Taking a prepaid card loaded with currency on holiday is hardly a new idea – but to Brian Jamieson and his team at Centtrip it didn’t seem fair on the customer that they are forced to pay a markup on every transaction where currency is exchanged. Utilising their background in foreign exchange, they set out to do things in a more transparent way to get a better deal for the modern day traveller.
Having spoken to credit card giants Mastercard and won their approval to do things their way, Brian set about launching a card with fourteen different currencies available on it – but with a backing behind it of an online account which would allow customers to exchange money at interbank rates. How does a startup company disrupt the long-established huge companies that rule the financial markets?
What’s your background before you founded Centtrip?
Brian: My partner Tony North and I were co-founders amongst a group of other people of a corporate deliverable foreign exchange company called Schneider Foreign Exchange. We set that company up in 2006 in the City – sort of a similar story actually - when we were set up, we were laughed at because we had gone into the FX world which was pretty much monopolized by the banks and we set up with a group of five people in a small room. We literally started with one banking line and no clients and over the course of the next six years turned into a team of seventy people. We had a turnover of $15billion per year at the end, we had phenomenal growth year on year and in 2012 we were bought by Banca Monex.
After turning over so much money in a company like that, what made you go into pre-paid cards?
Brian: Four or five years ago I looked at the sector. Because we were so vanilla at Schneider, because we were doing really well and continued to do so we thought what else could we do; what could we do different and the prepaid sector caught my eye because there was an FX element to it. At the start I spoke to Mastercard, I spoke to Visa, just to get information really; they put me into a couple of companies around the city - around the country actually - when I went out to meet them, asked them what they were doing but the timing wasn’t right for us as a business because you know, we had our business, but I always maintained an interest in it, I watched it as a sector because you could see there was real growth in it there was more and more prominent; Mastercard as an organization have really really got behind it, they have embraced it as a product and so I said to Tony let’s do it, let’s make a card that really, really makes a difference, let’s challenge the payment card sector.
How does your card challenge the banks, the financial institutions?
Brian: When we looked at doing it, I wanted to create a card that was really meaningful, was really customer-centric. You are only a disrupter if you genuinely disrupt something – if you do something not just for the sake of trying to do something different, but because it actually means something to change it, it actually makes something better and provokes change in others. We could have took an easy route out - made a card that has more currencies than anyone else has got, and charge margin and spread like everyone else just charge a little bit less. But then, we’d have changed nothing.
So we looked at it, let’s turn it on its head. If I’ve got a card and I travel, what would I want? I would want a card with more than one currency on it because when I travel from place to place I just want the convenience of one card in my wallet. I want that card to have real currency on it so if I’m in America I want real dollars – I don’t want a sterling card that has been converted into dollars, I want dollars, I want to know I’ve got dollars so when I take money out of the wall I know I’m spending my money. I’ve got all the convenience of cash but none of the risks. Then you’ve got all of this, and how would it work?
Tony is like my little maverick thinker - he said we won’t charge for the foreign exchange. It was a great idea, we sat there and said it’s perfect, we’ve got a card that’s got more than one currency on, we’ll give them an online account that they can keep money in, that’s like a bank account – it’s safe and secure, because it’s in a clients trust account with Barclays. Then it was how many dollars you get for your pound. Tony said if we give them the rate that the market’s giving – the interbank rate - free of any markups, free of any commissions and spreads, you’re unbeatable.
So where do you make money?
Brian: If it’s going to be all about the customer then it needs to be completely fair. As a customer I would just want to know what I’m paying, I would want transparency. We came up with the idea we would charge an annual fee for the account. We’ll offer money at interbank rates - the best rate possible - but you’re going to pay this much up front every year. We also charge for ATM withdrawals – other companies say it’s free to withdraw money but I don’t agree with that statement. They might not charge you for the cash withdrawal, but they absolutely charge you for the currency conversion so it’s not free, is it?
Let’s say “Company A” don’t charge you for the physical act of taking the money out of the ATM, but they will charge to you to convert your £100 you’re withdrawing from your account. Let’s say they charge 2% for the conversion - it’s £2. With our card, you take your dollars, or your euros out, there is no currency conversion charge and we charge you £1.60 – 40p better than them. If I take £200 out, they’re £4 – we’re still £1.60.
How have you targeted your audience?
Brian: We had to find our niche - we had to find a target and our target was those who are most exposed to foreign exchange because they are the people who travel the most, who spend the most therefore they need it the most. We do recognize that there is also a mass-market of everyday people who travel as much, and to some extent because they have that one holiday a year with their children, it’s a big event for them - every penny counts - so in actual fact they’re probably more important as a customer but they are also in some respects the harder target in the beginning because they are such a big audience that everyone is after them. What we recognized very quickly is that if we had a card with a £3000 limit on it – it would only cost £15 – which is reasonable, maybe then when you thought about it the guy who is taking his family away we’re saving them the cost of at least one big family meal – but that’s down the line.
What piece of advice would you offer to other startups?
Brian: I think you need to be honest with yourself first – I think a good idea isn’t always a good idea; you really need to spend the time to research what it is what you’re going to do. It’s not good enough to have a belief you need to prove it somewhere, you need to research it, that it does have a place, that there is a market for it, that the pricing structure you’ve put to it that it makes sense – and then absolutely, most crucially, surround yourself with people who have the same energy you have for that idea people, who are going to have the passion to drive it through. To quote Stephen Covey, the main thing is to keep the main thing the main thing.