Mobile money is becoming increasingly popular all over the world and so are companion cards. Companion cards are basically a debit or prepaid card that is tied to a mobile money service, and which can be used for any purpose like merchant payments, eCommerce, and even ATM withdrawals. The convenience factor has led to a growing popularity of companion cards. Currently, around 24 mobile money deployments have a companion card product on the shelves.
Companion cards currently have multiple uses, which include the following:
Why are companion cards popular?
Companion cards are a win-win both for the customers and the mobile operators. Let us look at why:
- Extremely beneficial for mobile service providers: Companion cards let mobile companies gain revenue, especially the amount that they lose due to the advent of various free messaging apps. Moreover, companion cards reduces the dependency of agents in the system for cash-out, thus saving on agent commission.
- Good branding opportunity: When customers carry cards issued by an operator with them round the clock, think about the brand recall they have. In most cases, such customers stick to the operator in the long run.
- Easy distribution system: Mobile operators do not have to take the hassle of setting up a fresh distribution structure for companion cards. It is done through the existing mobile money distribution system.
As discussed above, the opportunity for the companion card industry is enormous. Having covered why companion cards are popular, let us look at the opportunity that lies ahead for companion cards:
- A great chance for mobile operators: Companion cards help mobile operators expand their bouquet of the offering. They are coming up with various mobile financial services like merchant payments, e-commerce, ATM withdrawals, etc. This will help them not only to increase the pocket share of existing customers but also onboarding of new customers.
- Appeals to the youth: Today’s Millennials are ready to embrace new technology. They want to have new experiences and are open to new ideas. Virtual cards allow milleanls to shop from local and international online stores from convenience of their home
- Add new segments of users: As companion cards can be used internationally, they can be easily used by expats, travellers, students going abroad to meet their financial needs.
Challenges for companion cards
While it is true that the opportunities for companion cards are enormous, there are a lot of things that mobile operators need to take into account as they might pose a challenge in future as companion cards gain popularity and penetration increases. As the companion card penetration grows, the IT infrastructure will have to be kept updated and robust so that higher volumes don’t affect performance. Today, one of the major advantages of companion cards is that it is convenient and fast – a thing which should not become a disadvantage due to an outdated IT system.
To conclude, we can stay, companion cards are here to stay. The opportunities far outnumber the challenges to writing off companion cards just yet. The concept of virtual cash and the convenience of payment would ensure that the penetration grows in the coming here. How mobile operators adapt themselves to the changing volumes and what technological innovation, they bring to the table will be something to see in the coming years.