Demand Soars at Vacation Time : As Summer Nears, Firms Set to Cash In on Travelers Check Boom

Summer vacation often means travel, and traditionally summer is the biggest travel season in the United States. To that end, companies that serve travelers are beginning to gird themselves for the annual onslaught. A case in point: travelers checks.

Three of the world’s biggest travelers check companies have come out with announcements. Spokesmen for the three--American Express Travel Related Services, MasterCard International and Visa International--said the approach of summer was the reason the announcements were timed for late March.

“Approximately 40% of our annual sales take place in June, July and August,” said John B. Wright, president of MasterCard’s travelers check unit.

What’s new in the hotly competitive $56-billion market for travelers checks? The battle rages on two fronts.

The first line is the consumer, who should be concerned with fees, acceptability and ease of refunds. Experts said about two-thirds of the travelers checks sold in this country are sold without fees.

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Acceptance worldwide and ease of refunds are the subject of debate among the companies and the theme of various ad campaigns.

The other battlefield is the distributor, who wants to know which is the most profitable check to sell.

With the last few days, the big players announced these changes:

- American Express launched an advertising campaign for its Worldwide Refund Delivery program, which promises to hand-deliver replacements for lost or stolen American Express travelers checks anywhere in the world.

The company, the industry leader and the biggest spender on consumer advertising for the checks, says the refund can be obtained by calling one of 12 toll-free numbers from any of the 570 million telephones in the world.

- MasterCard, taking a stand on the distribution front, introduced a voluntary program in which it will invest the “float”--the money paid by customers for travelers checks that have not yet been spent--on behalf of any financial institution that sells its checks, and will pay that institution a sales commission.

Previously, the institutions had to pay MasterCard an administrative fee and invest the float themselves. Wright, the unit’s president, said many small banks and other sellers had asked for this system, which is the way American Express operates. MasterCard, an association of member banks, does not issue travelers checks itself, but licenses issuers.

- Visa announced an expanded refund network and predicted that it would outsell American Express outside the United States this year--which produced the closest thing to a snort of derision one is likely to get from the buttoned-down financial-services types at American Express. As Tom Cash, senior vice president at American Express Travel-Related Services, put it: “People can make all kinds of projections, and what they have to do is deliver on that.”

Overall, the international travelers check market is growing at 7% to 8% a year, notwithstanding the increasing acceptability of credit cards in many tourist destinations. That’s twice the rate of growth of the American travel business, according to Cash, who added that he sees travelers checks as an alternative to cash, not to credit cards.

“People still buy travelers checks,” said Spencer Nilson, publisher of the Nilson Report, a publication that tracks travelers checks and other non-cash payment systems.

“There’s a lot of people don’t want to carry their credit cards. The difference is, you can convert travelers checks to cash, and (with) bank cards you can’t always do that. There’s no substitute (for cash) for a taxicab.”