Multi-Currency Wallets in a Post Pandemic World
Consumer access to foreign exchange (FX) has changed dramatically over the last decade. As Revolut & TransferWise have gained significant popularity, retail consumers have enjoyed new FX products, functionality and better pricing across card spend, currency exchange and international remittance payments.
Multi-Currency Wallets attached to Visa & Mastercard payment cards have been at the core of this FX innovation by enabling consumers to:
Easily hold funds in a range of different currencies simultaneously
Spend in a specific currency as if they were in their home market
Lock in exchange rates ahead of future travel
Transfer funds directly from a currency wallet to a designated 3rd party
For a bank or fintech issuer that is considering if multi-currency wallets should be a part of their product line-up, the following factors should be considered:
Current Volumes: If your existing cardholders are spending >10% of their gross transaction volume in foreign currencies (measured pre-pandemic), then multi-currency wallets and FX-based innovation will likely have a positive business case & ROI for your card programme P&L.
Market Benchmarking: How is your card programme currently performing in cross-border metrics when compared to domestic competitors? Multi-currency wallets offer an opportunity to maintain your lead or can be a spur to drive growth to close a gap with your competitors.
Innovation Pressure: What is the presence and success of local and international disruptors such as Revolut and Wise? Does your card programme need to match or expand upon the FX innovations that fintech disruptors are using to capture market share?
If your card programmes or market challenges match any of the factors described above, then the deployment of multi-currency wallet functionality is worthy of detailed consideration. However, multi-currency wallets are not uniform in their design and there are at least three distinct forms of multi-currency offerings today that should be assessed:
Domestic foreign currency account – offer cardholders the ability to open a single currency, full functioning bank account in an international currency. For example, a Czech bank offering customers the ability to open a USD bank account. This gives customers a USD bank account, a payment card linked to that USD account and the ability to send and receive banking transfers in USD. A domestic foreign currency account is most relevant where customers have a definitive need for full banking services in a single overseas currency.
Stand-alone multi-currency wallet account – offer cardholders a new foreign currency account and card product that enables them to load funds from their primary domestic bank account. Once funds are loaded into the new FX account, these funds can easily be converted & held in multiple currencies and card transactions in those currencies are first debited from the relevant currency wallet. Stand-alone multi-currency wallet accounts are most relevant where a bank or fintech is looking to attract new customers with a competitive fee structure and/or wishes to fully separate their FX offering from traditional accounts, often because of the perceived complexity in upgrading existing accounts.
Integrated multi-currency wallet account – upgrade existing bank accounts & card products with multi-currency features that enable cardholders to hold funds in multiple currencies as sub-wallets directly connected to their primary domestic account. Fully integrated multi-currency wallets enable card transactions to be performed in any supported currencies and may also support real-time funds transfers in each foreign currency. A fully integrated offering is most relevant for issuers with existing accounts without the need to introduce new account & card products.
In the pre-pandemic world, multi-currency wallets innovations have helped to drive rapid customer adoption among a range of high growth fintechs and helped their products achieve “top-of-wallet” status among consumers. As the world economy recovers post pandemic, travel and FX-based innovation will very likely return as key differentiators, with these trends further supported by new regulations such as CBPR2 in Europe. Issuers that can identify the right product for their market and execute, will ultimately succeed as crossborder spend continues to grow significantly as a segment.
About Cambrist
Cambrist is an award-winning technology company enabling payment card Issuers & processors to better manage the foreign exchange requirements of their card programmes. Our proprietary SaaS platform simplifies the adoption of advanced customer features such as multi-currency wallets and enables compliance with new transparency regulations at a reduced cost. Our technology, combined with our team of industry veterans & experts, supports customers around the globe.
Learn more about Cambrist at www.cambrist.com or contact us at info@cambrist.com