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Foreign-currency prepaid cards serve a niche market in the travel industry, though some industry insiders believe the cards can extend into other areas where cash and check use remains common.
A recent announcement by the Travelex Group and MasterCard Worldwide gives both companies a chance to explore those opportunities. And it comes at a time when consumers and corporations are just realizing the benefits of using prepaid travel cards.
London-based Travelex is expanding its brand relationship with MasterCard to advance its product development and global expansion, the companies announced earlier this month. Travelex is a distributor of foreign-currency reloadable prepaid cards that offer consumers and corporations a locked-in foreign-exchange rate.
As part of the agreement, Travelex will launch new prepaid products using MasterCard's suite of back-end processing software services. The company works with multiple financial institutions worldwide that issue the cards. Travelex is the second prepaid provider to use the Integrated Processing Solutions software, Laura Kelly, MasterCard senior vice president of global prepaid solutions, tells ATM&Debit News. (Swiss Bankers Prepaid Services Ltd. was the first financial institution to use the service for its prepaid cards in 2008).
Mastercard developed the software last year to "service a debit-scale type opportunity, 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, Kelly says.
The system helps financial institutions with account creation, customer service and vendor management. For example, Travelex will use real-time fraud protection with enhanced reporting to minimize the company's already low fraud rates. Kelly says.
"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," Kelly says.
Travelex will help shape how subsequent MasterCard prepaid-issuer partnerships use the system, Kelly says. "I find that not only as 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," Kelly says. MasterCard will have an active dialogue with its customers regarding the software's product road map and that "will continue to influence our overall product road map prioritization," she adds.
Travelex's participation in the process was a "very attractive" incentive to extend its brand relationship with MasterCard, Vanessa Murden, Travelex head of global product development, tells ATM&Debit News. "During the transition phase, we have the ability to work with [the software] to really shape the product that is going to give us change in the marketplace," she says.
Some of that change already is in the works as Travelex introduces its products in areas dominated by cash and checks.
In March, Travelex announced plans to launch corporate prepaid-currency cards in the United States designed to eliminate the process of advancing employees cash for international business travel. The company believes airlines especially will find the card convenient.
Airline crews typically receive 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.
Several airlines contacted by ATM&Debit News did not return respond to requests for comment.
The maritime industry also can use the product as a way to pay ship workers, Kelly contends.
"Even 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 for the consumer and corporations," she says.
Travelex still will have relationships with China UnionPay and Visa Inc., but its brand preference will be MasterCard. Travelex expects to convert existing programs to MasterCard starting next year. MasterCard Advisors, a consulting arm of MasterCard, will assist Travelex with the transition, Murden says.
"[They] will also be working with us to identify new opportunities," Murden says. "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, says Megan Bramlette, managing associate with Westbury, N.Y.-based Auriemma Consulting Group. "[The cards] lessen the risk for corporations because the money can't be used for unauthorized items," she says.
The cards also are attractive from a consumer perspective because of the locked in foreign-exchange rate. They enable consumers "to budget themselves better for international travel because the rates will not change, which is the case when using credit or debit cards," Bramlette says. ATM
