Last year, Brits withdrew more than £7 billion from cash machines overseas and while back in 1997 the spending split was 40% plastic to 60% cash, today that ratio is 70:30.


Despite this, holidaymakers remain keen on keeping currency in their wallets ready for when they hit their destinations – not only because of the often high fees charged on withdrawals, but also due to security concerns over using cards abroad.


According to Mintel’s latest Travel Money report, most people still exchange at least some of their money before travelling, giving agents an opportunity for new revenue streams and to offer a valued complementary service.


Gordon Gourlay, managing director of travel money provider First Rate said: “UK travellers want convenience, so being able to pick up their holiday cash at the same time as their tickets will be seen as a real benefit.”


But how convenient is it for agents to offer the service? Like all consumer-facing businesses you’ll need high standards of customer service, stock and margin management skills. And because the sale of foreign currency is regulated, money laundering training will be required to register as a Money Services Business.


You’ll also need a good deal of information at your fingertips including exchange rates, understanding how much you can make adjustments to keep customers without losing profit and an idea of the rate of commission you can charge.


Then there are more basic queries – do you have enough euros in the till or can you get more from a nearby branch?  If the customer needs to buy traveller’s cheques, how can the agent keep track of the cheques being sold and inform the cheque issuer of the sale?


“Questions like these often need to be answered and it can traditionally involve quite a lot of work for the agent,” said IMX Software product manager Tim Shaw.


“Historically, a bank clerk might have needed to use a calculator to convert an amount from sterling to euros, and then do further calculations to arrive at the correct amount of commission to apply. The clerk might have had to consult their files to find any existing record of the customer.


“Unless they have had extensive training on anti-money laundering regulations, they would not know which identification they needed to take from the customer, and how it varied based on the size of the order the customer is placing.”


One solution is an automation system, such as IMX Software’s Travel Money Express – recently adopted by Midlands Co-operative Travel. “Using it makes foreign exchange transactions quick, easy and less prone to error – reducing the risk of financial loss and the legal consequences of non-compliance with anti-money laundering regulations,” claimed Shaw.


Other providers such as Travelex and First Rate are helping to streamline travel money services by offering online ordering for next-day home or branch delivery. “We work with our customers to ensure it is fully integrated with their website, but take the strain out of all the back office work by processing the orders and organising the delivery service on their behalf,” said Gourlay.


Such systems can overcome stock handling issues such as insurance, secure storage, staff and space challenges, said Travelex regional director Stephen O’Donovan.


It’s all about helping the agent to offer customers an easy-to-use service. Proof of the relationship between convenience and customer behaviour can be found in the Mintel research, which discovered only 31% of consumers even bother to find the best exchange rates.


This lack of inclination to shop around is surprising, said Mintel, given the variation in currency exchange rates between providers. One reason could be that consumers leave it to the last minute, which in itself creates further opportunities to drive business with seasonal or special promotions.


Currency cards


According to Mintel, the biggest development in travel money in recent years is currency cards. They are safer than cash and other plastic cards and more convenient than travellers’ cheques.


With just 2% of Brits over the age of 16 having used one, it’s also a huge market for growth – 31% of adults are ‘hot prospects’ to become prepaid card users.


One such card is Travelex’s Cash Passport. Once loaded, consumers can access local currencies from more than one million Visa cash machines and 18 million retailers worldwide.


If the card is lost or stolen, the funds are protected and can be replaced within 20 minutes worldwide. “Cash Passport offers agents a unique revenue opportunity as it is reloadable for three years – every time it is loaded with funds revenue is generated for the agent.


“The card has many compelling features, including a purchase fee that agents can set, and it is the only prepaid card to offer a second card free,” said O’Donovan.


Providing travel money: top tips


Look at your competitors and the local market, review how many are out there and research their pricing strategies. If it looks like a cut-throat market, think twice


Ask your customers if it is something they’d like to see you provide


Ensure you can cover any cash flow and margin movement risks. If offering an over-the-counter  – or even currency collection – service from your premises, security is key so install CCTV, safes and even bandit screens.