Introduction
Navigating
the realm of international travel, no doubt brings with it a sense of adventure
and discovery, as well as practical considerations that extend beyond
sightseeing and exploration. However, one of the crucial considerations during
this travel is managing international payments effectively. As you embark on
journeys across borders and cultures, your financial interactions take on a new
dimension, involving foreign currencies, varying transaction fees, and diverse
payment methods.
Whether
you're a seasoned nomad traveller or embarking on your first international
adventure, understanding how to manage your finances while traveling can
greatly enhance your experience. From accessing local currency to making secure
transactions and optimizing costs, mastering the art of international payments
ensures that your focus remains on enriching experiences rather than financial
intricacies.
In
this article, we'll discuss about the the Most Popular International Payment Methods and also uncover strategies to minimize fees, ensure
security, and make informed decisions that align with your financial
preferences. These payment methods play
a crucial role in enabling seamless transactions between parties situated
thousands of miles apart, contributing to the growth of global trade and
economic cooperation.
When
traveling abroad, there are several international payment modes that you can
consider using.
1. Credit Cards:
The
most common and Widely accepted around the world payment method is the
International Credit cards. Be it a hotel booking, or a flight booking, or a
Cab service or any other recreation activities that you are involved with,
Credit Cards play an important role in making the transactions a seamless
one, These credit cards offer convenience and
security while making the payments just with a swipe or a tap in machine. Visa,
MasterCard, American Express, and Discover are some of the major international
card networks that are widely accepted globally.
International
credit cards are payment cards issued by financial institutions that allow
cardholders to make purchases and transactions in foreign countries and
currencies. These cards offer convenience and flexibility when traveling or
conducting international business, as they can be used at a wide range of
merchants and ATMs worldwide. Different types of international credit cards
come with varying features, benefits, and associated charges for international
transactions. Here are some common types of international credit cards and the
typical charges associated with international transactions:
Visa
and MasterCard:
These
are two of the most widely accepted credit card networks worldwide. Credit
cards issued on these networks can be used in a plethora of countries and offer
various levels of benefits and rewards. The charges for international
transactions usually include:
Foreign Transaction Fees: These fees are typically a percentage of the transaction amount and are charged by the credit card issuer for converting the transaction from the foreign currency to your card's billing currency. These fees usually range from 1% to 3% of the transaction amount.
Currency
Conversion Markup: In addition to foreign transaction fees,
credit card issuers may apply a currency conversion markup on top of the actual
exchange rate. This markup is also a percentage and helps the issuer cover its
costs for currency conversion. It's usually in the same range as foreign
transaction fees.
American
Express Card :
American
Express (Amex) offers premium credit cards with various travel and lifestyle
benefits. While Amex cards are widely accepted, especially in developed countries,
they might have slightly lower acceptance rates in certain regions compared to
Visa and MasterCard. Charges associated with Amex international transactions
include:
Foreign
Currency Conversion Fee: Similar to foreign transaction fees on
other networks, Amex charges a fee for converting foreign currency
transactions. This fee is usually a percentage of the transaction amount.
Diners
Club Card :
Diners
Club cards are known for their travel-related perks and benefits. However, they
are accepted in fewer places compared to Visa, MasterCard, and Amex. Charges
related to international transactions with Diners Club cards include:
Foreign
Currency Transaction Fee: Similar to other cards, Diners Club charges a
fee for transactions made in foreign currencies. This fee is usually a
percentage of the transaction amount.
Discover
Cards :
While
Discover cards are popular in the United States, they have limited acceptance
internationally. Discover cards often do not charge foreign transaction fees,
making them a good option for international travellers seeking to avoid
additional charges.
It's
important to note that the charges mentioned above can vary depending on the
specific credit card issuer, the type of card, and the terms and conditions
associated with your card. Additionally, some premium or travel-focused credit
cards may offer benefits like waived foreign transaction fees, travel
insurance, airport lounge access, and more, which could offset the costs of
international transactions.
Before
using your credit card for international transactions, it's recommended to
check with your card issuer to understand the specific charges that apply and
to explore cards that offer favourable terms for your international spending
needs.
Also
you need to specify the maximum spending Limit using your Net banking before
using your International Credit card.
2. Prepaid Travel Cards
Travel
prepaid cards, also known as travel money cards or currency cards, are a type
of payment card designed specifically for travellers. These cards offer a
convenient and secure way to manage your spending while abroad, particularly
when dealing with multiple currencies. They function similarly to debit or
credit cards but are preloaded with a specific amount of money in a chosen
currency or multiple currencies.
