Amid the coronavirus (COVID-19) pandemic, the way we travel – and, in particular, use foreign currencies – is about to undergo a massive transformation. That’s according to Cameron Hume, Managing Director of Travelex APAC, and Jun Otani, Representative Director of Travelex Japan.
Since the pandemic, financial institutions, foreign exchange service providers and fintechs have had to restructure or scale up their services, explain Hume and Otani. Many incumbents, such as banks, have closed exchange counters in their branches. New entrants, including startups, have worked with legacy institutions and FX experts such as Travelex to bring new services to the fore.
As a result, more customers than ever before can order foreign currency digitally through web and mobile applications; receive foreign currency in store or by home delivery; or withdraw currency through credit / debit cards, pre-loaded multi-currency contactless prepaid cards or through touch-and-go channels. Speaking to Japan Today, Hume and Otani explain what this means for international travel, an activity they hope to return to pre-COVID-19 numbers by winter 2022.
What impact has COVID-19 had on digital payments in the forex industry?
Hume: Out of necessity, COVID-19 has boosted online shopping, leading people to become more accustomed to online and digital payments. While travel was previously tied to cash businesses – which we believe still have a very large market – we are seeing the channels for getting foreign currency going digital. Travelex is building channels and products in this direction. So I think (this transition is linked to COVID-19), but it’s also a generational shift as millennials start their adulthood, including traveling more – and they’re used to smartphones.
Can you say more about the new service offerings around the world and in Japan?
Hume: From a travel perspective, what we’re doing is building our online ordering capability, so that you can order online through the Travelex website or app in markets like UK and UK. Europe and withdraw cash in a physical store. In Japan, we have a great service where we have Japan Post delivered to your doorstep. Going forward, we see a world where what we call pre-planners – or the people on their phones – can order foreign currency online and then withdraw it from an ATM: we’re rolling this out in the UK. in the first quarter of 2022, and Japan will also be a priority market. It’s on the cash side.
On the non-cash side, we have a product called a multicurrency prepaid card. In some markets, like Australia, where people have not yet switched to telephone payments; it’s still a tap-and-go type company – they use a prepaid card where you can load up to 11 currencies, check your balance at any time and tap to select the currency required for contactless payment at any time point of sale of a merchant who accepts Mastercard. Using this card, you can also withdraw foreign currency at any ATM that accepts Mastercard.
Japan is a special market. What more can we say about what is going on here?
Otani: In Japan, you have two options for receiving your foreign currency online order: at the Travelex store in the city center or at an airport, or via the Japan Post home delivery service. As you know, the Japanese mentality around cash is that they still believe in it compared to other countries. However, some changes are happening in the small amount payments industry here, with services like PayPay and Suica expanding their services. But it is not necessary to do the same in Japan as in other countries. Over the next two or three years Travelex will aim to roll out something like âCashless 1.5â – rather than going straight to âCashless 2.0â, as has been a trend overseas. So we are planning to have card and cash or card and discount services for Japanese customers. This type of hybrid service is going to be essential in capturing some market share here.
When do you think the digital FX revolution will mature in Japan?
Otani: It depends on the definition of digital effects. You could say that using multi-currency prepaid cards and ordering foreign currency cash online is already part of digital FX, and we already have the products to help deliver that. However, as Cameron mentioned, in Australia and the UK we already offer tap-and-go and other advanced services at airports. In Japan, it will take another year or two because the airport authorities here are relatively conservative. For example, you may know that some people in Japan still do not use online check-in at airports; they prefer to queue at the check-in counter. So it is very difficult to answer your question, but maybe the first users will take about a year and the majority of the population will catch up in three to five years.
What effect will the transition to digital-first FX have on hiring and training?
Hume: From the point of view of the APAC, we are already witnessing a change. We are in the process of launching what we call our âdigital airportâ in Australia. The key pillars of this are reducing the size and number of our retail stores; offer customers the option of ordering foreign currency online on our app or website, and collecting it at a store or ATM at the airport. And, when they arrive at the airport, our customer service ambassadors – what we call our employees – will help people who are not familiar with digital or smartphones, while providing them with information such as types of payments accepted in each country and typical expense values. So rather than just making a transactional sale, it’s more of a skill set shift where they will help people through the process, and it’s a very different skill set.
Are you worried that digital currencies are causing job losses in your industry?
Hume: There has been a lot of concern in retail across all industries about what is happening to staff in the digital world, but I see this as reinforcing the need to have people who understand our market, understand foreign currencies. and are able to explain it to clients. . Going abroad, for many people, remains a great adventure. For example, I travel quite often to Japan. But my favorite ramen shop still doesn’t accept cards or digital payments; it still only accepts cash. If you are unfamiliar with this, you can expect that you can just âtype and goâ in Japan.
Conversely, if you go to China, the digital ecosystem is very mature, but it is probably not very convenient for foreign customers or tourists, as these visitors are not part of the local ecosystem and do not are therefore not easily able to use digital payments in China. So while new digital platforms work well domestically, when you travel abroad it’s always a very different experience. At Travelex, we need employees who understand these differences and can explain them to our customers so that they can have a pleasant and hassle-free travel experience abroad.
What can customers in the Japanese market expect in the coming year?
Otani: In about a year, we are launching a new multi-currency prepaid card that will make it easier for customers to use foreign currencies. At the same time, we are launching a new online international money transfer service. While you can order currency online on our website, we are also negotiating with airport authorities to provide our API to airports and other partners so that you can also have the same experience on their websites, currency being delivered directly from our safes to your home or office.
What impact will digital FX have on global FX trading volumes in your industry?
Hume: If you focus on travel, education, and cross-border industries, we’ll see the recovery happen faster than people think given how interconnected the world has become. And people will continue to travel to more places and potentially more often than before. So, firstly, our mission is to simplify people’s access to international money: our âOne Retailâ strategies allow customers to choose the channels on which they want to access their currencies, whether online, in a single store. store, via an ATM or via a card.
Second, customers want to be able to access a full range of products and channels, be it cash, cards or money transfers, which they can carry in their wallet. Third, the foreign exchange market is the largest and most liquid in the world. We’re seeing fintechs come in and take a lot of the costs and downsides of cross-border transfer, for example. So we are now seeing one day settlements for cross border transactions where the fees and times are very transparent – you can go online and see the status of your transfer. And I think that takes a huge part of the cost out of this process.
In terms of the overall forex market, there is a lot going on, including cryptocurrencies and central bank digital currencies. Travelex wants to understand these new innovations and what they can bring to our customers. With cryptocurrencies, we take a wait-and-see approach: obviously, crypto is still unregulated and in some places banned. It has the advantage of blockchain technology, but we are very aware of the AML / CFT (Anti-Money Laundering and Anti-Terrorist Financing) rules and laws that protect customers and the integrity of the global financial system. Obviously, the blockchain is also interesting, especially when you talk about cross-border currency transfer.
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