Rise of Popularity of Multi-Currency Products

The rise of multi-currency wallet services in Europe is on an upward trend, with over 29% of fintech companies already offering multi-currency functionality to customers. Moreover, 75% of the EU's leading digital banks have some form of FX innovation. This indicates that companies offering multi-currency wallet services will continue to gain importance in the cross-border space and are likely to see significant growth in the coming years.

This recovery in international travel has driven a significant increase in cross-border spend, with travel spend being a key driver of this rebound. Visa & Mastercard have reported an average year-on-year growth in cross-border travel spend of 37.5%. This has been supplemented by the continued growth in international eCommerce spend which grew by an average of 12% at both Visa & Mastercard. These two factors mean that cross-border card spend recovered to pre-pandemic levels earlier than expected, reaching 132% and 135% of pre-pandemic levels in September.

Visa & Mastercard forecast continued growth in cross-border spend in 2023, particularly as consumers currently consider travel to be their highest priority for discretionary spend. 42% of survey respondents made travel a high priority in 2023 (vs. 27% for restaurants, 25% for fashion and 20% for big ticket items such as new cars). For these consumers, the average spend on International Travel next year is expected to be ~US$2,670. This is a significant opportunity for Banks & FinTech’s to capture this spend on their card programmes and differentiate themselves from their peers, particularly as 73% of travellers are now more likely to pay attention to FX fees and costs associated with international travel.

Examples of the growing popularity of multi-currency wallets are evident when looking at cross-border spend trends, for example, 48% of travellers are more likely to choose a pre-paid debit card that holds multiple currencies over other payment methods. With multi-currency wallets, users can store and manage multiple currencies in a single account, making it easier for consumers to control costs and better understand fees associated with cross-border card transactions. This trend is being driven by several factors, including the growth of the digital economy, the increasing number of people travelling and conducting business across borders post Covid-19, and greater awareness of new cross-border card propositions.

Multi-currency functionality for payment card programmes has played a significant role in driving innovations in the foreign exchange market over the past decade, targeting three different types of customers: expatriates, internationally mobile spenders, and everyday spenders.

Expatriates primarily transact in one or two currencies and remit funds to family in a different currency to their domestic currency. Low-cost remittances and the ability to bank in multiple currencies are key to this segment. Internationally mobile customers have both daily payments and regular bank payment requirements across multiple countries and currencies, leading to higher discretionary expenditure. Lastly, everyday spenders typically take one holiday per year in a foreign currency and make a small number of eCommerce purchases in a different currency.

Given the popularity of multi-currency wallet services and the increased attention that consumers are paying to FX fees and costs, banks and fintech companies need to invest in their product propositions to simplify cross-border card payments. This evolution is underway and being led by the fintech sector, which is continuously raising the table stakes for card programmes significantly over the last few years. Alex Reddish of Tribe Payments noted that "It started as a pre-paid card, became a payment account, and then a multi-currency product."

In conclusion, Banks & Fintechs for 2023 need to be aware that customers increasingly expect improved cross-border payments functionality and will be more aware of bank charges and FX costs than ever before. The multi-currency wallet services trend is here to stay, and companies must adapt to meet the changing demands of consumers to remain relevant in the future.