Forex Prepaid Card Market Assessment, By Card Type [Physical Card, Virtual Card], By Currency [Single-currency Cards, Multi-currency Cards], By End-user [Corporate, Consumer, Travel, Business], By Loading method [Prepaid Cards, Reloadable Cards], By Chip

Forex Prepaid Card Market Assessment, By Card Type [Physical Card, Virtual Card], By Currency [Single-currency Cards, Multi-currency Cards], By End-user [Corporate, Consumer, Travel, Business], By Loading method [Prepaid Cards, Reloadable Cards], By Chip Type [Contactless Type, Europay, Mastercard, and Visa Type], By Region, Opportunities and Forecast, 2017-2031F

Global forex prepaid card market is projected to witness a CAGR of 12.46% during the forecast period 2024-2031, growing from USD 115.85 billion in 2023 to USD 296.40 billion in 2031. Due to rising globalization at higher speeds, along with higher e-commerce activities, remarkable growth is expected in the forex prepaid card market in the forecast years. As forex prepaid cards extend an efficient, flexible, and secure mode of cross-border transactions and online payments, they are therefore highly sought after by frequent travelers and businesspeople. Card issuers should consider partnering with online marketplaces, travel agencies, and remittance services to capitalize on the growing demand for forex prepaid cards. These partnerships could help widen the consumer base and diversify the services on offer.

Forex prepaid cards have emerged as a popular option among international travelers, turning from a simple store of value into a multifunctional financial tool. It includes added functionality in the form of loyalty rewards, card controls, expense management, and budgeting features, thus signaling their growing applicability to a broader range of traveler needs.

In June 2023, The Reserve Bank of India (RBI) gave the go-ahead to banks in India to issue RuPay prepaid forex cards for use at ATMs, point of sale (PoS) machines, and online merchants overseas. The move, announced during the RBI Monetary Policy Committee (MPC) meeting, aims to increase the scope of accessibility and acceptance of RuPay cards worldwide.

Globalization and Tourism Driving the Market Growth

Globalization has significantly increased international travel across multiple sectors. Within the business domain, companies are broadening their operations globally, leading to a notable increase in business-related trips. Furthermore, educational aspirations are playing a crucial role in this growth as students endeavor to pursue higher education opportunities overseas, which necessitates regular international travel.

Moreover, an escalation in disposable income, coupled with a desire to immerse in new cultures, has resulted in a rise in leisure travel. Increased global mobility has created demand for handy and safe financial tools, such as forex prepaid cards. Preloaded with multiple currencies, these cards are highly efficient for travelers visiting a few places. Forex prepaid cards offer a set of advantages in terms of convenience and safety. Carrying large amounts in cash is dangerous, however forex prepaid cards reduce vulnerability due to several built-in safety features. Transactions are made using a PIN, and these cards can be quickly blocked in case of loss or theft. They are not linked directly to the user's bank account either, reducing the possibility of fraud. Altogether, these make forex prepaid cards an option that is safer than cash and traditional credit and debit cards.

Apart from these benefits, forex prepaid cards enjoy a wide acceptance worldwide. They can be used at millions of outlets globally, wherever a major card network, such as Visa or Mastercard operates, and travelers are allowed to withdraw local currencies through ATMs, offering them both flexibility and choice. This wide acceptance ensures seamless access to funds, thus making the travel experience smooth and helping to increase the forex prepaid card market.

For instance, in the first half of 2024, the American Express Gold Card offers a limited-time promotion designed to attract new cardholders. Those who signed up by 11 June 2024 and spend USD 6,000 on eligible purchases within the first six months can earn 60,000 Membership Rewards Points. Additionally, new cardholders will receive 20% back in statement credits on eligible restaurant purchases made worldwide during the first six months, up to a maximum of USD 100 back.

Shift to Cashless Payments is Fueling Growth

The growing demand for cashless alternatives is one of the major factors driving the growth of the forex prepaid card market. Forex cards offer a convenient and affordable way to carry money while traveling abroad, with no need to handle large amounts in cash, thereby reducing stress related to finding an ATM or a bank during a trip. Due to the increase in cashless and contactless transaction modes, these cards have drawn millennials and Gen-Z people towards themselves, as they help in smooth electronic transactions, thus seamless travel experiences. Forex cards ensure transparency with monthly statements and help in managing expenses. Features such as PIN protection, chip, and PIN technology, and blocking of the card in case it gets lost or stolen make Forex cards more secure compared with carrying cash. This is believed to serve as a source for further growth within the Forex prepaid card market since people increasingly shift toward cashless payments in search of more security and handiness. Overall, the trend toward cashless transactions and the practical benefits of Forex cards are key to growing popularity and market penetration.

