Travelex Group said that extending its relationship with MasterCard Inc. would help it promote foreign-currency prepaid cards into new areas where cash and checks are commonly used.
Travelex, a London prepaid card company, said this month that it plans to introduce prepaid products that would use MasterCard's back-end processing software. Several banks are to issue the cards.
The U.K. company distributes foreign-currency reloadable prepaid cards that offer a locked-in exchange rate.
Travelex is the second prepaid provider to use MasterCard's Integrated Processing Solutions software, said Laura Kelly, the card network's senior vice president of global prepaid solutions.
MasterCard developed the software last year to serve "a debit-scale type opportunity," Kelly said, "and as a part of that we also integrated prepaid capabilities because we recognized our issuers and partners like Travelex will need robust prepaid capabilities as they look into the future" of prepaid.
The software helps financial companies with account creation, customer service and vendor management. For example, Travelex will use real-time fraud protection with enhanced reporting to minimize its fraud rates. Kelly said.
"When a Travelex consumer specialist needs to help someone out with a travel card, they'll be using the [software's] infrastructure in order to automate that entire process," she said.
Travelex will help shape how other MasterCard prepaid issuers use the software, Kelly said. "I find that not only is a big advantage to Travelex but also for MasterCard to be customer-centric and intimate with our customers so we can serve their specific needs," she said.
Being involved in testing and developing the software was a "very attractive" incentive for Travelex to extend its relationship with MasterCard, said Vanessa Murden, Travelex' head of global product development. "We have the ability to work with [the software] to really shape the product that is going to give us change in the marketplace."
Some of this change already is in the works as Travelex introduces cards aimed at replacing cash and checks.
In March, it announced plans to introduce corporate prepaid-currency cards in the United States that were designed to bypass providing employee cash advances for international business travel.
Travelex said the cards would be a good fit for airlines. Airline crews typically get per-diem cash allowances before each flight from the captain to cover hotel accommodations and food expenses. With Travelex, the airline can load funds into a currency card account while the crew is on board.
The maritime industry also can use the product as a way to pay ship workers, Kelly said. "Though it's a niche, there are a lot of amazing opportunities to not only change from cash and checks to cards but also to increase security and convenience," she said.
Travelex is to maintain its relationships with China UnionPay and Visa Inc., but its brand preference is to be MasterCard. It said it expects to convert programs to MasterCard starting next year. MasterCard Advisors, a consulting unit of the card network, is to assist in the transition, Murden said.
MasterCard "will also be working with us to identify new opportunities," she said. "The key to our success has been focus, and they will help us quantify the next key focus areas, particularly in our corporate card sector."
Prepaid travel cards in a corporate environment are very attractive, said Megan Bramlette, a managing associate at Auriemma Consulting Group. The cards "lessen the risk for corporations because the money can't be used for unauthorized items," she said.
The cards also are attractive to consumers because of the locked-in foreign exchange rate. They let consumers "budget themselves better for international travel because the rates will not change."