American spenders are using cash in less than half of their transactions, while Europeans are more inclined to stick to their notes and coins because of exchange fees, new research suggests.
According to the Payments UK, the use of cash as a payment method in the US has fallen to just 48% for consumers, businesses and financial institutions. But in Germany, it says cash still accounts for 80% of all transactions
Europe has the slowest non-cash transaction growth of any region in the world, it added.
Rob Darby, head of partnerships for travel sector clients at Tuxedo Money Solutions, which works in more than 200 countries, said: “One explanation for this phenomenon is the large number of European holiday-makers who are discouraged by the charges for using debit and credit cards overseas.
“Outside of Europe, consumers’ preference for cashless options has paved the way for a rise in prepaid technologies.”
Darby went on to say consumers find pre-paid cards “safer and more convenient than notes and coins” and that flexible currency conversions which find the best rate at the point of transaction save fees, offer better security against loss, theft and fraud and can be used multiple times.
He added that the travel industry can also benefit from pre-paid currency cards, saying: “Sales of the cards can be tracked by source, channel, branch and agent (including home-worker) giving distributors improved performance and channel analysis and the ability to pay commissions to individuals based on card sales.
“At one time it was common across the market for the operator to earn commission only on the initial load, with no incentive to continue to push the product. Prepaid programmes have now developed to deliver significant income potential for partners, offering a generous commission rate, paid over the life of the card, rather than a one off payment on the initial load, as has been the industry norm,” Darby said.
Only 21% of Brits, 25% of Germans and 24% of Austrians purchased a prepaid card within the past year, according to research from First Data, but more travellers from each country all said they were more likely to buy one next year (UK 63%, Austria 44% and Germany 49%).
Payments UK believe the opportunity to educate travellers on the benefits of non-cash transactions with minimal charges is “there for the taking”.
“Given the relative immaturity of the prepaid market in most of Europe, prepaid cards are not likely to be a threat to existing credit or debit portfolios,” Darby continued. “It seems appropriate, therefore, to market prepaid cards as a supplemental product, rather than a user’s primary purchase method.”
He encouraged agents to earn extra commission by selling pre-paid cards as an add-on to holiday bookings.