I use Nationwide Select Credit Card for foreign currency purchases, and Nationwide Flex Plus (best paid current accounts out there) for cash withdrawals when abroad. So for that reason, I'm out:-)

Let me tell you guys what I know about payment transactions and FX rates, some might find it very interesting.

There are three main parties who take a small chunk of the money you pay to the retailer - the payment processor (normally a subsidiary of a financial institution, a familiar example would be iZettle), Visa, and the card issuing bank. There may be multiple payment processors involved in a given transaction. For the sake of simplicity, I'll describe the below assuming there is just one payment processor.

In a normal UK GBP transaction, the retailer is charged 0.5% - 2% of the transaction cost by the payment processor depending on the negotiation between the two. Visa then charges anywhere between 30% - 50% of this transaction cost to the payment processor to transfer the money from the credit/debit card to the retailers account. A small but fixed amount (generally a few pennies) is paid to the card issuing bank. Consider an example. You buy a £1000 tele from Amazon.co.uk with your Visa card. Since Amazon.co.uk is a large retailer, their payment processor would charge them 0.5% fees = £5 to facilitate this payment. The payment processor will then pay, say 30% of this fee to Visa, 30% of £5 = £1.50. Visa then pays a fixed cost to you card issuing bank, say 5p.

When FX comes into picture, Visa adds a nominal 1% - 3% on top of the wholesale FX rate (this is your the exchange rate quoted on Visa's website) The payment processor still gets the same cut, but the cut for Visa and the issuing bank increases. To give an example, you buy a tele from Amazon.de for €1400. Again, since Amazon.de is a large retailer, their payment processor will charge a small fee or 0.5% = €7. Again, 30% of this fee goes to Visa, i.e 30% of €7 = €2.10. Your issuing bank still gets paid a higher fixed charge of 10p by Visa for helping facilitate an FX transfer. Say the wholesale € to £ rate is 1.401. Visa charges your issuing bank a rate of 1.400, taking a small cut (I'll explain the cut later). If your issuing bank doesn't charge any FX fees, it charges you €1400/1.4 = £1000 for the transaction. If your issuing bank charges a fee (say 2.5%, which is largely the norm), it bumps up the FX rate in its favour by 2.5%, i.e. 1.4 - (2.5% of 1.4) = 1.365, and charges you €1400/1.365 = £1025.64, pocketing the £25.64.

As for the money Visa makes in FX transactions, in the above example, Visa gets £1000 from your bank and has to transfer €1400 (minus costs) to the retailers account. Visa buys €1400 from the wholesale market at a rate of 1.401 paying in £. So Visa pays €1400/1.401 = £999.29. So now it pocketed £1000 - £999.29 = £0.71 as FX fees.

Now let's come to the matter at hand - the Supercard. This is all speculation since I don't know of a similar model that exists (paypal is different since it is its own payment processor). It might be the case that TravelEx, who is the issuing bank, has negotiated a better deal with Visa for these transactions (think about it, TravelEx is a huge FX broker, I am sure it has sorted out some deal with Visa to take a cut of the transaction fees that Visa makes, and in return provide a favourable wholesale rate to Visa?). The credit/debit card issuing bank gets paid as per a normal UK GBP transaction.

If my understanding is correct, looks like this model might be sustainable and other FX brokers (ICE, etc) will be coming up with similar models.

Hot Deal!

I'm sorry sir, we only take landscape cards here

Will UK banks charge for the debit transaction? That's the key. For example you can walk into a travel agent, buy currency, have your debit card debited in sterling and some banks charge you.

Will UK banks charge for the debit transaction? That's the key. For example you can walk into a travel agent, buy currency, have your debit card debited in sterling and some banks charge you.

Looks promising. Would be good to have Visa alternative to my Halifax Clarity reward card.
I imagine if you link it to a Credit card and use it for ATM withdrawal you ought to get it interest free too.

and like paypal with give you a poor exchange rate to make them some money. Link to engadget

Does sound really good, signed up for the launch.....just wondering how they make any money off this. Maybe they skim a bit of the bank vs retail FX rate? Anyway sounds like a useful travel card,

Cheers OP

Not like PayPal, it says they charge the Visa exchange rate which means they won't be making any margin on the FX. Seems a good deal to me.

I've been pondering on this for nearly an hour and I still can't see the catch!!! Apart from the fact it's Travelex!

Limited amount of cards for free - might as well apply anyway

I'm sure there will be a catch somewhere ,possibly Exchange rates -but bears examination - A Tentative "Hot" from me -must look into it when I have the time .