Competing in Saudi Arabia's Travel-Focused Prepaid Card Market

As prepaid cards become more popular in Saudi Arabia, companies need to find the right mix of fees, rewards, and international features to meet customer needs.

Market Overview: Fees and Rewards

Key Trends:

• Annual Fees: These range from SAR 0 to SAR 575, with an average of SAR 78.42. About 49% of card providers don’t charge an annual fee to attract more customers.

• Rewards: Around 47% of cards offer rewards. However, only 21% of cards have both rewards and no annual fee, while 26% charge higher fees for reward programs.

Opportunity: Many cards don’t offer both free annual fees and rewards. Companies can stand out by offering both without adding hidden costs. This can help them attract more customers.

Fee Structures: Where Companies Can Stand Out

1. Card Replacement Fees

• Average Cost: SAR 65

• Details:

  • Cards without rewards have the lowest replacement fee (SAR 48.78).

  • Reward cards with an annual fee cost the most to replace (SAR 132.71).

  • Reward cards with no annual fee have the cheapest replacement cost (SAR 26.35).

Takeaway: For people who often lose or replace cards, offering low replacement fees can attract them. Companies can bundle other benefits to make these cards more appealing.

2. Cash Withdrawal Fees

• Domestic (within Saudi Arabia):

  • Average Fee: SAR 30

  • Non-reward cards have the lowest fees (SAR 23.65).

  • Reward cards with no annual fee have higher fees (SAR 54.86).

• International (outside Saudi Arabia):

  • Average Fee: SAR 44

  • Reward cards with an annual fee have the lowest fees (SAR 41.25).

  • Reward cards without an annual fee are more expensive (SAR 54.86).

Takeaway: For travelers, cards with a small annual fee but lower international withdrawal fees are attractive. For people who only use cards locally, low domestic fees matter more.

3. International Transaction Fees

• Average Fee: 2.33%

• Details:

  • Cards with an annual fee offer the lowest rates (2.22%).

  • Reward cards with no annual fee have higher rates (2.41%).

  • Non-reward cards are around the average (2.35%).

Takeaway: Lower transaction fees save money for frequent travelers. Offering low fees, even with a small annual cost, can make a card more popular.

Strategies to Compete in the Market

1. Rethink Annual Fees:

• A small annual fee can be worth it if it leads to lower transaction costs, especially for travelers.

• Offer discounts or lower fees for customers who use the card more often.

2. Be Transparent:

• Clearly explain all fees so customers know what they’re paying for. This builds trust.

• Bundle services to make higher costs feel more worthwhile, like adding free card replacements

3. Customize for Different Groups:

• Travelers: Offer reward cards with annual fees but low international fees.

• Local Users: Create non-reward cards with low domestic withdrawal and replacement fees.

• Budget-Conscious Customers: Design cards with fewer hidden fees, using smart technology to adjust fees based on how people use the card.

Market Gaps:

• Only 9% of providers focus on travel benefits. This means there’s a big chance for companies to stand out by offering travel perks.

• Providers not focusing on travel could start targeting travelers with new products and better fees.

Conclusion

As more people travel, they want cards that work well both locally and abroad. Companies should:

• Create cards that offer both rewards and cost savings.

• Use data to adjust fees based on customer behavior.

• Focus on travel benefits to attract more customers.

By following these strategies, companies can compete better and set new standards in Saudi Arabia’s prepaid card market.

Note: This information is based on current data and may change as new products are introduced. Companies should keep an eye on market changes to stay competitive.