card segment is expected to record a CAGR of 32.3%, whereas employee benefit card segment is expected to record a CAGR of 32.0%.

Companies such as Sodexo, Udio, Zeta, CINQO, and Edenred are offering meal vouchers as per employee or employer preferences. Mumbai-based CINQO was founded in 2008 and offers meal vouchers, medical vouchers, fuel reimbursements, and gift cards. The products are digital or via prepaid card in partnership with DCB Bank and Visa. Employees can access the products via Android or iOS apps and can be used at over 200,000 merchant locations across India.

CINQO earns revenue through transactions made by users, by issuing gift cards, and deal redemptions. Edenred, France-based rewards and loyalty provider has started operations in India in 1997. Since two years, Edenred has digitized its meal and gift vouchers via smartcards. The digital vouchers business in India constitutes less than 1% to the global revenue the companies in this industry. Edenred operates under commission fee model – Edenred gains revenue from the commission it earns from corporates and merchants. It is understood that commissions in this industry are about 3-5% of service charge.

In November 2016, Yes Bank partnered with app based digital meal wallet Crownit to offer digital meal vouchers. Crownit can be integrated with Meal Debit Mastercard and allows employees to access food & beverage, grocery redemption via online and offline channels. While employees can benefit from the tax savings, employers can also reduce manual effort by issuing vouchers by simply tapping on the app. Though Sodexo and Zeta are successful in the industry, not many firms have been able to leverage digital channels so as to increase customer base and adoption rates.

Zeta, which started operations in mid-2015 has launched digital suite of products including meal voucher, medical reimbursement, gift card, gadget card, fuel & travel card, books & periodicals card and communication card. Zeta product suite comprises of Zeta Express, a mobile based meal ordering and payment platform. Zeta’s Super Tag enables users to make NFC payments at any of the accepting merchant locations across the country.

To know more and gain deeper understanding of prepaid card industry in India, click here.