Debit Travel Cards: The Evolution of Money

Early American Express Travelers ChequeFor over a hundred years, travelers have looked for ways to make it easier, safer and more convenient to carry money while traveling. The first “travellers cheques” were issued by Thomas Cook in 1874. The original cheques were essentialy circular notes designed to be used abroad. Notes designed specifically for travel were introduced by American Express in 1891. These traveler cheques allowed holders to purchase goods or exchange money while traveling abroad and provided added security in the event the cheque was lost or stolen. The cheques enjoyed huge popularity – by 1994, the estimated world-wide sales (on a face value basis) of travellers cheques was estimated to be US$55 billion. The advent of ATM machines, prepaid cards, as well as world wide credit card and debit card acceptance has changed the market.

In 1994, Visa (NYSE: V) piloted use of a new product, called “Visa TravelMoney” at the Winter Olympics in Lillehammer Norway. The TravelMoney product was the first prepaid debit card designed for use as a travel card. Users could purchase the card at certain resellers and bank locations, load the card with funds, and use it to purchase goods or services or obtain cash at ATMs while traveling. In many ways, the Travel Money card was one of the first network branded prepaid debit cards.Original Visa Travel Money card

Since then, a wide variety of prepaid cards designed for use in travel have been introduced. American Express, Thomas Cook, MasterCard, and a number of banks have launched prepaid travel cards. The Visa TravelMoney product is still available, and still provides many of the benefits of the original American Express travelers cheques, including emergency card replacement and emergency cash disbursement, purchase and transaction security, and other travel benefits.

However, many of the benefits originally provided by travelers cheques and travel cards are provided by no longer so critical. Now, travelers can take their normal credit card or debit card with them almost anywhere in the world, and enjoy easy access to ATMs and point of sale devices. Many travelers never go to a money exchange booth – instead, relying on widely accessible ATM machines which dispense local currency.

Despite this, companies like MasterCard International Incorporated (NYSE: MA) continue to bet on continuing demand for prepaid travel cards. In 2011, MasterCard acquired the prepaid card program management resources of Travelex. MasterCard believes that prepaid cards will continue to be in demand by travelers, claiming that prepaid cards provide consumer and business travellers a payment option that eliminates the need for currency exchange and the frustration of travellers’ checks, and that there are great reasons why prepaid is the best way to go while travelling Two of the reasons why MasterCard believes prepaid is a good choice for travel include (1) There were over 9.8 billion outbound and domestic trips in 2010, so ensuring easy access to money and safeguarding it while abroad is important, and (2) many travel experts (including Simon Calder, Senior Travel Editor of the Independent) recommend prepaid cards to transport money while travelling, as prepaid cards can help avoid paying certain foreign exchange and currency conversion fees.

Still another reason why some prepaid travel cards can be a good idea is that in many countries (including most European countries), point of sale and ATM machines are increasingly relying on smart card chip technologies, and may not accept more traditional magnetic stripe cards.

Travelex and other companies now offer chip & PIN prepaid debit cards (Travelex’s product is called the Cash Passport MasterCard) that provide compatability with overseas merchants that have adopted Chip-based point of sale terminals. These cards require a Personal Identification Number (PIN) to complete Chip-based transactions, offering a safe and convenient alternative to cash, ATM or credit cards.

Other providers of travel debit cards claim they provide benefits for business travelers, allowing easier expense tracking and reimbursement.

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