American Express Foreign Exchange have just launched their GlobalTravel Card in South Africa and Managing Director Andrew McDonic joined me for a chat at their local offices in Rivonia, Johannesburg, to give me more on the new product and to discuss the travel spending trends of the modern age.
It’s a risky business, this foreign exchange stuff. You make forecasts and do your budgeting according to what you think the Rand or the Dollar might do in the future. But really, you’re in the hands of factors beyond your control. That being said, Andrew McDonic doesn’t look like a man who has sleepless nights, although perhaps that grey hair wasn’t there a few months ago?
Foreign exchange is what we’re talking and I’m interested in how people’s travel spending habits have changed over the years.
“Traveller’s cheques have been around for hundreds of years and they’ve slowly started to die off,” says McDonic. “But, there’s still a fair amount of usage among the older generation. Also, as exchange controls have lined up, it’s easier to take money and put it into your personal bank accounts, as people did for years illegally. Travellers cheques are still quite a good way of doing that and there’s still a market for them, but what has happened worldwide is the prepaid card, and that is going to take over.”
Whilst Amex have had products on the market, McDonic admits that they’ve been a little slow, when compared with their competition.
“We’ve had the product offering there, but we haven’t aggressively pursued it. One of the reasons that we’ve been slow is because there was going to be something developed and this developing went on for three, four years. In fact, we did launch a card in the UK which was actually pulled, and then about a year ago we launched this prepaid card in Brazil and Australia. South Africa’s the next market and in the meantime it’s going into India, China and Europe. So, it’s actually gained a bit of global traction.”
But one area where it’s not likely to gain traction anytime soon, is Africa, where cash is still king.
“Africa is still quite primitive,” says McDonic. “Our biggest selling products still in the forex business in South Africa is notes, which we sell a hell of a lot of. You travel into Ghana, for example, and it’s still dollar-based. You need to know what the exchange rates are, otherwise you get ripped off.”
What about the other competitors to foreign exchange?
“The credit card is the other option, but not if you’re travelling into the rest of Africa. I think you should always take a certain amount of cash, but even with the credit card, you’ll get charged 5, 6, 7% and you’ll only find out afterwards when they klap you! So, credit card is a very inefficient way of travelling, although it is easier, and maybe that’s why there’s still a lot of corporate travel that happens on credit card.”
Some food for thought – particularly if you have one eye on your travel spend and are looking at ways of tightening the belt.