News

Study: Prepaid travel card outlook and opportunities

A new report examines the methods and distribution channels used by issuers to get their products into the hands of consumers in this growing market.

October 9, 2014

International travel is becoming increasingly common. In 2014, international tourist arrivals are expected to increase by as much as 4.5 percent worldwide, according to the United Nations World Travel Organization. This exceeds even the UNWTO's own long-term forecast of 3.8 percent per year from 2010 to 2020.

And as international travel goes, so goes the need for currency exchange — either before or shortly after arrival in another country. Travelers have a number of options for this: They can exchange currency at their home bank before traveling; withdraw cash from an in-country ATM; or visit a forex kiosk at home or abroad.

Or they can use a prepaid travel card, an option that is becoming increasingly popular around the world as a secure and efficient means of payment abroad.

A new report from Mercator Advisory Group, "Surveying the Global Prepaid Travel Card Landscape," highlights the global potential for these products by analyzing international travel statistics, including inbound and outbound travel volumes for the United States.

In addition, the report reviews leading travel card products in the top five countries of origin for travelers visiting the U.S. — Canada, Mexico, Japan, the U.K., and Germany (in decreasing order).

The report also reviews the marketing and distribution of prepaid travel cards within each market. According to Ben Jackson, director of the prepaid advisory service at Mercator and co-author of the report:

Issuers will have to balance the benefits of a growing travel base with the fact that prepaid travel cards are inherently a niche product. Arguably more important is the need to develop a prepaid product that accurately reflects the behaviors and needs of the market they are operating in. Travel prepaid cards have a bright future around the world, but only if the cards are marketed and distributed through the correct channels.

Highlights of the report include:

• global and U.S.-focused travel statistics that highlight the potential for prepaid travel cards in world markets, including the United States;
• a review of leading prepaid travel card products in Canada, Mexico, Japan, the United Kingdom, and Germany; and
• examination of the marketing and distribution channels employed by prepaid travel card issuers to help get their products into the hands of the consumers.

One of nine exhibits in the 20-page report: