As more countries adopt cashless payment systems and international payment channels become increasingly interconnected, innovative payment solutions are quickly emerging for travellers. One of these is prepaid travel cards.
Prepaid travel cards are the best option for travellers to avoid foreign transaction fees, get more value out of a currency when abroad, handle payments more safely and even manage exchange rates better. The cards come in a design similar to credit or debit cards. The difference is that they are normally not directly routed to a customer’s bank account, but can be loaded with a certain amount of money online from an account or at ATMs. This virtual cash can then be spent at a large number of outlets and payment points and also for online shopping, with many cards offering a multi-currency option.
The business has done well in the past in the UAE, a recent market report shows. The prepaid card market in the country increased at an average annual rate by 22.7 per cent from 2011 to 2015, found a study by PayNXT360, a UK- and India-based business intelligence firm specialised in market
research on prepaid cards, mobile wallets and online payments.
“Over the forecast period of 2016 to 2020, the category is expected to record an annual growth rate of 15.9 per cent, increasing from $4.8 million (Dh17.6 million) in 2016 to reach $8.6 million by 2020,” says Pankaj Chaubey, Principal Analyst at PayNXT360.
There are a number of prepaid travel card offerings in the UAE. One of the first to issue such a card with the option of using more than one currency was UAE Exchange, which launched its gocash card in cooperation with Mastercard back in 2012.
Most importantly, with multi-currency prepaid travel cards travellers can preload money in a chosen currency from their bank account on to the card or by paying cash, fixed at that day’s exchange rate and without the spreads that money changers and banks in the holiday destination that are likely to add up.
The card is also safe. Firstly, it has a PIN code. When it gets stolen or lost, it can easily be blocked by calling an emergency number, and because the card is not connected to any bank account, thieves won’t have any use for it. For frequent travellers, it makes sense to equip themselves with two travel cards, whereby the second card serves as a backup kept in a safe place. If the main card is stolen or lost, the balance can instantly be transferred on to the second card.
Prepaid travel cards have another strong benefit: they are an ideal way for companies to equip traveling staff with advance expenses in order to keep spending under control and verifiable without the need to collect original bills. For individual customers, in turn, the limited prepaid amount is a way to actively control their expenses.
Another advantage of prepaid travel cards is that they are easily obtained over the counter without application or credit checks and can be loaded and used instantly. Some of them even offer cashback options on certain purchases abroad and can also be used for booking VAT refunds when leaving a country.