M1's new prepaid MasterCard to challenge StarHub?
This multi-purpose debit card offering from M1 allows users to top up M1’s prepaid cards, pay public transit fares, and make contactless purchases.
Targeting a huge customer base- the young, the old and everyone in-between- all mobile phone users now have the option of making cashless transactions with the additional attraction of getting bonus talktime and other telco-related rewards.
Analysts are seeing that StarHub may be vulnerable to this new product, as StarHub is the least competitive in mobile voice calls.
Here's more from Maybank Kim Eng Singapore:
M1’s new prepaid MasterCard offering looks attractive enough to help it regrow its prepaid mobile segment, which has seen negative net-adds for the past two quarters.
Pioneers new prepaid MasterCard
The M1 Prepaid MasterCard is a multi-purpose debit card that allows users to top up M1’s prepaid cards, pay public transit fares, ERP and car park charges and make contactless purchases. It is an interesting product that should help M1 increase customer stickiness and reverse negative net- adds in prepaid. The main selling point is that it offers a simple way to pay for goods and services but without the complexity of owning a credit card.
Aimed at the young, the old and everyone in-between
Mobile phone users who were previously not entitled to a credit card can now have the option of making cashless transactions with the additional attraction of getting bonus talktime and other telco-related rewards.
For the young. Parents can give this card to their children as a way to control their spending. In addition to their mobile phone fees, they can charge the card with their children’s monthly allowance. Spending can be tracked online for better budgeting and financial management. Also, instead of a student postpaid plan which normally comes with unlimited SMS, having a limited budget can motivate children to control their mobile spending themselves.
For the elderly. Older consumers can also benefit from this card as it is more convenient than carrying cash around. It can double as a payment card for purchases via the MasterCard prepaid function, and a public transit fare card via the EZ-Link function.
For migrant workers. Employers could give this card to their domestic workers when they do the family’s grocery shopping, as spending can be easily tracked. Depending on the top-up denomination, additional airtime bonuses can be up to 28% on top of the top-up amount, significantly above M1’s highest bonus value of 15% currently.
For professionals. Even professionals, who are on postpaid mobile plans and have numerous other credit cards, can use this card when they are travelling abroad as they may choose not to bring all their usual credit cards along as a safety precaution.
M1 is targeting this card at any consumer who values convenience in general; in other words, the majority of its customer base can benefit.
Spotlight on StarHub
Taking a look at the prepaid plans that are available on the market today, StarHub appears to be vulnerable to this new product from M1. No surprise if Starhub runs a negative prepaid net-add number in 2Q12 and 3Q12. Comparison shows that StarHub currently is the least competitive in mobile voice calls, both locally and internationally. A 20-minute voice call costs SGD1.74 for StarHub versus SGD1.60 for M1 and SingTel, and its IDD rates to Indonesia and the Philippines are 2-4 times higher.