Travelex Supercard

benjus

Yeah, I don't get it.

Does't Visa/Mastercard charge the card issuer a cross-border fee? So if you have a card that charges 2.75% for overseas use, some of that actually goes to Visa/Mastercard and the rest to the card issuer? And the 0% cards are actually a loss for the card issuer, used as a loss-leader to get people to use their profit-making services? This may be wrong but I'm sure I've read it somewhere.

Then there's the Visa/Mastercard fee charged to merchants for making transactions on a customer's credit/debit card.

So it sound like TravelEx will have to foot the bill for these charges. And what do they get in return? As far as I can see, nothing. They don't even get a balance maintained on the card - the money is just there for a few moments as it goes from the customer's credit/debit card to the retailer's account.

Maybe they are using this as a loss-leader - but if so, a loss-leader into what? I don't understand how there can't be more to this...

PeacefulWaters

benjus wrote: »

Maybe they are using this as a loss-leader - but if so, a loss-leader into what? I don't understand how there can't be more to this...

Get us all hooked and then introduce the profit making charges in 18 months - after we've all used it for two summers.

dseventy

Interesting.

The only way I can see they can make money is taking a cut of the transaction fee that visa charges companies.

D70

SW17

benjus wrote: »

Then there's the Visa/Mastercard fee charged to merchants for making transactions on a customer's credit/debit card.
.....
Maybe they are using this as a loss-leader - but if so, a loss-leader into what? I don't understand how there can't be more to this...

Travelex won't have to pay the merchant fees, they are paid by the merchant either way. However, like you and others, am still struggling to see how they make money from this. Maybe some sort of rebate deal with card issuers based on volume of transactions they bring? I guess it will only be clear when full T&Cs are issued.

eDicky

I have no professional insight but I have always assumed that the main income for Visa/MasterCard themselves is the fee they charge merchants for every card transaction. (And the merchant passes this cost to the customer through pricing.)


Then I imagine that the card issuer, in this case Travelex, receives a cut of this income. Does anybody know?

callum9999

SW17 wrote: »

Travelex won't have to pay the merchant fees, they are paid by the merchant either way. However, like you and others, am still struggling to see how they make money from this. Maybe some sort of rebate deal with card issuers based on volume of transactions they bring? I guess it will only be clear when full T&Cs are issued.

Surely they'll have to pay some sort of fee to the card they take the money from though. From the perspective of the banks, you've presumably just made a normal transaction with Travelex.

This card was specifically designed to operate on razor-thin margins, but I can't see where even those margins come from either!

Petetobin

As well as being the Issuer (who now receive reduced interchange due to the new EU regulations), Travelex are also a Merchant who will need to pay a Merchant Fee to top up your card from your credit or debit card. Unless they submit that transaction as an ATM transaction, the Merchant Fee will definitely be more than the interchange revenue they receive. I simply can't see how they can make money would playing around with the FX rate although it clearly says they will use the Visa rate.

Toe-Jam

RBS say exactly the same thing about their debit cards

Any transaction made in a foreign currency using your Debit card or ATM card is converted by us into Sterling using the Visa Payment Scheme Exchange Rate. To see the up-to-date rates used for Debit cards and ATM cards visit https://www.visaeurope.com and click on the Cardholders section.

They just forgot to mention the 2.75% markup which is in another section.

callum9999

Toe-Jam wrote: »

RBS say exactly the same thing about their debit cards

Any transaction made in a foreign currency using your Debit card or ATM card is converted by us into Sterling using the Visa Payment Scheme Exchange Rate. To see the up-to-date rates used for Debit cards and ATM cards visit https://www.visaeurope.com and click on the Cardholders section.

They just forgot to mention the 2.75% markup which is in another section.

They don't say exactly the same thing, as Travelex says "we charge no fees, commission or foreign-exchange mark-up when you use Supercard abroad".

RBS neglects to mention that they load the exchange rate, Travelex specifically says they don't.

Petetobin wrote: »

As well as being the Issuer (who now receive reduced interchange due to the new EU regulations), Travelex are also a Merchant who will need to pay a Merchant Fee to top up your card from your credit or debit card. Unless they submit that transaction as an ATM transaction, the Merchant Fee will definitely be more than the interchange revenue they receive. I simply can't see how they can make money would playing around with the FX rate although it clearly says they will use the Visa rate.

They don't submit them as ATM transactions as they say you still get your normal credit card rewards. Every single charge or trick they could use that people are bringing up seems to be contradicted by what they say on their site - I'm not sure we're going to get any closer to the truth until it's released/they release more info! The only thing I can think of is they'll have some sort of monthly subscription that they aren't including at the start to build momentum.

eDicky

callum9999 wrote: »

The only thing I can think of is they'll have some sort of monthly subscription that they aren't including at the start to build momentum.

My bet was also on them charging something for the card and probably a monthly fee thereafter.

But I just called Travelex (020 8538 5500) and the agent told me that the card is free and no monthly fees, and the only possible cost is a charge by the foreign ATM operator. When I asked how Travelex could possibly make any money from it, he said he didn't know offhand but it could possibly be a commission from Visa for promoting them over MasterCard.

Thinking about it, this last may be true, because if it is really what it seems it could take off and revolutionise the card industry for overseas travel.