Table of Contents
Issues in the Market
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- Key issues
- Market definitions and scope of the report
- Abbreviations
Future Opportunities
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- Increasing transparency in the prepaid travel card sector
- Mintel’s Consistency trend helps frame the argument
- How can online providers penetrate the foreign currency market?
- A new targeting strategy – the Rise of the Screenager
- Bundled travel money products could also benefit online providers
Market in Brief
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- The travel money market declined in 2009
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- Figure 1: Annual spending abroad, by UK residents, at current prices, 2004-09
- People cut back on holidays in 2009…
- …but the long-term outlook is much better
- A diverse market, with a number of different sectors
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- Figure 2: Estimated size of the travel money market customer base, November 2009
- Spending on debit cards abroad has increased significantly
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- Figure 3: Volume and value of foreign credit and debit card transactions, by type, 2003-08
- The Post Office is the leading foreign currency provider
- When it comes to arranging foreign currency, the branch is key
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- Figure 4: Sources used to buy foreign currency in the UK, November 2009
- Most people take foreign currency with them when they go abroad
- ABs like the safety and convenience of plastic
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- Figure 5: Attitudes towards spending abroad, November 2009
- Awareness of prepaid travel cards is extremely low
Internal Market Environment
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- Key points
- Most people don’t have a choice when it comes to foreign currency
- More people taking all-inclusive holidays in 2009
- Fewer people travelling abroad during the recession
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- Figure 6: Number of overseas visits by UK residents, by purpose of visit, 2003-08
- 2009 – the year of the staycation
- More people are visiting countries outside of the eurozone
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- Figure 7: Number of overseas visits by UK residents, by region visited, 2003-08
- People spend more money on visits to non-European countries
- Growth in the number of people with a second home abroad
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- Figure 8: Number of English households with a second home abroad (three-year moving averages), 2000/01- 2007/08
- The eurozone is expanding
Broader Market Environment
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- Key points
- Consumer confidence has started to increase again
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- Figure 9: Monthly, three-monthly and 12-monthly UK consumer confidence index, January 1982-September 2009
- Long-term growth in PDI is good news for travel money providers…
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- Figure 10: UK population aged 16+, PDI and consumer expenditure (at constant 2004 prices and per capita), 2004-14
- …as is the growing number of affluent consumers
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- Figure 11: Structure of the UK population, by socio-economic group, 2004-14
- Unemployment has increased during the recession
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- Figure 12: UK unemployment levels (seasonally adjusted), 2002-09
- An ageing population – changing holiday trends
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- Figure 13: Structure of the UK population, by lifestage, 2004-14
- The value of the Pound has fallen
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- Figure 14: Pounds Sterling to euro and US Dollar currency rates, January 2007-October 2009
SWOT Analysis
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- Figure 15: Travel money – SWOT analysis, 2009
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Who’s Innovating?
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- Key points
- Prepaid travel cards – a growth segment
- Foreign-currency ATMs becoming more popular
- MasterCard launches a new travel website
- Other developments
Trade Perspective
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- A mixed approach with regards to travel money
- Holiday trends are changing
- Consumers are more rate-sensitive now
- A lot of support for prepaid cards, and their benefits…
- …but also some issues that need to be addressed
- Some prepaid card users are very savvy
- The decline of travellers’ cheques continues
- Market size commentary
Market Size and Forecast
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- Key points
- The size of the market is expected to decline by 18% in 2009
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- Figure 16: Annual spending abroad by UK residents, at current prices, 2004-09
- Holidays account for the majority of all overseas spending
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- Figure 17: Annual spending abroad by UK residents, by purpose of visit, 2004-08
- Europe accounts for the majority of all spending abroad
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- Figure 18: Annual spending abroad by UK residents, by region of visit, 2004-08
- Market forecast
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- Figure 19: Annual spending abroad by UK residents, at current prices, 2004-14
- Factors used in this forecast
Market Segmentation – Product Trends
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- Key points
- Cash is still king in the travel money market
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- Figure 20: Estimated size of the travel money market customer base, November 2009
- Debit cards account for 89% of all cash withdrawals abroad…
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- Figure 21: Volume and value of foreign credit and debit card transactions, by type, 2003-08
- …but credit cards account for the majority of purchases
- Prepaid travel cards are tipped to be a major growth area
- Declining demand for travellers’ cheques
- Bureaux de change are still a major segment of the market…
- …and don’t forget about overseas visitors to the UK
- Niche alternatives
Market Share
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- Key points
- The Post Office is the leading foreign currency provider
- American Express dominates the travellers’ cheques market
- Lloyds Banking Group is the biggest debit card provider…
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- Figure 22: Main or primary current account providers market share, March 2009
- …and also has the largest market share of credit cards
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- Figure 23: Market share of the main credit card providers, April 2009
Companies and Products
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- Key points
- Exchange rates vary by channel, provider and even region
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- Figure 24: Margin above euro spot rate for different types of travel money providers, November 2009
- Prepaid cards are cheaper than credit/debit cards but fees vary
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- Figure 25: Cost of using debit cards versus prepaid travel cards abroad, by selected card issuers, October 2009
- Company profiles
- American Express
- Barclays/Barclaycard
- Caxton FX
- FairFX
- M&S Money
- Post Office
- Thomas Cook
- Travelex
Brand Communication and Promotion
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- Key points
- Travel money adspend has increased by 49% since 2004/05
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- Figure 26: Topline travel money adspend*, 2004/05-2008/09
- Advertising for prepaid cards has increased substantially
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- Figure 27: Travel money adspend, by brand category, 2006/07-2008/09
- The Post Office is the biggest advertiser of travel money services
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- Figure 28: Travel money adspend*, by company (top 20 advertisers in 2008/09), 2006/07-2008/09
- Press is the most popular method of advertising
