Prepaid card launches rising at a rapid rate across Africa and the Middle East region in 2023

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In Africa and the Middle East, digital payments are on an accelerated growth trajectory, with the adoption of prepaid cards and digital wallets rising significantly ever since the pandemic outbreak. The entry of new-age digital banks, coupled with the growing fintech landscape, has substantially aided the growth of the prepaid card and digital wallet market across the region. With the competitive landscape growing in the segment, firms are forging strategic alliances to launch new and innovative prepaid card offerings in the African and Middle Eastern markets in 2023.

• Ila Bank, for instance, has entered into a strategic collaboration with Arab Financial Services (AFS) to power the prepaid card offering launched by the digital bank in Bahrain. The prepaid card solution enables cardholders to make transactions online and in-store.
• To make the product offering more attractive, ila Bank has also linked the prepaid card with insurance products. This includes Schengen medical insurance and travel medical insurance. Alongside the prepaid card, ila Bank and AFS have also launched credit card products in late 2021.

AFS, in partnership with Visa, also launched business prepaid cards in Bahrain and Oman in May 2023. The collaboration between AFS and Visa is expected to pave the way for digital merchant settlements. Furthermore, the deal will also boost the market share for AFS in Bahrain and Oman.

In Bahrain, for instance, payment card penetration is relatively low but has continued to grow gradually ever since the pandemic outbreak. In Oman, too, the use of payment cards is expected to grow significantly from the short to medium-term perspective. This presents a strong growth opportunity for fintech firms like AFS over the next five years. Going forward, AFS and Visa are expected to launch the business prepaid card solution in more markets across the Middle East and Africa.

In other markets, as well, firms are entering into strategic collaborations to launch prepaid card products. Fawry, for instance, entered into a partnership with Banque Misr and Egyptian Banks Company (EBC) to launch a prepaid card in Egypt in July 2023. The myFawry yellowcard was launched with the aim of supporting the growth of the digital economy. Since the prepaid card has been launched in partnership with EBC, it operates through the national payment network Meeza.

In another strategic alliance, Banque Misr entered into a collaboration with Nexta, e-Finance, Visa, and e-cards for launching the Nexta banking application. The solution, which also includes the offering of Visa prepaid cards issued by Banque Misr, will enable Egyptians to experience seamless banking services. The launch of the solution is in line with Egypt's digital transformation strategy to support the growth of e-payments.

In Tanzania, I&M Bank entered into a collaboration with Mastercard in June 2023. As part of the agreement, the two firms are planning to launch a suite of debit and multi-currency prepaid card solutions. The payment cards will enable customers to make transactions online and in-store. Furthermore, cardholders can also use the prepaid card service for domestic as well as international transfers.

Going forward, PayNXT360 expects more such strategic alliances to emerge in the African and Middle Eastern markets, thereby supporting the industry growth from the short to medium-term perspective. According to PayNXT360’s estimates, the prepaid card and digital wallet market in Africa and the Middle East are expected to grow at a compound annual growth rate (CAGR) of 11.6%, increasing from US$56.62 billion in 2022 to reach US$100.84 billion by 2027. This clearly indicates that there is plenty of headroom for growth for new-age fintech firms and digital wallets that are seeking to enter the regional market.

To tap into the high-growth market, foreign players are also seeking to enter the African region. dLocal, which is in the business of white-label prepaid card business, revealed that the firm had received payment service licenses for Kenya and Rwanda. These licenses will enable the firm to tap into the growth potential of the two African markets, where the digital payment industry is poised for accelerated growth from the short to medium-term perspective. Going forward, PayNXT360 expects more global players to enter the African and Middle Eastern markets, thereby driving the competitive landscape in the region.

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