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Travel Money Market In UK 2014

Travel Money - UK - May 2014

There are opportunities for big name brands in the fragmented travel money market, where price often comes secondary to convenience, and consumers prefer the reassurance of a well-known brand. Brands have the opportunity to take advantage of the potential growth of pre-paid cards. However, if they are to do so, currency cards must be repositioned as a safe and convenient way to carry cash rather than as an alternative to credit or debit cards.“There are opportunities for big name brands in the fragmented travel money market, where price often comes secondary to convenience, and consumers prefer the reassurance of a well-known brand. Brands have the opportunity to take advantage of the potential growth of pre-paid cards. However, if they are to do so, currency cards must be repositioned as a safe and convenient way to carry cash rather than as an alternative to credit or debit cards.

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Table of Content

Introduction

Abbreviations

Executive Summary

The market

Value of overseas spending expected to increase

Figure 1: Forecast for annual spending abroad by UK residents, 2008-18

Market factors

Overseas visits increased in 2013

Companies, brands and innovations

Brand promotion

Figure 2: Top 4 advertisers of travel money services (including foreign currency pre-paid cards), 2013/14

Who’s innovating?

The consumer

Travel and holiday trends

Figure 3: Holiday and travel trends, March 2014

Methods of spending abroad

Figure 4: Methods of spending while abroad, March 2014

Ways of arranging and collecting foreign currency

Figure 5: Ways of arranging foreign currency, March 2014

Attitudes towards using payment cards abroad

Figure 6: Attitudes towards using payment cards abroad, March 2014

Attitudes towards pre-paid cards

Figure 7: Attitudes towards pre-paid cards, March 2014

Attitudes towards travel money and spending abroad

Figure 8: Attitudes towards travel money and spending abroad, March 2014

What we think

Issues and Insights

Pre-paid card providers need to re-educate consumers to dispel the myths

The facts

The implications

A strong brand is important to travel money success

The facts

The implications

Mobile and tablet apps have the potential for growth

The facts

The implications

Trend Application

Offering flexible rewards and taking the hassle out of purchasing pre-paid card

Promoting the security of using a pre-paid cards over taking cash

Pre-paid cards could become popular amongst the youngest generation of travellers

Market Drivers

Key points

Trips abroad are yet to recover from the recession

Figure 9: The number of overseas visits by UK residents, by purpose of visit, 2006-13

Europe remains the most popular destination for consumers

Figure 10: Number of overseas visits by UK residents, by region visited, 2006-12

Increased consumer confidence will drive growth in the holiday market

Figure 11: GfK NOP Consumer Confidence Index -UK, January 2007-December 2013

The Pound strengthens against the Dollar and euro

Figure 12: Spot exchange rates, US Dollar, and euro into Pounds Sterling, March 2009-March 2014

All-inclusive holidays present a challenge to travel money providers

The long-term shifts toward independent holidays restarts

MEPs have voted to scrap mobile roaming fees in the EU

Who’s Innovating?

Key points

AmEx links up with TripAdvisor

Thomas Cook launches interactive Holiday Budget Calculator

TUI launches Digital Assistant to help customers plan their trip

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Market Size and Forecast

Key points

Consumers are beginning to spend more whilst on holiday

Figure 13: Annual spending abroad by UK residents, at current prices, 2007-13

Holiday spending increases for the second successive year

Figure 14: Annual spending abroad by UK residents, by purpose of visit, 2006-13

Visits to Europe generate the largest amount of spending

Figure 15: Annual spending abroad by UK residents, by region of visit, 2006-13

Value of debit card expenditure abroad exceeds credit cards for the first time

Figure 16: Volume and value of credit and debit cards purchases outside the UK, by type, 2004-12

Value of overseas spending expect to continue to rise

Figure 17: Forecast for annual spending abroad by UK residents, 2008-18

Figure 18: Annual spending abroad by UK residents, at current and constant prices, 2008-18

