According to the U.S. Department of State, nearly 115 million American passports were in circulation in 2012. With a U.S. population of around 316 million, this means roughly one in three Americans holds a valid passport.
Travel spending statistics indicate many of these passports are being put to good use. Direct spending on leisure travel by domestic and international travelers totaled $597 billion in 2012. Direct spending on business travel by domestic and international travelers totaled $259 billion that same year.
Statistically, Americans who travel comprise an attractive demographic for financial institutions (FIs). The average age of American leisure travelers is 48, while the average age for business travelers is 46. Additionally, traveling households report higher incomes than non-traveling households. In 2012, the average American household income was $52,800. For domestic leisure travelers, the average household income was nearly $10,000 higher at $62,500, while the average household income for business travelers amounted to $87,500.
It’s clear that financial products designed to serve travelers represent a sizable opportunity for FIs. Three products in particular stand out as being ideal options to market to travelers: EMV-ready credit cards, prepaid cards and “vacation” savings accounts.
EMV
Because the EMV standard is prevalent everywhere but the U.S, converting credit card portfolios to EMV chip-enabled cards will be highly attractive to international travelers.
Jet-setting Americans are realizing more and more that EMV has largely replaced mag-stripe cards in Europe. In fact, according to a recent creditcard.com article, frequent travelers to Europe recommend getting an EMV card prior to traveling for a smoother travel experience.
Prepaid
One of the main benefits of offering prepaid cards is to satisfy cardholders who want to take a card on vacation that a) won’t expose them to a lot of risk if it’s stolen; and b) will allow them to budget for their trip.
Indeed, prepaid cards can offer travelers a safer alternative to regular travel credit cards, cash and travelers’ checks. Because they’re loaded with a preset amount and aren’t linked to any accounts, travelers feel more secure taking them along to new or off-the-beaten-path locations.
Travel Savings Accounts
Travel savings accounts, like those available through providers such as SmartyPig, are becoming incredibly popular. With minimal product-alignment effort and a solid marketing campaign, FIs can offer nearly the same service to consumers stashing away money for the next big trip. Not only can this type of program foster goodwill between you and your customers by promoting a divergence from the “buy-now-pay-later” mentality, it can also be an opportunity to provide financial education (especially to younger consumers) on the importance of saving.
Helping your traveling consumers by offering products that serve their specific needs can help your FI build loyalty and grow your portfolio.
