Foreign exchange provider Travelex takes a step towards becoming a digital business today with the launch of its Supercard, an app and card which allows you to use credit and debit cards abroad without incurring any unwanted fees.
The Supercard is not a pre-paid card (although Travelex do those too), instead it is a “live-load” card which makes transactions as if you were using your own card, all while stripping out the financial exchange (FX) fees your bank normally charges. It is accepted anywhere MasterCard is and users get the MasterCard wholesale exchange rate, with none of the added fees.
Much like Apple’s wallet or similar products from fintech startups like Curve, you simply use the app to link an existing account (debit or credit card) and use the card as normal. Much like Curve, app users can see an almost instant breakdown of their spending.
So, how do they do that?
Your bank will typically charge you twice every time you make a payment while abroad, a one-off fee per transaction, as well as a margin upon the foreign exchange rate when it converts the money back to British pounds.
With the Supercard, Travelex re-routes transactions so that it appears to the bank as a domestic transaction. All Travelex takes is the small interchange fee from the merchant. However, you will still be charged a standard 2.99 percent for cash withdrawals.
Chief digital officer Sean Cornwell gave Techworld an example: “So let’s say you check out of the Sheraton in New York. To your bank that is an international transaction using your UK card. What we’re doing is splitting that into two domestic transactions, the Sheraton only sees a domestic US transaction and your bank sees a domestic transaction. We sit in the middle.”
So this isn’t a money-spinner for Travelex, but as Cornwell says: “It’s much more about building a product that customers love and consumers engage with. Part of our transformation is around building large user bases of customers.”
What Travelex will be getting is that most-valuable of assets for digital economy companies: data. Travelex will be able to develop a picture of customers' spending habits while they are abroad as they use the Supercard.
Fighting the fintechs
Instead of acquiring fintech startups and integrating their product into the Travelex ecosystem, the incumbent company has decided to build out its technology team internally to develop similar digital products, starting with the Supercard.
“You can’t just take a model and paste an app over the top and hope it works. You have to take risks and challenge yourself,” Cornwell said.
Cornwell says that team is currently working on a platform for international money transfer, which will compete with UK tech unicorn TransferWise. Travelex is also looking to rebuild its pre-paid card experience to better reflect current consumer expectations.
Moving from offline to online
This reflects a broader pivot from the forty-year-old company into more online services. Speaking at the Tech for Britain conference last week, Cornwell laid out the company’s attempts to bring its online and offline capabilities together in a more coherent way under his stewardship.
Not everyone was convinced though. When they launched the Supercard pilot many in the business raised their eyebrows. “We didn’t know how customers would react," Cornwell said. "Some people at the business saw it fundamentally as a challenge. We didn’t know how it would make money, but we have a better idea now.”
“Essentially it’s about how you integrate the offline and online. When a new medium comes it doesn’t displace the old model, but usage patterns shift and we see that.”
The free Supercard is available across the UK from today. Users can sign up using the app and a card will be sent out after they have successfully registered.