At the recent ESTA (European Security Transport Association) conference in Spain, the ChangeGroup[1] CEO Sacha Zackariya explained why international travel was an important driver for cashMoney in physical form such as banknotes and coins. More demand.
Firstly, international tourism represents a sizeable chunk of the global economy. According to the World Tourism Organisation (WTO), international tourism in 2014 represents:
- 9% of GDP
- 1 in 11 jobs worldwide
- 1.1 billion tourists
- $ 1.5 trillion in exports
- 6% of world exports.
Secondly, many of the top-ranking countries, both in terms of outgoing and incoming tourists, are viewed as cash intensive. According to MasterCard Advisors, 85% of transactions in these markets are settled in cash. In the case of international travel, there is a demultiplying effect: a tourist from a cash-intensive country will likely pay in cash because he is accustomed to do so, regardless of the destination; a tourist travelling to a cash-intensive destination will also likely use cash, regardless of his origin, because the acceptance of non-cash paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More instruments is limited.
|
International Tourism Expenditure |
International Tourism Receipts |
|||||
|
Rank |
Country |
$ billion |
Rank |
Country |
$ billion |
|
| 1 | China |
165 |
1 | United States |
177 |
|
| 2 | United States |
111 |
2 | Spain |
65 |
|
| 3 | Germany |
92 |
3 | China |
57 |
|
| 4 | United Kingdom |
58 |
4 | France |
55 |
|
| 5 | Russian Federation |
50 |
5 | Macao (China) |
51 |
|
| 6 | France |
48 |
6 | Italy |
46 |
|
| 7 | Canada |
34 |
7 | United Kingdom |
45 |
|
| 8 | Italy |
29 |
8 | Germany |
43 |
|
| 9 | Australia |
26 |
9 | Thailand |
38 |
|
| 10 | Brazil |
26 |
10 | Hong Kong (China) |
38 |
|
Source: World Tourism Organisation and MasterCard Advisors.The countries in green are the ‘cash-intensive’ countries.
Top ten countries in terms of international tourism and expenditure. The countries in green are the ‘cash-intensive’ countries.
Thirdly, this is a growing market. The WTO forecasts that the number of international tourists will increase by 3.3% a year over the period 2010-2030. This represents an additional 43 million persons per year. At this rate, the number of international tourist arrivals is expected to reach 1.4 billion by 2020 and 1.8 billion by 2030!
So, international travel is growing. But why do travellers rely particularly on cash. They use cash for the same reasons they would use it for domestic transactions. But Sacha Zackariya emphasizes additional factors.
Security is top of his list. When they are overseas, consumers are particularly wary of risks associated with card use, including identity theft, card cloning, card confiscation and privacy concerns. The poor exchangeThe Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro. More rates or lack of transparency on exchange rates is another factor. Cash also enables travellers to better control their budget and avoid the risk of transactions being denied if they overspend.
As the holiday season is getting nearer in the northern hemisphere, holidaymakers are making plans to buy travel moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More. In the case of the United Kingdom, the EU referendum scheduled on 23 June, is creating an additional currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More risk and according to the BBC, foreign exchange firms are seeing increased activity.
[1] ChangeGroup is one of the world’s leading providers of foreign currency and tourist services to the international traveller. The first bureau de changeThis is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. More was opened in London’s Regent Street back in April 1992; ChangeGroup has progressively grown and currently has operations in 11 countries and 23 cities across Europe, North America and Asia Pacific and continues to expand.