Securing your money on the go
How payments are becoming safer & more convenient for modern travellers
Before their star turn in Dan Brown’s Da Vinci Code, the Knights Templar had one significant claim to fame – they established one of the world's first private banks.
The secretive, religious "warrior monks" were committed to defending Christian pilgrims travelling to Jerusalem during the Crusades. So they created a system of credit that allowed travellers to leave their "cash" at the Temple Church in London and withdraw it in Jerusalem.
“We actually don’t know how the Templars made the system work and protected themselves against fraud,” writes Tim Harford in Fifty Things That Made the Modern Economy. The Knights Templar, Harford argues,“ were the Western Union of the Crusades”.
In many ways, today’s wanderers face the same kind of issues the Crusaders did – how to safely access their funds while travelling overseas. Modern bank services and credit card features have come a long way in a short time, of course. The first Bankcard wasn’t available in Australia until 1974 and cards like it couldn’t be used overseas until the 1980s. Lightning-fast technology and fraud detection systems now make financial transactions easy, in just about every outpost in the world.
Banks are looking for better ways to give their customers faster, safer and easier access to their cash while travelling for business or pleasure overseas. In the future, we can expect the broader use of contactless and wearable technologies to make transactions easier.
Customers may soon be able to buy anything from shops anywhere in the world without speaking to salespeople or queuing for cashiers, as they can now at Amazon Go.
Like Brown’s hero Robert Langdon, banks and credit providers are searching for any clues that reveal the future of foreign financial transactions. The first thing they do is ask their customers what they want.
"It's always a fine balance between security and convenience.”
Gary Wong, Senior Product Manager for Deposits, Retail Banking, at HSBC Australia, says his organisation carries out intensive qualitative and quantitative research to determine what features customers require from their everyday account while overseas. He said he spent weeks on the other side of a double-sided mirror listening to customers debate what features they would like to see.
“In the focus groups, everyone was talking about security,” he says. “They were trying to balance that with the need to travel with lots of cash [because] overseas ATM fees are a sticking point for an everyday account. It's always a fine balance between security and convenience.”
Wong says many customers, especially those using prepaid travel cards, complained about the uncertainty of currency conversion costs. "They wanted control over when they do the foreign exchange conversion," he says. “It’s why, for instance, the HSBC Everyday Global Account allows customers to exchange currencies online before they leave home or use the local currency when they buy something overseas, automatically converting from Australian dollars. It was designed based on these customer insights combined with the strong appeal of no overseas ATM and transaction fees.”
Fees and currency charges are always top of mind for UK-born Paul Guy. He travels for months at a time to the world’s most remote regions, including Nepal and Guatemala. "I tend to use cash, getting money out of my domestic account via ATMs," Guy says. "This can cost hundreds of dollars in fees because you're getting a double hit – once on the exchange and once on the ATM itself.
“If those transaction fees could be reduced that would be a big difference because they add quite a bit to my travel expenses.”
Guy says card security concerns him. "I've had situations when my credit card has been declined for security reasons and to get that cleared can be a real hassle," he says. "Obviously it's protecting me, but it can limit what I can do."
What might persuade him to use a card instead of cash? “An EFTPOS-style function would be a dream situation – a universally accepted card without the fees. No extra charges whatsoever, anywhere.”
“Paying for travel cards seems a bit backward, especially when you have to pay the currency conversion.”
Sydney-based Joanna Meads has travelled extensively through Asia, especially Cambodia. She also prefers dealing in cash, but this is not out of choice. “In an ideal world I’d rather not carry cash around, especially the volume of cash you might have depending on how long you’re going for,” Meads says. “You’re always worried about losing it. Then I come back to Australia and have a whole drawer of different currencies, especially coins that never get used.”
Meads is unsure she would ever use preloaded travel cards. “Paying for travel cards seems a bit backward, especially when you have to pay the currency conversion,” she says. “You would think the banks would do it automatically.”
Meads foresees a time very soon when smartphones and wearable technology will be how we make transactions across the world via services such as Apple Pay or Google Wallet. “Really, now my phone is my wallet.”
HSBC’s Wong says research shows customers prefer to do their banking through connected devices. “Banking is conducted traditionally through a card – even when you provision your card, you still need it there,” he says. “I think the way of the future might be that you just get sent your card straight to your phone, as long as there's a secure and efficient method of doing so. We are always looking for ways to further improve and enhance the user experience.”
It sounds like bank customers will enjoy easier future crusades.
This article was first published as a commercial feature on bbc.com (http://www.bbc.com/storyworks/capital/borderless-banking/what-does-the-best-overseas-banking-service-look-like-to-you) and was created by BBC StoryWorks, BBC Advertising’s commercial content division, on behalf of HSBC Bank Australia Limited.