How is fintech reshaping your travel experience? Experience and product of Transferwise, Revolut and other traditional payment
Faced with more frequent travel and last minute tours, can new business model promote the growth of fintech in travel sector while innovation is enhancing traveller’s digital financial experience?
In this article, we are going to study customer experience shifts base on the nowadays fintech using in the outbound journey.
Top 3 typical pain points of traveller’s money
- Carry large amounts of cash while travelling
- High currency exchange rate
- Risk of counterfeit note in the small currency exchange shops
Compare with existing popular payment/withdrawal practices, we will focus on two tourist-friendly fintech — Transferwise borderless & Revolut standard to study money in the digital age and influence on the journey.
Why Transferwise & Revolut?
- Both support multi-currencies
- Both support overseas ATM withdrawal
- Both companies are authorised by the Financial Conduct Authority (FCA). Revolut is holding a European banking licence. Having said that, both of them are not a deposit guarantee institution.
5 fundamental money touchpoint in trips
- Add money to your account
- Overseas cash withdrawal
- Pay in stores
- Spending historical records
- Dealing with the unexpected while travelling
Tranferwise & Revolut both are offering debit cards to users. Meanwhile, using a debit card, the fund is deducted from account balance; therefore, in principle, you are required to prepare sufficient funds before proceeding payments.
On the other hand, credit cards can be a convenient alternative to cover tour expenses or simply handle a financial emergency in the cash crunch. Theoretically, credit card users are borrowing money when they are swiping cards in shops and repay later.
The numerous currencies balance supported by Transferwise & Revolut draw attention to the model multi-currency digital wallet. However, unlike traditional banks, users of these fintech companies cannot deposit directly in a physical branch.
1-a. Top-up channels
1-b. Compare currency support in Transferwise and Revolut
In Transferwise & Revolut, app users can hold 30+ currencies in account anytime. In consequence, just exchange your money at your target rate and hold in your account and feel free to spend it anytime you want!
Both Transferwise / Revolut spread out for most of the popular for top-up FX, especially well established in North America and Europe currencies. In particular holding in balance FX support, two fintech APPs are incredibly beneficial to most of top world travel destinations. Obviously, Transferwise is widely expanded in more Asian, African and South American counties’ money.
Due to security reasons, to avoid carrying large amounts of cash on the whole journey, some travellers prefer a flexible lifestyle, for example, withdraw or cash exchange in overseas ATM or exchange shops. Credit cards are an apparently costly option for aboard withdrawing, particularly cash advances will start accruing high-priced interest immediately once withdrawal happens.
In terms of the cost of oversea ATM withdrawal, there are 3 essential types of charges outlined below:
Total overseas ATM cash withdrawal charges =
i. Overseas withdrawal fees + ii. Currency conversion fees + iii. Local ATM owner’s fee
Despite 0.5–1 % markup is applied to all Revolut currencies exchanged on weekends, both fintech that we are studying still all-time eye-catching than usual ways like credit cards or exchange shops.
More on the exchange rate
The basic concept of Transferwise exchange rate: Mid-market rate + small fee ( no official answer again, need to search it case by case)
Remarks:
Transferwise — Low-cost transfer: Sent money from your bank account
Transferwise — Fast and easy: Sent money from your debit or credit card
Revolut: Sent money from local bank transfer or credit card
HSBC UK Visa card — with a bank foreign transfer action fee of 2.99%
Best rate of local exchange is recommended by compareholidaymoney.com
Travelex: Rate from collection only
To understand the current usage of debit and credit cards, let’s begin with a payment volumes chart provided by UK payment markets summary 2019, UK Finance.
According to the figure, debit cards had overtaken cash in 2017, were the most frequently accepted payment method now in the UK. Over the next decade, the volume of UK debit card payment forecast to reach 22.3 billion in 2028, accounting for over half the size of UK payment methods. On the other hand, cash payments continued to decline in 2018 ( 28% usage of all payments in the UK).
Not surprisingly, contactless payments (including Apple Pay, Goole Pay and Samsung Pay) had strong growth over the past years due to smartphones have significantly revolutionised our everyday life.
In terms of the exchange rate comparison, please refer to table 2b /2c.
Hottest payments are already supported by 2 Fintech. Compare to credit cards; fintech offers more remarkably exchange rate. However, don’t forget there is an extra transaction fee, subjects to the amount of spending.
Remember the old days? Kept collecting all receipts and marked one by one on your trip diary? Then using a calculator, pen, and notebook counting each of your spent records, you can see how much budget you left for your trip.
In the last decade, every transaction that happens across your balances was showing in your credit/debit cards App. From a security perspective, it is challenging to avoid payment fraud regarding not all trade data that can push notification in APP or SMS alert.
In the prospect of financial experience, we are excited to look forward to the build-in full real-time records, expense management, saving/spending analysis and additional personal financial advisory in our payment APP.
Regardless of Transferwise and other payment Apps, most of them are considerably confined to breakdown all past business records. One improvement is transaction can display as an instant notification in Transferwise and Revolut, notwithstanding, some traditional payment records are still delayed (maybe 2–5 days).