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- Figure 29: Travel money adspend*, by media type, 2008/09
Channels to Market
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- Key points
- When it comes to arranging foreign currency, the branch is key
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- Figure 30: Sources used to buy foreign currency in the UK, November 2009
- People do shop around on the internet, but few buy online
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- Figure 31: Agreement with statements about buying travel money, November 2009
- Travellers’ cheques are sold by third-party distributors
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- Figure 32: Source used to buy travellers’ cheques, 2006 and 2007
The Consumer – Holiday Trends and Expenditure
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- Key points
- Two fifths of people did not have a holiday last year
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- Figure 33: Holidays taken in the last 12 months, November 2009
- Wealth is key when it comes to having a holiday
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- Figure 34: Holidays taken in the last 12 months, by destination, by demographics, November 2009
- Europe is the most popular destination for UK holidaymakers
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- Figure 35: Number of holidays abroad taken in the last 12 months, by destination, November 2009
- Multiple holidays abroad are reserved for high earners
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- Figure 36: Number of holidays abroad taken in the last 12 months, by demographics, November 2009
- Half of people spend less than £1,500 on holidays abroad
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- Figure 37: Total amount spent on holidays abroad in the last 12 months, November 2009
- Men and middle-aged adults spend the most on holidays abroad
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- Figure 38: Total amount spent on holidays abroad in the last 12 months, by demographics, November 2009
- Couples and married people are also big spenders
The Consumer – Methods of Spending Abroad
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- Key points
- Four fifths of holidaymakers take foreign currency with them
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- Figure 39: Use of different methods of spending abroad, November 2009
- Debit cards are more commonly used for withdrawing cash
- Men are more likely to use debit cards abroad
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- Figure 40: Use of different methods of spending abroad, by demographics, November 2009
- Wealthy people are more likely to use credit cards abroad
- A detailed look at prepaid card holders
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- Figure 41: Prepaid card holders, by demographics, 2009
- Most people who take foreign currency with them go to a bank
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- Figure 42: Use of different methods of spending abroad, by use of different methods of spending abroad, November 2009
- Savvy consumers use credit cards just for purchases abroad
- Travellers’ cheques used more for non-European destinations
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- Figure 43: Use of different methods of spending abroad, by the number of holidays taken/destination in the past 12 months, November 2009
- Big holiday spenders are more likely to use niche methods
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- Figure 44: Use of different methods of spending abroad, by the total amount spent on holidays abroad in the last 12 months, November 2009
The Consumer – Attitudes towards Spending Abroad
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- Key points
- A third of people shop around for the best deal on travel money
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- Figure 45: Attitudes towards spending abroad, November 2009
- 45-64-year-olds are the more price-sensitive age group
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- Figure 46: Most popular attitudes towards spending abroad, by demographics, November 2009
- ABs like the safety and convenience of using cards abroad
- Internet researchers are more likely to use prepaid travel cards
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- Figure 47: Attitudes towards spending abroad, by use of different methods of spending abroad, November 2009
- People who spend a lot on holidays are more likely to use plastic
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- Figure 48: Total annual amount spent on holidays abroad, by attitudes towards spending abroad, November 2009
The Consumer – Prepaid Travel Cards
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- Key points
- Half of consumers have never heard of prepaid travel cards
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- Figure 49: Attitudes towards prepaid travel cards, November 2009
- Awareness and support is higher amongst the affluent
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- Figure 50: Most popular attitudes towards prepaid travel cards, by demographics, November 2009
- Big holiday spenders are more aware of prepaid travel cards
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- Figure 51: Attitudes towards prepaid travel cards, by total amount spent on holidays abroad in the last 12 months, November 2009
- It’s worth targeting people who use credit and debit cards abroad
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- Figure 52: Attitudes towards prepaid travel cards, by methods used for spending abroad, November 2009
The Consumer – Attitudinal Groups
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- Key points
- Savvies are on the ball when it comes to travel money
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- Figure 53: Attitudes towards spending abroad, by attitudinal groups, November 2009
- The Last Minute Mob are more influenced by exchange rates
- Savvies are more likely to use prepaid travel cards
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- Figure 54: Use of different methods of spending abroad, by attitudinal groups, November 2009
- Card Lovers are more likely to use debit cards abroad
- Savvies are a lot more likely to be third agers
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- Figure 55: Attitudinal groups, by demographics, November 2009
- Card Lovers are more likely to be high earners
Appendix – Internal Market Environment
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- Figure 56: Average length of stay, average spend per visit and per day, by region and purpose of visit, 2008
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Appendix – The Consumer – Holiday Trends and Expenditure
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- Figure 57: Holidays taken in last 12 months, by detailed demographics, November 2009
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- Figure 58: Statements on number of holidays taken in past 12 months, by detailed demographics, November 2009
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- Figure 59: Total amount spent on holidays abroad in the last 12 months, by detailed demographics, November 2009
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Appendix – The Consumer – Attitudes Towards Spending Abroad
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- Figure 60: Use of different methods of spending abroad, by detailed demographics, November 2009
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- Figure 61: Attitudes towards spending abroad, by detailed demographics, November 2009
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Appendix – The Consumer – Prepaid Travel Cards
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- Figure 62: Attitudes towards prepaid travel cards, by detailed demographics, November 2009
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- Figure 63: Attitudes towards prepaid travel cards, by number of holidays taken in past 12 months, November 2009
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Appendix – The Consumer – Attitudinal Groups
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- Figure 64: Attitudinal groups, by detailed demographics, November 2009
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