MasterCard, Western Union Expand Prepaid Program Worldwide

MasterCard Inc. and Western Union Co. are expanding a program that lets customers send money via prepaid cards, the companies said on Tuesday.

Now people who go to Western Union locations globally to receive wire transfers can have the money loaded onto MasterCard-branded prepaid cards, instead of receiving cash.

These services have already been available in the United States, but now MasterCard and Western Union are expanding it around the world.

The goal is to provide "seamless, safe, and efficient money transfer" services, Ron Hynes, head of prepaid solutions at Purchase, N.Y.-based MasterCard, told American Banker in an interview on Tuesday.

The partnership will help MasterCard expand its reach to consumers who do not have or do not regularly use bank accounts or traditional credit or debit cards. While some banks offer prepaid cards and money transfers to their customers, those services are still largely the domain of nonbank companies, including Western Union, that focus on low-income and other "underbanked" consumers.

Hynes says the program could be attractive to 2.5 billion "financially underserved" adults around the world.

While three-quarters of the prepaid market is in the United States currently, Hynes says that MasterCard is hoping for "tremendous growth" in the market abroad. He estimates that almost half the prepaid business will be outside of the U.S. by 2017 and that the industry will reach $840 million in consumer spending by that time.

MasterCard and Western Union expect to launch new initiatives in Latin America and Europe in coming months, though executives declined to go into detail.

They said that their partnership does not exclude the companies from doing business with competitors, including MasterCard rival Visa Inc. or Western Union rival MoneyGram International.

But Western Union, which has offered Visa products in the past, now says that its preference is with MasterCard.

"You're going to see MasterCard as the predominant brand we will utilize," Mike Hafer, vice president of global cards at Englewood, Colo.-based Western Union, said in the interview.

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