Opting to buy foreign currency traditionally at airport kiosks has various disadvantages, whereas many digital solutions are now available with less or no disadvantages at all.
By Salil Datar
Vacations are for a break! Vacations are opted for one to relax and not to take up hassles for planning the same. You hardly get any time to take a leave or take your whole family for a world tour. But when you get the chance to explore the world, the first thing that comes to your mind is Visa processes followed by requirement of foreign currency.
While you could make all your purchases with a credit or debit card, you end up wasting too much money on processing fees. One could avoid this by exchanging currency and carrying around cash. Opting to buy foreign currency traditionally at airport kiosks has various disadvantages, whereas many digital solutions are now available with less or no disadvantages at all.
Disadvantages of traditional methods of currency exchange
Travellers should avoid any kind of currency exchange kiosks which are at airports since these forex brokers provide services with additional fees, commissions and charges that can be avoided on opting for digital methods. Brokers also know that travellers are crossing the border and thus take advantage of the same.
Another disadvantage of the traditional way of exchange is limited number of transactions. How many times would a person prefer to leave the time on his vacation in order to make sure he has enough money? Hence, one gets it exchanged in bulk and then spends his vacation with a fear of theft of cash, therefore not being able to enjoy his time. If not, he spends half of his vacation getting it exchanged multiple times since carrying a lot of cash could be dangerous due to unavailability of security measures. When carrying a card, one has to secure it with a PIN, unlike when carrying cash around an unknown country. Locating a foreign exchange office too becomes a troublesome task.
Banks for Exchange
One may go to a bank for money transfer. When using banks to exchange money overseas, one should be aware of all the charges and compare these charges with other options. Most banks will charge you transfer fees which would include a commission as well as the exchange rates. It is possible for some of these charges to be hidden and once one encounters these hidden charges, you will find the overall cost for your transfer to have risen significantly from what you had initially expected. In most instances, it is found that the other options add considerable value and convenience too!
Transparency is another key distinction between the banks and forex brokers. Unlike the banks, online exchange provides clients with the latest exchange rates on a daily basis so that customers can take advantage of positive changes on a real time basis. This proactive and transparent approach contributes significantly in further reducing the costs of international money transfers. Banks, on the other hand, only update their rates at their own convenience and don’t consider how harmful fluctuations of foreign currency can affect customers.
It is difficult to comprehend why traveller’s cheques are still billed as a convenient way to carry funds for travel. They isn’t widely accepted anymore. One has to pay the commission twice, once when issuing it and then on submitting it in order to receive cash. Although these cheques can be replaced if stolen, but the process for the same is highly complicated and time consuming.
Pre-Paid Forex solutions and their advantages
Followers for digital foreign exchange processes are on a hike. It offers quicker and more secure choices to exchange foreign currency. Don’t let money worries dominate your international tours. Forex Cards are accepted at over 20 million Visa / Master Card Merchant outlets worldwide. It provides with 24-hour access to cash at over 10 lakhs ATM’s across the globe with a benefit of reloading any time. It provides with enhanced security through 4 – digit secures PIN to authorize all ATM transactions. In addition to being available in different currencies with unlimited number of transactions, one has the option to issue an add-on card too! Thus, following are the advantages of using a prepaid forex card for currency exchange:
1) Widely accepted
These cards are accepted everywhere, even in taxis! It provides you with multi-currency convenience. It does not make sense to fill your pursue with different currencies.
2) Safe to carry
From a security point of view, card abolishes the risk of losing money in case of theft or loss of wallet. It has a PIN and just like a credit/debit card, you can get the prepaid card also hot-listed in case of loss of card. A secondary card may also be activated by a simple call in case the first card is hot-listed.
3) Hedge against currency fluctuation
A Prepaid Forex Card protects a customer from currency fluctuation volatility. The value of the forex amount loaded is determined based on the exchange rate of the day which remains fixed. So the forex value can be uploaded on the prepaid card in advance when forex rates are favourable.
4) Cheaper than buying currency
It is always cheaper to buy a prepaid card than buying foreign currency for a bank due to hidden processing and conversion charges.
On a customer’s return to India, customer can choose to have the unspent amount on the Forex card reimbursed in Indian rupees. After the forex refund request format is shared with the customer, he is required to fill in the details and send it back for initiating the refund.
Forex Card Vs. Credit Card
Using your credit or debit card abroad can expose one’s bank account to fraud. Since a Pre-paid forex card comes loaded with a fixed amount, and is not linked to either your credit card or bank account, it completely eliminates this risk. Additionally, a Forex card offers a transaction fee versus high Credit card and Debit card transaction rates which can go up to 3.5%
The Better Way Forward
Depending on your destination, you might have to pay a lot of money in order to exchange currency. One of the cheapest ways to get foreign currency is through prepaid forex card. You’ll likely get stuck paying a very high processing fees if you exchange currency at the airport or banks.
A pre-paid forex card also helps getting away from the risk of constantly fluctuating exchange rates. If one wants the best value for dollars, it’s a good idea to pay close attention to what’s happening in the market.
(The author is CEO of Essel Forex)