Sara usually travels around the globe for her official trips quite frequently, and she enjoys shopping at local shops to bring back memorabilia for colleagues and family. Nairobi was on her frequent travel list, and she loves to shop the local markets for their rich handicrafts. The popular currency formats in Nairobi were either M-Pesa or Nairobi Shillings.
However, carrying local currency is not a good idea, and M-Pesa requires a local account and sim card for starters. At the same time, using international debit or credit cards will attract too many charges.
That’s when Forex Cards came to the rescue.
With single or multiple currencies in one card that has safety and comfort as it is a core feature, forex cards were the best solution Sara could ask for, making her travel much easier.
So, what is a Forex card?
A forex card can hold single or multiple currencies in a single card, prepaid by nature. It is a globally accepted prepaid card with features of ATM withdrawal, just like a debit/credit card. Therefore, it is a safer and fool-proof way of managing finances abroad, be it for professional or personal travel.
Types of Forex cards
Forex cards come in various types, and they can be chosen as per the traveler’s requirement. The forex cards are typically differentiated as:
Single-Currency Forex card
This card holds a single international currency and is usually available when travelers only intend to visit one country. Furthermore, if the traveler tries to transact in any other currency other than the preloaded currency, they will end up paying high conversion charges along with markup fees and additional applicable charges.
Multi-Currency Forex card
Best suited for globetrotters, this type of prepaid forex card allows the user to carry multiple international currencies in one card.
Student Forex card
This type of forex card is specifically designed for the new adults embarking on their maiden financial journey on account of their studies. It also doubles up as an identity card known as International Student Identity Cards (ISIC cards). Student forex cards also offer student discounts and can help primarily help in managing living expenses abroad.
How does a Forex card work?
Like a debit/credit card application, the traveler needs to apply for a forex card with the bank or forex service provider. Once the application goes through, the applicant can load their desired currency of GBP, USD, SGD, EUR, and others in the card.
Also, certain documents need to be submitted when applying for forex cards:
- Forex card application
- Self-attested copies of Visa and Passport
- Copy of confirmed air tickets of the visiting countries
- The usual attachments of Identity and Address proof
If the traveler is a student, they need to submit some additional documents like:
- Admission letter
- University Identity card or
- Letter of appointment
Post these documents verification, the forex card gets approved, and it will be either shipped to the applicant’s address, or they can pick the card up from their choice of branch.
The traveler can load the card as per their choice of currency by issuing a standing instruction to the service provider. They can specify the international currencies they want along with the amount in each of the currencies. If the currency conversion happens via a bank, their bank account will be automatically debited, and their multi-currency card will be loaded.
If it is a forex service provider, the traveler can load the card using the issuer’s payment gateway. Then, they can make the payment by using the standard options of debit card, credit card, net banking, etc.
At the same time, forex cards also carry a certain number of charges that may differ depending upon the issuer. Some of the common charges are cash withdrawal, balance inquiry, SMS alerts, cross-currency mark-up charges, etc.
Even though forex cards come with their share of charges, they still reign supreme over other payment methods like debit cards, credit cards, or travelers cheques. And the popular opinion claims that forex cards are a much better option when compared against these instruments.
Advantages of Forex cards over Debit/ Credit cards
ATM withdrawal fee
Forex cards have set ATM withdrawal fee that is usually lower than credit/debit cards, and they are now accompanied by conversion fee as well.
Debit/Credit cards come with a withdrawal fee plus a markup fee of 1% to 3% and currency conversion charges. While it may differ between card issuers, the charges remain significantly higher than using a forex card.
Transaction charges
Swiping prepaid forex cards doesn’t levy extra transaction charges as the local currency is used for the transaction.
Swiping a debit/credit card will attract extra charges as the foreign currency will be converted to the local currency and then will be charged to the traveler’s account. Furthermore, it will attract a markup fee along with other applicable tax charges.
Exchange Rates
In forex cards, exchange rates are well locked in advance, which protects the traveler from fluctuations in the exchange rate.
There is no exchange rate lock, and the value of the rupee often fluctuates against most of the international currencies in debit or credit cards.
Temptation
Forex cards curbs the temptation to overspend while overseas as it is a prepaid card and comes with an already set limit.
Credit cards come with an overdraft facility that will tempt the traveler to overspend and end up with a huge bill.
Advantages of Forex card over Cash
Better exchange rates
Forex cards come with better exchange rates when compared to cash conversion. Also, the traveler gets to enjoy locked-in exchange rates that do not fluctuate on a daily basis.
Safety
Cash is only safe when it is stored in a vault, and it creates an inconvenience when carried in huge amounts, whereas a forex card is a CHIP and PIN enabled card that offers top-of-the-line security to the traveler.
Theft
In case of cash theft, there is no possible way to get the money back nor reclaim damages. But in case of forex card theft, the traveler can immediately block the card and request a replacement card, no matter their geographical location.
Multi-currency
It is practically impossible to carry around wads of cash in different currencies as it is neither safe nor smart to walk around with cash. It is a hassle to keep and use the right currency without the confusion around the country’s native currency. Whereas when using a forex card, the card will automatically detect the country and carry out transactions using the preloaded local currency.
Advantages of Forex cards over traveler’s cheques
Modernized version
Forex cards are the software upgrade of traveler’s cheques. They are widely used and come with convenience and comfort at their core. Traveler’s cheques are antique, primarily out of use, and are not accepted worldwide anymore.
Associated Fees
Both forex cards and travelers cheques come with their share of fees and charges. But travelers cheques are a bit on the higher side as they involve traveler cheque creation and encashment plus the usual charges.
Handling
Forex cards are easy and convenient to handle; all it takes is a swipe for a transaction and a few clicks to customize the card. Whereas traveler’s cheques are outdated and hold no meaning in the world of digital payments.
Why a Forex card?
While Forex cards do allow for frictionless travel, they also come with a host of other benefits such as:
It is the safest form of carrying cash, and they are PIN-protected prepaid cards. For example, M2P’s Forex cards enable a traveler to load up to 24 currencies in one card, and it also comes with an app that offers a virtual wallet.
They also come with an app feature. For example, M2P’s digital travel money app offers the feature of configuring spending limits, channels and block/unblock the card. The traveler can lock in the exchange rates, and buying a forex card is cheaper than cash currency conversion. Also, it saves them fluctuating rates when using debit/credit cards.
The traveler can save on transaction fees typically charged by debit and credit cards. They range from 2% to 5% and are coupled with markup fees, applicable taxes, and so on.
It can be reloaded from any part of the globe and access a 24/7 customer support team. Travel cards are predominantly accepted everywhere without additional charges.
Also, many issuers allow the auto-sweep feature when one currency in a multi-currency wallet goes low. For example, M2P will transfer funds from the GBP wallet to the USD wallet if the wallet balance becomes low when initiating a purchase. It doesn’t require any additional confirmations from the user, and they can easily transact at their preferred platform.
It also comes with an ATM feature and can be used in any Visa or MasterCard terminal. Upon return, the balance currency can be converted back into INR without any hassle. Most often, the issuers also offer travel insurance cover along with the forex card.
Gone are the days when foreign travel mandated carrying around cash hidden inside the layers of dress and goodies as a safety precaution. With the travel ban slowly being eased in many countries across the world and with M2P’s multi-currency forex cards as a travel companion, today’s globetrotters can enjoy secure and hassle-free travel.
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