Forecast methodology

Fan chart explanation

Market Share

Key points

Post Office leads the way for foreign currency exchange

Figure 19: Ways of arranging foreign currency, March 2014

Largest retail banks promote currency exchange over debit card use

Figure 20: Main current account provider, June 2013

Credit cards look to beat the completion from debit cards

Figure 21: Top six credit card and charge card providers in the UK, by share of customers, July 2013

Companies and Products

American Express

Company description

Product range

Key data

Figure 22: Key financial data for American Express Payment Services Ltd, 2011-12

Recent activity

Marketing and promotion

Barclays/Barclaycard

Company description

Product range

Key data

Figure 23: Key financial data for Barclays Group, 2012-13

Recent activity

Marketing and promotion

Caxton FX

Company description

Product range

Key data

Figure 24: Key financial data for Caxton FX, 2011-12

Recent activity

Marketing and promotion

FairFX

Company description

Product range

Key data

Figure 25: Key financial data for FairFX, 2012-13

Recent activity

Marketing and promotion

M&S Bank

Company description

Product range

Key data

Figure 26: Key financial data for Marks & Spencer UK, 2012-13

Recent activity

Marketing and promotion

Post Office

Company description

Product range

Key data

Figure 27: Key financial data for Post Office Ltd, 2012-13

Recent activity

Marketing and promotion

Thomas Cook

Company description

Product range

Key data

Figure 28: Key financial data for Thomas Cook Group Plc 2012-13

Recent activity

Marketing and promotion

Travelex

Company description

Product range

Key data

Figure 29: Key financial data for Travelex UK Ltd, 2011-12

Recent activity

Marketing and promotion

TUI Travel

Company description

Product range

Key data

Figure 30: Financial performance of TUI Travel Plc, 2012-13

Recent activity

Marketing and promotion

Brand Communication and Promotion

Key points

Adspend on travel money services increases in line with trips abroad

Figure 31: Adspend on travel money services (including foreign currency pre-paid cards), 2011/12-2013/14

The Post Office’s travel money expenditure pays off with high usage

Figure 32: Top 10 advertisers of travel money services (including foreign currency pre-paid cards), 2011/12-2013/14

Press leads the way in travel money adspend

Figure 33: Adspend on travel money services (including foreign currency pre-paid cards), by media type, 2011/12-2013/14

A note about adspend

Travel and Holiday Trends

Key points

The majority of consumers have taken a holiday abroad in the past year

Figure 34: Holiday and travel trends, March 2014

European destinations continue to lead the way

Financial situation affects travel habits

Figure 35: Holiday and travel trends, by financial situation, March 2014

Under-35s are more likely to travel abroad

Figure 36: Holiday and travel trends, by age, March 2014

Cosmopolitan Londoners are more likely to have travelled to Europe

Figure 37: Holiday and travel trends, by region, March 2014

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Methods of Spending Abroad

Key points

Almost three quarters of travellers used payment cards abroad in the last year

Figure 38: Types of travel money used, March 2014

Travellers cheques decrease in popularity could benefit pre-paid cards

Under-35s are more comfortable using debit cards abroad

Figure 39: Types of travel money used, by demographics, March 2014

There is no relationship between age and use of pre-paid cards

Travellers to Europe are more likely to have used foreign currency

Figure 40: Types of travel money used, by Holiday and travel trends, March 2014

Ways of Arranging and Collecting Foreign Currency

Key points

The Post Office remains the most popular way for consumers to arrange foreign currency

Figure 41: Ways of arranging foreign currency, March 2014

Few consumers exchange their money at airports

Most consumers arranged their currency in the UK

Most people prefer to order and collect currency in person

Figure 42: Ways of collecting foreign currency, March 2014

Retail presence helps to improve use of in branch foreign currency services

Figure 43: Ways of collecting foreign currency, by ways of arranging foreign currency, March 2014

Almost half of consumers used an ATM to arrange travel money at their holiday destination

Travellers outside Europe more likely to use online ordering methods

Figure 44: Ways of collecting foreign currency, by holiday and travel trends, March 2014

