Conceptually, the prepaid card is a natural fit for any traveler. Even if you lose the card itself, it can guarantee your cash is ring-fenced and safe from fraudulent activity. Generally, the exchange rates are on a par with Foreign Currency, and with over 3 million ATMs (let alone the millions of card readers across the globe) you would have to go out of your way to avoid being able to use the Visa or MasterCard plastic somewhere.
So why is it that after decades of improving technology, multi-currency wallets and new, ever increasing functions, the prepaid card continues to account for less than 10% of the total travel money business?
Here at Consumer Intelligence, we recently ran a survey to see how well prepaid cards were performing. Based on our findings, less than 7% of customers used a prepaid card. Even when they did, consumers said that they also took foreign cash, ‘just in case’.
Consumers are not stupid. They know that they can use credit and debit cards abroad and that these will often incur hidden rates and charges. They also know that a little foreign cash is worth having in the pocket, but carrying two weeks of holiday money in cash is high risk at best. In consideration of this risk, we must ask again why the prepaid card still has such limited penetration.
In the UK alone there are over 100 travel prepaid cards on offer, all fighting for a small part of the Travel Money business. Growth rarely comes from penetrating into the foreign banknote. Instead, it tends to originate from converting a prepaid consumer from one card to another.
Intriguingly, our research highlights that regardless of the above-mentioned hurdles to leap in terms of the consumer journey, some companies are extremely effective at selling prepaid cards. Others are not.
It would seem that some retail locations struggle to highlight their value proposition simply and effectively to consumers. In other cases, the revenue share between travel organization and program providers may reduce the motivation or drive to educate consumers on the benefits of the prepaid card.
This is where Consumer Intelligence comes in: our work allows us to see how the winners do it and what others can learn. Are you the best in your class? If not, how can you improve?
To get a deeper understanding of the challenges faced by prepaid travel card providers, Consumer Intelligence surveyed 1,087 consumers. The results highlight the importance of convenience and a strong upsell strategy over competitive exchange rates.