In general, Revolut demonstrates the most advanced management interface. All transactions can sort by category, merchant, country. By setting up monthly budgets, it’s more accessible to estimate expenditure, control budget and set categories budget control to help you to stick on spending targets.
Manage day-to-day or travel expense with tracking, budgeting and analytics in App. So it can be part of your finance management tool to help you evaluate financial patterns.
The unexpected sometimes happens.
If you lost or misplace Transferwise/Revolut card, first, both APP offers you freeze and unfreeze cards to suspend future transactions. Next, you can report a card lost or stolen in APP interface #.
# Friendly remind: Features are only working if your smartphone is not lost or stolen together. :-)
Beside, Revolut offers 2 top-up features for travellers, which are Lounges and insurance purchase in the APP.
What’s next?
CREALOGIX published a survey for “attraction to mobile bank features”, which studied what specific features would be encouraged UK consumers to open a new bank account.
Look at 11 attractions on the graph. Indeed, Transferwise and Revolut have already covered up 64% and 82% of features, respectively. Our customer-oriented wishlist leads our market trends; consequently, agile challenger banks/fintech institutions are addressing a substantial advantage to win new customers, especially Gen-Zs.
Anton Zdziebczok, Head of Product Strategy at CREALOGIX UK, said: “With the recent anniversary of the Open Banking initiative, our research found that the directive has had a positive impact on overall competition in the retail banking market, and customers are increasingly trying out new bank accounts. This comes as good news for financial regulators, who have been fighting in the 10 years since the financial crisis for more consumer choice and innovation in the highly concentrated UK retail banking market.
“This increased competition encourages innovation, ultimately delivering the best experience to the consumer. However, where the agile, mobile-first banks are using technology to win new customers, the incumbent banks have been slower to adapt.”
Jo Howes, Commercial Director at CREALOGIX UK, commented: “To compete and stay relevant, every financial institution needs to increase the pace of innovation and offer differentiated mobile user experience features to satisfy digitally-demanding customers.
“For now, the challenge for established financial brands is simply how to maintain reasonable feature parity with the challengers, and time is of the essence. With every passing month, the feature and design gap between challengers and less technologically agile banks is widening. But established banks have the foundations of trust and market share to keep them ahead of the game. They are more than able to bring the competitive fight back to the challengers if they succeed in using technology to place their customers at the heart of their business.”
Base on the research compensation from fintech and traditional payment method, fintech are presently walking forward to a more satisfying experience, fixing some major travel financial pain-points, but still not yet a travel game-changer.
Travel x fintech as-is enhancement
- Numerous currencies hold in balance. Users can trade-in their desire rate anytime before travel
- More attractive exchange rate than traditional ways
- Advanced transaction analytics
- Transaction instant notification
- Quick and handy card lost report handling.
Next thoughts for travel x fintech — Seemless personal financial assistant
Utilize consumer insights and forecast what you may need for an upcoming trip — Up until now, traditional banks are offering services only by customer request, while acquiring big data, the financial landscape will significant shifting to implement proactive servicing.
Fintech or banks are now capturing booming travel data, daily-life behaviours and spending patterns. After the tipping point has been reached, not only primary activity feeds but also the future fintech APP will also advise us next travel budget, suppose activities and spending proposal with their advanced predictive analytics.
Leveraging with prospective internet of things (IoT) — IoT allows smart devices to connect, interact and exchange data. It’s no doubt that the quality of IoT data sources is a crucial success factor in ensuring a complete picture of the next customers’ demands. In another aspect, particularly wearable technology will enable voice AI processer to be seamless connect clients 24/7.
Imagine your future fintech can advise and assist you in preparing enough budget and exchange currency for their tips. “You may need 12,000 Thai Baht for your upcoming 3 days Bangkok trip. Do you want to exchange it now? “; “Thai Baht to British pound reached 3 months low, THB/GBP conversion rate is 0.022. Do you want to exchange now?”
As water activities and pizza fans, the future financial App can also recommend personalising promotion to you. “I found a special Pattaya water activity discount for you! You and family members can join scuba diving in Pattaya with a 40% off discount. Are you ready to book now?” When you finished your delightful Pattaya diving day and driving your car to the city centre at 7:30 pm. Your financial assistant come out again and ask you, “Are you hungry now? Your favourite pizza shop is just 3 blocks behind. Spending per head is 350 THB, approximately 7.7 GBP. Do you want me to show you the way?”
Doing the financial job will be just part of AI-powered personal financial assistant’s job.
At A Glance
Transferwise
Established origin and year: UK, 2010
Financial Conduct Authority authorised: E-Money and payment services.
Deposit guarantee: None.
Monthly fee Borderless account — £0
Trustpilot reviews: 4.5 stars
If you are interested in Transferwise, please open an account with our referral link so you will receive a special promotional offer!
Revolut
Established origin and year: UK, 2015.
Financial Conduct Authority authorised: E-Money and payment services.
Deposit guarantee: None.
Monthly fee: Standard — £0 / Premium — £6.99/Metal — £12.99
Trustpilot reviews: 4.5 stars
Interested in Revolut and want to support us? Open an account with our referral link so you will enjoy a free Revolut card!