Attitudes towards Using Payment Cards Abroad

Key points

Payment cards give 55% of consumers a feeling of security

Figure 45: Attitudes towards using payment cards abroad, March 2014

Older consumers are more likely to monitor their spending using a payment card

Figure 46: Attitudes towards using payment cards abroad, by age and working status, March 2014

A fear of running out of money could be holding back use of pre-paid cards

Figure 47: Attitudes towards using payment cards abroad, by types of payment card used, March 2014

Three out of ten consumers who have used payment cards abroad feel the charges are too high

Attitudes towards Pre-paid Cards

Key points

A recognisable brand is important to encourage consumers to use pre-paid cards

Figure 48: Attitudes towards pre-paid cards, March 2014

Providers need to change consumers’ perceptions of pre-paid cards

Figure 49: Attitudes towards pre-paid cards, by age, March 2014

Security and budgeting are the main attractions of using pre-paid cards

Younger consumers are most worried that pre-paid cards will not be accepted

Figure 50: Attitudes towards pre-paid cards, by age, March 2014

The potential demand for pre-paid cards is high

Figure 51: Attitudes towards pre-paid cards, by age, March 2014

General Attitudes towards Travel Money and Spending Abroad

Key points

A third of consumers prefer to be more relaxed when spending abroad

Figure 52: Attitudes towards travel money and spending abroad, March 2014

Almost half of consumers save up before going on holiday

Figure 53: Responses to the statement: ‘I tend to save up my spending money before I travel on holiday abroad’, by methods of spending abroad, March 2014

Online tools likely to help consumers to keep track of what they are spending

Figure 54: Attitudes towards spending abroad, by age, March 2014

Only 15% of consumers who use cards are surprised by charges

Figure 55: Travel money attitudes of consumers who have used specific payment methods, March 2014

A third use a price comparison site to find the best rates for foreign currency

Figure 56: Responses to the statement: ‘I look for the best exchange rate for my cash by using an online comparison site’, by ways of arranging foreign currency, March 2014

Appendix – Market Size and Forecast

Figure 57: Best and worst case forecast for total value of annual spending abroad by UK residents, 2013-2018

Appendix – Travel and Holiday Trends

Figure 58: Holiday and travel trends, by demographics, March 2014

Appendix – Methods of Spending Abroad

Figure 59: Types of travel money used, by demographics, March 2014

Appendix – Ways of Arranging and Collecting Foreign Currency

Figure 60: Most popular ways of arranging foreign currency, by demographics, March 2014

Figure 61: Next most popular ways of arranging foreign currency, by demographics, March 2014

Figure 62: Ways of arranging foreign currency, by demographics, March 2014

Appendix – Attitudes towards Using Payment Cards Abroad

Figure 63: Most popular attitudes towards using payment cards abroad, by demographics, March 2014

Figure 64: Next most popular attitudes towards using payment cards abroad, by demographics, March 2014

Appendix – Attitudes towards Pre-paid Cards

Figure 65: Agreement with the statement ‘I would only take out a pre-paid travel card from a well-known brand’, by demographics, March 2014

Figure 66: Agreement with the statement ‘I’m concerned about the charges incurred on these cards’, by demographics, March 2014

Figure 67: Agreement with the statement ‘Using a pre-paid travel card would give me a feeling of security when spending abroad’, by demographics, March 2014

Figure 68: Agreement with the statement ‘A pre-paid travel card would help me to stay on budget whilst abroad’, by demographics, March 2014

Figure 69: Agreement with the statement ‘I would be worried that the card would not be accepted when paying for goods and services abroad’, by demographics, March 2014

Figure 70: Agreement with the statement ‘I am interested in using a pre-paid travel card in the future’, by demographics, March 2014

Figure 71: Agreement with the statement ‘I think arranging a pre-paid travel card would be a lot of hassle’, by demographics, March 2014

Figure 72: Agreement with the statement ‘I have never heard of a pre-paid travel card before now’, by demographics, March 2014

Appendix – Attitudes towards Travel Money

Figure 73: Attitudes towards travel money and spending abroad, by demographics, March 2014

Figure 74: Attitudes towards travel money and spending abroad (continued), by demographics, March 2014

 

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