Pre-paid foreign currency cards have been around for a number of years but they have never offered the convenience of being linked direct to users’ bank accounts – until now.
UK fintech start-up Currensea believes its next generation currency card solves many of the hassles travellers face with Forex, and it is looking for travel distribution partners.
Former banking sector digital strategist James Lynn and his fellow co-founder Craig Goulding, a specialist in open banking, pooled their expertise to develop Currensea.
As well as keeping costs low to compete with new online challenger banks like Revolut and other disruptive card providers like WeSwap, Currensea claims to have a pioneering model.
Lynn believes it is the first card in the world to link direct with users’ bank accounts meaning no more needing wifi to top up or being left with unspent currency when you return.
“Myself and my co-founder were chatting in a pub one day and agreed we were frustrated travelling abroad with the high cost of spending money,” Lynn said.
“I had used various pre-paid cards but found quite a high hassle factor. We thought we can come up with something different based on the new open banking regulations.
“So, we were able to build something which had never been done before, which was a card which connects to existing high street bank accounts.
“If you have a Barclays account you would connect your Currensea card using open banking, so it’s safe, and when you go abroad you use it as you would your bank card.”
Lynn believes that the challenge existing currency cards have faced gaining penetration in the market has been the hassle factor of having to top up a separate account.
Surveys Currensea has done indicates that the 34-year-old plus demographic are the biggest overseas spenders accounting for almost three quarters of all spend.
They also account for around two thirds of all trips, and yet only 14% use new challenger banks or pre-paid cards for their foreign exchange.
Although pre-paid cards’ USP is they offer a much lower cost for users, Lynn believes this hasn’t been enough to get over the hassle factor.
“People don’t want to have to have a separate pot of cash and manage money sitting elsewhere,” he said.
“We have tried to marry two things; convenience and value. There are some solutions out there that offer value, but they are inconvenient.”
Working with Mastercard and the Financial Conduct Authority, Currensea spent around a year figuring out the specific Open Banking regulation that opened the door to its model.
The firm attracted a first £1 million seed round investment in 2018 and began building the platform before it could start testing it during the second half of 2019.
Last November, a Crowdfunding push on the Seeders platform raised a further £930,000 and brought in 850 small investors.
The card officially launched at the beginning of this year and was gaining traction until the COVID-19 pandemic brought travel to a standstill.
“Within two-and-a-half months we had thousands of users signed up,” said Lynn. “It hit a sweet spot. We had an amazing start to the year and now we are looking for a bounce back.
“The card was being used in 120 countries and we had amazing Trust Pilot reviews and Martin Lewis (MoneySavingExpert) rated it in the top three travel cards in the UK.”
As well as appealing to users’ desire to cut costs and for convenience, Currensea is also appealing to their concerns about the environment.
Eco-conscious consumers can opt to take a percentage of the difference of what they are charged by Currensea and what they would be charged by their bank and put that to planting trees.
On a Currensea dashboard, where users can keep track of their spending and exchange rates for each transaction, users can monitor their tree planting record.
Currensea offers a range of packages that determines the charges uncured by users. A premium plan costing £2.50 a month means users will only be charged the flat interbank rate.
Lynn said Currensea has so far marketed the card largely online through digital channels like Facebook, but it is keen to forge industry partnerships.
The firm is open to discussions about whitelabel and co-branded deals based on a revenue share agreement. It is also looking to introduce a virtual corporate card for SMEs.
Lynn believes the post COVID-19 travel sector reboot will see people take a fresh look at the sector and forex providers will have to be more transparent about their charges.
“That’s going to be hugely valuable for the industry. In a market where transparency becomes the key, I think we will be in a very strong position.”