Source: Fintech Finance
Firms seek to win over cost-conscious holidaymakers with money-saving solutions and incentives
Rip-off deals and poor exchange rates are kick-starting a battle for the nation’s travel money this summer, with payment providers creating cost-saving solutions to target the wallets of cost-conscious holidaymakers.
According to the Prepaid International Forum (PIF), the not-for-profit trade body representing the prepaid financial services sector, holidaymakers are facing a huge difference in the cost of spending money abroad this summer with a growing range of payment methods and associated deals on offer.
A study* of the best and worst value options on the market showed a 19.5% difference on Euro spending (€96 for every £500 spent) and a 17.5% difference for US Dollars ($92 for every £500 spent).
If this wasn’t motivation enough to shop around, the weak pound is contributing to rocketing costs in some popular destinations. For example, the price of holiday spending in Nice, France for British visitors has increased by 38% in the last year according to the Post Office’s Holiday Costs Barometer report for 2017 reflecting the weakening Pound to Euro.
To ensure they aren’t suffering from poor deals and the after-effects of Brexit-influenced exchange rates, PIF’s experts are recommending that consumers shop around for the best deals and check the costs incurred when spending money abroad.
Alastair Graham, PIF spokesperson, comments, “In previous years consumers have absorbed the extra costs and fees levied on spending abroad, not wanting to spoil their holiday by counting the pennies. However, worsening exchange rates and greater disparities in price between available options, means that this summer, travellers are keen to cash-in on ways to save money.
“Fees on domestic debit and credit cards when used abroad are a common bug bear, as are fluctuations in exchange rates which make it hard to be sure exactly what bill you’ll face on arriving home. Cash is always an option, but increasingly travellers are aware of the security risk this presents.
“To provide an alternative, we are seeing innovation from prepaid providers that aim to appeal to consumers fed up with traditional, expensive solutions”
Helping Reduce Costs for Consumers
Specialist payment providers such as, FairFX, offers the security of spending on a card (and so not carrying large sums of cash abroad) but without the accompanying high fees and extra charges.
A study carried out by FairFX reveals that the average fee to use your debit card and credit card abroad is 2.8% and 3.5% respectively. Switching to prepaid solutions avoids this charge and also means that consumers aren’t at the mercy of the exchange rate on the day you use it. Instead FairFX allows you to preload a card at a fixed exchange rate (allowing you to pick the most favourable time to exchange). This, combined with lower commission rates, can add up to considerable savings.
According to FairFX, such services also reflect how savvy consumers are choosing to exchange money.
FairFX CCO James Hickman says: “When the pound was stronger, consumers didn’t pay as much attention to the impact that exchange rates can have on holiday costs. However, in the last 18 months, and particularly since the Brexit referendum, there has been a significant change in focus. With poorer exchange rates against major currencies including the euro and the US dollar, consumers are getting less for their pound than they were two summers ago.
“Planning ahead is key; one in 10 of us leave travel money until the last minute but this means you limit any control and are forced to accept whatever rate is available on the day. In the same way as you should book your travel insurance when you book your holiday, you should start planning your travel money at the same time – if not before. By monitoring exchange rates, many customers are now buying when the rates are at their strongest and get the biggest bang for your buck. If you don’t have time, the free FairFX travel money tracker will do this for you.”
Added benefits to tempt consumers
Providers are also adding additional benefits to holiday spending services to tempt consumers.
Research carried out by Tuxedo Money Solutions and Escape Travel Card, reveals that having holiday cash stolen is still a major concern for 70% of British holidaymakers. Despite this fact, 54% still opt to carry large sums of cash to avoid banking fees and charges.
Rob Darby of Tuxedo Money Solutions says: “To provide a solution to this problem the Escape Travel Card programme, developed by Tuxedo Money Solutions, offers holidaymakers a safe and convenient way to carry money, while also eliminating the costly card fees on purchases made abroad.
“Holidaymakers can preload the card with up to £5,000 and if the card does happen to get lost or stolen it can be locked immediately with a single SMS text message, keeping valuable travel funds safe and sound until a new card can be delivered.”
Another provider, Mastercard, is even throwing in access to over 1 million, free, global Wi-Fi hotspots to sweeten the deal for holidaymakers. People signing up to its Platinum Prepaid Travel Card are signed up to Boingo Wi-Fi helping to keep them connected while abroad.