How Does Forex Card Work – Although using a forex card is convenient, understand the fees, advantages and disadvantages before using them. Photo: AFP 5 min read. Updated: August 2, 2018, 12:44 IST Sheikh Zoeb Saleem
Carrying cash when traveling abroad, whether for vacation, business or as a student, is always difficult: you never know how much is enough. Carrying too much cash can be unsafe, and having too little can lock you out. Having a credit or debit card doesn’t mean that using them can increase your total travel bill – you can’t be sure how much they charge and the currency conversion rate at the time of a transaction.
How Does Forex Card Work
Another option is the forex card, which can be used for all electronic transactions and even ATM withdrawals. These are prepaid cards that allow you to shop in the local currency without the risk of exchange rate fluctuations. Although single currency cards have been around for quite some time, over the years most banks and travel companies have also introduced multi-currency cards.
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Banks or travel companies usually charge a similar fee for issuing currency cards and loading/unloading foreign currency on the card.
For example, Axis Bank Limited charges INR 300 plus VAT for issuing currency cards in single or multiple currencies. “Then there is a surcharge on the exchange rate that the bank charges when you load your card. Normally this markup is in the range of 1-2%. If you have reached the US and swipe this dollar-denominated currency card, there is no charge as it is a dollar-to-dollar transaction,” said Satish Krishnamurthy, senior vice president, Prosper Business, Axis Bank.
Unlike an international credit or debit card, there are no other multi-currency fees when you draw a forex card at a merchant or withdraw cash from an ATM. However, if you load the card in one currency but use it in another currency, a cross-currency fee will apply. For example, if you have euros on the card, but use it for US dollars.
There may also be a fee for withdrawing cash from an ATM. For example, Axis Bank charges $2 (or equivalent in other currencies) per withdrawal. Surinder Chawla, Geography Branch and Head of Business Banking, RBL Bank said, RBL Bank sometimes has no ATM withdrawal charges. A forex card from BookMyForex offers three free ATM withdrawals, says Nitin Motwani, co-founder and chief technology officer, BookMyForex, an online forex marketplace.
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Like credit or debit cards, forex cards offer the option of not carrying cash. But the similarity ends there. When you swipe a forex card, you know the exact conversion rate, unlike other cards where it is dynamic. Of course, this can work to your advantage or disadvantage, but just like cash, it can help you stick to your budget.
“The exchange rate is fixed upon loading or before the journey begins. If one uses a credit or debit card abroad, be it at a PoS (Point of Sale) machine or at an ATM, the charges are very high, says Chawla.
It is up to the user whether to load a wallet with one currency or multiple currency wallets on a single card. For example, a person who needs to travel to the US as well as Europe may have US dollars and Euros loaded on a forex card. When swiped in Europe, it is automatically deducted from the Euro Wallet. Similarly, US dollars will be charged from the wallet.
You can also use a wallet with a currency in another currency country. In the same example, if the person has a wallet in one currency with euros, and if she uses a foreign currency card in the US, she will be able to make transactions, but will have to pay an additional fee for multiple currencies, which is a minimum of 3% of the transaction amount. “A better option is to load the foreign currency card with the required local currency with Indian currency. The higher the number of currency exchanges or transactions between currencies, the higher the cost to the consumer,” Krishnamurthy said.
Foreign Transaction Fee Vs. Currency Conversion Fee: Know The Difference
Lack of security layer: Although all debit or credit card transactions in India, including those at stores, use two-factor authentication, you don’t need to enter your PIN every time you swipe your card in many other countries.
This is why you need to be careful where you use your forex card. Ravi Menon, head of currency at Cox, said: “The main disadvantage is that the magnetic strip on the card is copied at a desolate ATM or merchant, and you can be susceptible to fraud and your money gobbled up by fraudsters. .” And Kings Limited
Disputed Transactions: Another problem area is disputed transactions such as debiting your account but not crediting the merchant’s account. Although there is an established process for dealing with disputes and fraud, it can take time. “In case of dispute or fraud, the customer should call the bank’s customer service and report the same at the earliest to prevent further abuse. In such cases, it takes up to 45 days for the investigation to be done by the online service providers,” said Krishnamurthy.
In some cases, the solution may take a long time. “The process has to go through the ATM network and points of sale outside India. Many cases take two to three months to resolve.”
Is It Better To Travel With Cash Or Card?
It becomes more complicated in fraud cases as most banks require registration of FIR in the country where the fraud has taken place. “Applying for an FIR abroad is a big task. What usually happens is that by the time you find out that fraud has taken place, you will have moved out of that country. It will be difficult to explain all this to the bank’s legal team. Then it is up to the bank to consider the specific case, says Menon.
Using a forex card has its advantages, but if you end up in a dispute, or your card is compromised, you’re in trouble. Keep your card information safe and pay attention while swiping the card.
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You have now subscribed to our newsletters. If you do not receive an email from us, please check your spam folder. TripMoney is a fintech solution that provides you with various financial facilities such as travel loans, credit cards, insurance, currency and pay later in the app. Recently they have launched a new prepaid currency card called TripMoney Global Cash Card which offers 0% exchange rate surcharge. This Visa Prepaid Card is issued by SBM Bank. All you need to do is load money on the app and then you are ready to use this card.
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The best thing about this card is that there is no annual fee, no renewal fee, no balance inquiry fee and no top-up fee. In simple words, it is a prepaid forex card that is free. In this article, we will discuss some of the key features of this prepaid card and how to apply for this card. Here is an overview:
Before we begin, I invite you to join our finance discussion community on Facebook: FinTalks. Here we share our experiences and discuss issues related to Banks, Debit Cards & Credit Cards, Funds, Stock Markets etc. Many offers and discounts related to credit cards are also discussed here. Click here to join FinTalks.
They provide the Visa exchange rate directly to you and do not add any additional fees or charges, which are charged by banks from 2% to 4% on each of your expenses.
On activating Visa Prepaid Card, the user will get some free rewards like MMT (MakeMyTrip) Black membership, discount vouchers worth over Rs.7000 on MakeMyTrip app and many more.
Travel Forex Card
Note: The joining fee for this card is waived due to its limited offer where you can order this card for free without paying a single penny. But this is a limited time offer which means after some time if you want to apply for this card you have to pay Rs. Connection fee will have to be paid. 499+ GST on TripMoney App.
Once you have received the TripMoney Global Cash Card, you can activate it by scanning the QR code provided on the card pages. Within a few days after the card is activated, you will receive an email with the following coupons:
As of writing this post, I have yet to receive the promised MMTBlack subscription. I will update when I find the same. Anyway, I’m still happy because I was able to get this card as a free card for life, and it will work great as a Global Forex card, something to replace the Niyo DCB card.
Anuj is a passionate blogger from Bareilly, Uttar Pradesh. Currently pursuing a B.sc in Programming and Computer Science from IIT Madras. Besides being an avid learner and a technology enthusiast, he loves playing PC games and likes to keep to himself.
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