For instance, in February 2024, the volume of cashless payments increased remarkably in 2022 due to the continued rise in digital payments. The average yearly number of cashless payments per capita grew from 426 to 468 (+10%) for advanced economies (AEs) and from 246 to 291 (+18%) in emerging market and developing economies (EMDEs).

EMV Forex Prepaid Cards to be Used More Widely

The most widely used chip type in forex prepaid cards is the Europay, Mastercard, and Visa (EMV) chip. EMV technology is a global standard for card payments and is known for its enhanced security features. It provides better protection against fraud by generating a unique transaction code for each purchase, making it difficult for unauthorized parties to replicate or clone the card. While contactless payments (using Near Field Communication or NFC technology) are becoming increasingly popular due to their convenience, they often rely on the underlying EMV technology for security. Therefore, EMV chips are the foundational technology for both contact and contactless card transactions.

For instance, in June 2024, Mastercard and Payment24 collaborated to boost EMV adoption in Eastern Europe, Middle East, and Africa’s fleet sector. Through the partnership, customers can take advantage of an end-to-end fleet management solution to help them rapidly deploy and scale their own secure fleet and fuel payment offerings.

North America Dominates Forex Prepaid Card Market Share

In 2023, North America was leading the market due to increased consumer spending on travel and a strong financial infrastructure that supported the forex prepaid card market. This region holds an important position mainly due to a significant potential for banks and forex prepaid card issuers existing for partnerships with travel companies for customized financial solutions to enhance the consumer experience. With the growing expenditures towards travel, North American issuers have begun the adoption of AI and other advanced technologies to offer seamless onboarding to customers. This innovation addresses the regulatory needs of organizations while simultaneously addressing increasing demands from cardholders for a quicker and smoother onboarding experience. The market's leading position is further driven by the presence of major financial hubs and the high adoption of digital payment solution services.

For instance, in June 2024, Canadian fintech company Nuvei Corporation partnered with Visa to offer Visa Direct in Colombia. Visa Direct is a VisaNet processing capability that allows safe, convenient, near real-time funds delivery directly to financial accounts using card credentials. Visa Direct clients use the capability to enable use cases such as person-to-person (P2P) payments, funds disbursements, bill pay, or cross border remittances directly to an eligible debit or prepaid card.

Meanwhile, Asia-Pacific has grown to be the fastest-growing market for forex prepaid cards. This fast growth is, in turn, aided by the growth in the tourism industry and a rise in consumers' disposable income in countries such as India and China. While more people and businesses in such emerging economies are looking for ways to effectively find flexible financial tools, the demand for forex prepaid cards is rising.

Future Market Scenario (2024 – 2031F)

Technological Advancements such as blockchain, machine learning, and innovations in mobile applications and digital payment solutions are making forex prepaid cards more user-friendly and accessible.

Forex prepaid cards at present offer better exchange rates compared to traditional currency exchange services, which makes them a cost-effective option for travelers.

The growing demand for cashless alternatives will continue to drive the growth of the forex prepaid card market.

The Forex prepaid card market will grow at a faster pace in Asia-Pacific due to the rise in the tourism industry and consumers’ disposable income in emerging economies.

Key Players Landscape and Outlook

The competitive nature of the forex prepaid card market is characterized by aggressive rivalry, where every provider tries to present the most attractive feature to the users. Competitive or low exchange rates and no transaction and ATM withdrawal fees are at the core of the competition in the forex prepaid card market, strongly appealing to travelers who seek to minimize their expenses. Some of the emerging technologies that develop forex prepaid cards for high-class security and functionality include blockchain, artificial intelligence, and machine learning. With advanced technologies, the card provides the ability to detect fraud and avail personalized services and smoother transactions. The forex prepaid card market is hence competitive, with continuous innovation and aspiring toward cost-effective and secure international finance management solutions.

In July 2024, ICICI Bank launched Student Sapphiro Forex Card, a forex prepaid card specifically for students going abroad for higher education. The card, powered by Visa, offers benefits and convenience to students and their parents to manage education related expenses abroad such as admission fees, course-related fees and other day-to-day expenses including travel, dining, and groceries.

In July 2024, Thomas Cook (India) Limited, India’s omnichannel forex services company has partnered with National Payments Corporation of India (NPCI), to launch its first RuPay prepaid forex card for Indian travelers visiting UAE, being enabled by NPCI Certified Partner, CARD91.