There’s a new way to spend your money abroad. Some fintechs and neo-banks (online-only banks) offer Rupee-denominated prepaid cards, through banks established in India such as DBS, Federal Bank and State Bank of Mauritius.
What is a Rupee-denominated card?
First things, first. A Rupee card works better than credit and debit cards because when you use the latter abroad, you pay hefty charges, both when you withdraw cash and when you spend. Getting foreign currency in cash is also a bit of a problem these days due to an acute shortage of currency notes and large forex traders such as Thomas Cook, Centrum and Wiseman are taking a hit due to the pandemic and many of their centres are shut.
Niyo (rupee-forex debit card), Hop (rupee forex debit-card) and Happay (pre-paid international card) are the three Rupee-denominated cards to choose from currently. So, if you visit multiple countries during a single visit, you would have to calculate the amount you would need in each country and accordingly load your forex card. If the amount isn’t utilised, you would waste hefty conversion and re-conversion charges.
You can purchase these cards online through the bank, neo-bank websites or even foreign exchange agents. Currently not many travel-service providers offer this service. You would have to undergo online KYC (know-your-customer) and open a bank account with the partner banks mentioned above.
Low on costs and fees
These cards comes with low currency conversion fee (typically 1-1.5 percent) as opposed to foreign exchange cash (10-15 percent), existing credit and debit cards (3.5-5 percent) and even forex cards (2-2.5 percent).
“Happay offers a pre-paid international card that can be loaded in Indian rupees and you don’t face the steep conversion charges that are applicable on the regular forex cards, which are available only in seven-eight currency options. Once you are back in India, you can use this same pre-paid card locally, too, at ATMs and merchants,” says Ananth Reddy, MD of Electrum Financial.
You wouldn’t have to worry about currency rate fluctuations, as it is a domestic card.
These cards can be used in 150-180 countries. “Users can also make withdrawals and online transactions with international merchants, and in multiple currencies. The ability to turn on or off the controls on the various forms of transactions instantly on the app makes it far simpler to understand,” says Sumit Gwalani, co-Founder of neo-bank Fi.
App-based services in foreign locations such as taxis and food delivery don’t accept forex card payments. But these new cards can come to your rescue, says Reddy, involved in distribution of Happay Card. “The rupee-denominated forex card can work on the app-based service platform too and this is a useful feature as one often uses taxi and food ordering apps in foreign locations,” says Reddy.
Cards aren’t free
Don’t fall for the claims that there are no charges for these rupee travel cards. In terms of bank account activation or card joining fee you would be paying a fee. “Even though you may be advertised that some specific travel card has zero percent mark-up charge, remember that there is always a low charge in some or the other form to the extent of 1-1.5 percent,” says a banking personnel not willing to be named.
Some cards may levy a card-activation fee at the time of buying. Besides, you have to open an account with the same bank from which you purchase your card. But the charges of Rs 150-200 on cash withdrawal at ATMs would not be applicable, when you use the rupee-travel cards.
Utilities such as railways, petrol stations in select countries could levy a surcharge of Rs 10-30 per transaction, as per the terms and conditions of Niyo Global Card.
Are Rupee forex cards safe?
Gwalani says that the cards are safe to use. His bank has tied up with VISA, “which assures you of world-class security. The banking partner, Federal Bank, adheres to all the security standards as per RBI’s guidelines,” he says.
Still, the card is insured up to ₹5 lakh. In case of theft or compromise of data in any card, you can use your phone-based app to block the card. But when you are stuck in a foreign land with a stolen card, you have the option of using the app to create a virtual card. “A virtual card can be created using the app to ensure you pay for hotels and a few other avenues online,” states Reddy.But even with these fees, a Rupee forex card works cheaper than forex cards and normal credit and debit cards.