- The traveler segment represents an opportunity to offer very profitable financial products and services
- More than 50% of Latin American tourists have an average of $4,000 per year for their trips
The thriving tourism industry presents a unique opportunity for banks and financial technology companies to meet the specific financial needs of travelers.
With rising disposable income and a growing middle class, tourism is on the rise again in Latin America.
According to a study by Travel2Latam and Americas Market Intelligence, 53% of Latin American travelers have a budget of $4,000 per year to spend on their trips.
80% of these expenses are paid in advance and the rest with credit cards
49% of Latin American travelers use online travel agencies to pay for their trips, 40% use airline websites, 38% use hotel chains, and 28% use social networks, an additional example of the social commerce trend
This increase demands innovative financial solutions that address the unique challenges faced by tourists. Frequent complaints from tourists about their financial tools are that payment systems can have high fees for foreign transactions, limited access to ATMs, and the hassle and risk of being forced to carry large amounts of cash.
Travelers in Latin America require a combination of features that include:
- Hassle-free cross-border transactions
- Minimize foreign transaction fees through partnerships or multicurrency accounts.
- Secure and accessible cash access
- Expand ATM networks and offer alternative withdrawal options such as mobile wallets.
- Real-time exchange rates
- Transparent currency conversion to avoid hidden charges.
- Budget management tools
- Expense trackers and budgeting apps tailored to travel expenses.
- Travel prepaid cards
- Reloadable cards with fixed exchange rates that offer budget control and eliminate the risk of carrying cash.
- Travel-friendly debit cards
- Banks are issuing cards with reduced foreign transaction fees and access to a wider network of ATMs.
Several Latin American companies are at the forefront of providing travel-focused financial solutions. For example, Nubank offers a digital banking platform with competitive currency exchange rates and international money transfers.
RappiPay (in Colombia) is a mobile wallet that facilitates cross-border payments and instant currency exchange within the app. Ualá provides a multicurrency debit card with no foreign transaction fees and ATM access in over 190 countries.
Adding to marketing strategies
Many people are not aware that they need to take some steps with their financial tools when traveling abroad. It is very common for inexperienced travelers to end up with their cards blocked for not taking the necessary precautions before leaving.
Therefore, with the proper segmentation, it is an opportunity for banks to educate customers through social media channels and email campaigns:
- Protect credit and debit cards by informing the bank of the trip
- Inform if the bank has agreements with ATMs abroad
In the world
Last year we reported in Frecuencia Money that Unionpay and Pecunpay launched the UnionPay card, which provides a payment solution for European tourists visiting China.
The benefits of the always disruptive neobank Revolut deserve a separate chapter. For travelers, it offers commission-free withdrawals at an infinite number of ATMs and the possibility of using the Revolut card in more than 150 currencies.
For frequent travelers, with a premium plan they can access accident insurance, coverage for travel delay expenses, cancellation and interruption protection, coverage for delayed baggage, lost or damaged baggage protection and discounted airport lounge access. Paid plan holders can also make more free international transfers and have a higher limit for commission-free currency exchange.