Signaling its intention to continue to develop new card-based products and services, Visa International last week introduced an international prepaid TravelMoney card.
Visa will test the card for six months with six member institutions, and then roll it out worldwide - most likely by next spring.
Visa officials predicted that in the first full year of distribution, member banks could sell more than 2.5 million TravelMoney cards at a value of $1.6 billion.
The card, which will be marketed primarily to people traveling outside their home country, will allow them to access previously designated travel funds at any of the 200,000 Visa/Plus automated teller machines worldwide.
"Visa TravelMoney is a prepaid, instantly activated card-based product that leverages both the Visa expertise in payment systems technology and our members' investment in the Visa/Plus global ATM network," said Ed Jensen, chief executive officer of Visa.
"For the traveler, it offers an enhanced level of convenience and safety," he continued, "and for our members, it offers a new source of revenue and potential customers."
The card was introduced last week at the Bank Administration Institute's retail delivery systems conference in Phoenix, where both Visa and MasterCard International took every opportunity to send the message that they will take a very active role in the future of payment systems worldwide. The card, they said time and time again, will be the key to the payment systems network.
Visa's new TravelMoney card is a departure from the traditional ATM card in that a consumer need not have a relationship with the issuing bank. Similar to traveler's checks, the card will access only designated travel funds, not an entire account.
"There are four potential revenue streams for the banks," said Jack Levine, vice president of cash products for Visa. "There's the upfront sales fee, per-use fees, the float between the time the consumer purchases the card and actually uses it, and foreign exchange opportunities."
The card also presents the opportunity to get potential customers into a branch, where they can be sold other products as well.
The pilot with two U.S.-based banks, First Bank System, Minneapolis, and its subsidiary. Colorado National Bank, plus Banco Mexicano. Bancomer, and Confia in Mexico and the Bank of Scotland, will test the overall system and identify additional marketing and potential revenue ideas.
Visa said it conducted market research that showed great consumer interest in this product - even, surprisingly, among people who do not regularly use ATMs.
Besides use for travel overseas, focus groups identified three more potential uses:
* A gift for friends and relatives - especially useful for students away at school.
* Cash for an emergency - such as keeping a card in the car's glove compartment.
* A corporate cash advance.
The only equipment banks need to sell Visa TravelMoney cards is a Verifone point of sale terminal.
"We did not want to create a new need for equipment" said Mr. Levine. "We wanted to find a way to introduce this product with existing technology."
The card, which is the same size as other Visa cards but is not embossed with the cardholder's name, is purchased for any amount the consumer desires. It never expires.
Although Visa will not set any upper limit, individual institutions can set prices and terms for the card, which they disclose at the time of sale.
A bank can choose to issue two cards for the same funds, for example, for two travelers who may want to separate for some time.
As a differentiating feature, the TravelMoney card boasts a hologram magnetic stripe, the first time it is being used commercially.
At the time of purchase, the customer selects or receives a four-digit personal identification number, which is used to withdraw cash at the ATM. If a customer believes the PIN is no longer secret, it can be changed at any Visa/Plus ATM.
A record of the prepaid amount is stored at a central Visa processing site, and it is available for authorization 24 hours a day. VisaNet handles all transactions and currency conversions.
When a customer desires cash, he or she goes to any Visa/Plus ATM, inserts the card, keys in the PIN, enters the amount of cash desired, and receives the local currency at a favorable exchange rate.
When the card's value is used up, the cardholder can either throw it away, or, if a small balance remains, return it to a Visa TravelMoney sales location to withdraw the remaining balance. The card is not replenishable.
To support the product, Visa will maintain a 24-hour customer service assistance center to replace lost or stolen cards. A customer will receive a replacement card within 24 hours - primarily through a local institution that sells the cards.
In preparation for the pilot, 100 Visa employees used the cards last month to conduct 500 withdrawals in 19 cities worldwide.
"We tested the system inside and out," said Mr. Levine. "We tested branch sales procedures, worldwide ATM withdrawals, clearing, settlement, and account posting, daily issuer and accounting reports, and customer service.
"We wanted the product to be field tested before our member institutions began issuing it."
