Accor, MasterCard create European prepaid venture

PARIS - French hotels and services group Accor and MasterCard on Tuesday unveiled a joint venture to grab a slice of the burgeoning European market in flexible payment services.

By (Reuters)

Published: Tue 10 Feb 2009, 8:04 PM

Last updated: Thu 2 Apr 2015, 3:54 AM

The groups aim to benefit from growing demand for so-called prepaid services which range from cash cards for welfare claimants and contract workers without bank accounts to gift cards for coffee shops and credit cards for companies to better manage employee expenses.

The PrePay Solutions venture plans to take some five percent of a sector expected to be worth 130 billion ($169 billion) within five years.

“We think the growth is going to be very, very important,” Javier Perez, president of the European division of Mastercard, the world’s second-largest credit card network, told a press conference.

The companies, which have been discussing cooperation for around two years, said Accor would take 67 percent of the venture with MasterCard owning 33 percent.

Investments would total “several million euros, no more”, Accor Chief Executive Gilles Pelisson said.

Shares in Accor were 1.1 percent lower at 34.135 euros by 1318 GMT, in line with the drop in the French benchmark CAC 40 index. Accor stock is down 1.7 percent this year, giving it a market value of 7.6 billion euros.

MasterCard has risen 13 percent this year and has a market value twice that of its French partner.

Accor, whose mid- and upscale hotel business is feeling the impact of the financial crisis on demand, is looking to accelerate growth at its Accor Services business to 10-18 percent organically after 2010 from 8-16 percent currently.

Accor Services head Serge Ragozin added that acquisitions were also still possible to help expand the division.

The hotels business posted a 1 percent drop in sales to 5.77 billion euros last year, whilst prepaid services revenue grew 10.5 percent to 978 million.

Accor said last month it would step up cost savings this year in response to the economic downturn and as it saw falling sales in the first quarter as the hotel division suffers.

Pelisson told reporters on Tuesday it was too early to give an update on the outlook for the current quarter, but added that he was monitoring developments.

MasterCard said last week its net revenue growth this year would likely fall short of its long-term objective of 12-15 percent amid a steep slowdown in consumer spending from the United States to Europe to Asia.

The PrePay Solutions joint venture will be developed around Accor prepaid card unit PrePay Technologies, which Accor acquired in 2007. The venture will market products to the partners’ existing clients as well as new customers of its own.

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