Academic journal article ABA Banking Journal

CAB Deal Let's Banks in on E-Payments

Academic journal article ABA Banking Journal

CAB Deal Let's Banks in on E-Payments

Article excerpt

There was a time when traveler's checks were the business to be in. American Express, Thomas Cook, Barclays, and Citigroup were all long-time issuers of traveler's checks. Then Visa and MasterCard entered the fray with their lines of paper checks.

Plenty of checks are still issued worldwide, but traveler's check volume has been declining about 15% a year for the past five years--even more steeply in the U.S., according to Tom Tucker, senior vice-president, Travelex Currency Services, Inc., a foreign exchange company which is also an issuer of Visa traveler's checks. Credit cards, debit cards, and widespread access to automated teller machines made it less necessary for traveler's to carry cash, or consequently, to need traveler's checks to avoid the risk of carrying a lot of cash.

Retail sales of paper traveler's checks was always something of an administrative headache. Being a service needed only intermittently, it usually required a teller to leave their usual station to handle the transaction. Dual controls were required on the checks, which were like cash.

On top of all this, low interest rates in recent years have reduced the income on the float from traveler's checks, making them, in many cases a net cost item for issuers.

Recently, prepaid debit cards have appeared as plastic alternatives to paper traveler's checks. Travelex issues such a card for the American Automobile Association and for several large banks, including Citibank.

In February, ABA announced a partnership with Travelex to offer three card products plus traveler's checks to ABA members. Travelex was endorsed by the association's Corporation for American Banking. The three card products are the Visa TravelMoney Card, Visa Gift Card, and Visa Money Transfer Card.

The TravelMoney card is a reloadable debit card that can be used anywhere a Visa debit card is accepted and at over 900,000 Visa affiliated ATMs. The card is not linked to either a credit or checking account and so protects users against identity theft. It is both PIN and signature protected and if lost or stolen, the remaining value is replaced by Travelex, just the way customers are covered if their traveler's checks are lost or stolen. …

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