Key
features of travel prepaid cards include:
Multiple
Currencies: Travel prepaid cards often support various
currencies, allowing you to load and hold funds in different foreign
currencies. This can be especially beneficial if you're visiting multiple
countries during your trip.
Preloaded
Funds: Before your trip, you load the card with a specific
amount of money. This helps you stick to a budget and avoid overspending, as
you can only spend what you've preloaded onto the card.
Reloadable
Funds : These cards comes with the feature of reloading funds
once you are exhausted and re-use them. You can instruct your family member or some
one else to reload the card with a specific amount or currency so that you can
use them on your international travel.
Fixed
Exchange Rates: When you load funds onto the card, you lock in
the exchange rate at that time. This can be advantageous if you're concerned
about fluctuating currency exchange rates.
Security:
Travel prepaid cards are not directly linked to your bank account, reducing the
risk of exposing your main financial accounts while traveling. If the card is
lost or stolen, you can typically get a replacement card or have the funds
transferred to a new card.
Ease
of Use: Just like a regular debit or credit card, travel prepaid
cards are widely accepted at merchants, ATMs, and online platforms that accept
card payments.
No
Foreign Transaction Fees: Many travel prepaid cards don't charge
foreign transaction fees when used in the currency the card is loaded with.
Mobile
Apps: Some providers offer mobile apps that allow you to track
your spending, reload funds, and manage your card while on the go.
PIN
Protection: Travel prepaid cards are usually protected by a
PIN, adding an extra layer of security to your transactions.
Limited
Access to Personal Funds: While this can be a security feature,
it's important to note that if you run out of funds on the card, you'll need to
reload it before you can use it again.
Travel
prepaid cards can be a valuable tool for managing your finances while
traveling, offering convenience, security, and control over your spending.
However, it's important to compare different card options, understand any
associated fees, and consider your travel destination's currency requirements
before choosing a travel prepaid card that best suits your needs.
3. Mobile
Payment Apps:
Apps
like Apple Pay, Google Pay, and Samsung Pay can be used for contactless
payments if the merchant supports them.
In the
United States, mobile payment apps have become increasingly popular for their
convenience, security, and ease of use. These apps allow users to make
payments, send money, and manage their finances directly from their
smartphones. Here are some of the prominent mobile payment apps accepted in the
USA:
Apple
Pay:
Apple Pay is a mobile payment and digital wallet service provided by Apple. It
allows users to make payments using their iPhone, Apple Watch, iPad, or Mac.
Users can store credit and debit card information securely on their devices and
use them for contactless payments in stores, online purchases, and within apps
that support Apple Pay.
Google
Pay:
Google Pay is Google's mobile payment platform. It enables users to make
payments with their Android smartphones, tablets, and watches. Users can store
payment cards, loyalty cards, and even transit passes on their devices for
seamless payments in stores, online, and in-app.
Samsung
Pay:
Samsung Pay is designed for Samsung Galaxy device users. It supports both NFC
(Near Field Communication) and MST (Magnetic Secure Transmission) technology,
allowing users to make payments at a wider range of terminals, including those
without NFC support.
PayPal:
PayPal is a widely used online payment platform that has extended into mobile
payments. Users can link their bank accounts, credit cards, or PayPal balances
to make payments, transfer funds, and even make purchases from eligible
merchants.
Venmo:
Venmo, owned by PayPal, is a peer-to-peer payment app that focuses on
simplicity and social interactions. It's often used for splitting bills,
reimbursing friends, and making informal payments. Users can share payment
details and transactions with their social network.
Cash
App:
Cash App, developed by Square, offers peer-to-peer payments, direct deposits,
and the ability to invest in stocks and bitcoin. Users can also get a Cash
Card, which is a debit card linked to their Cash App balance, allowing for easy
spending.
Zelle : Zelle
is a person-to-person payment network that many banks and credit unions offer
within their mobile banking apps. It allows users to send money directly from
their bank accounts to other individuals' bank accounts using just an email
address or phone number.
Facebook Pay: Facebook Pay is a payment feature integrated into Facebook, Messenger, Instagram, and WhatsApp. Users can link their payment methods and use the platform to make payments, send money, and shop within the apps.
Chase
Pay:
Offered by JPMorgan Chase, this app allows Chase customers to make payments,
send money to friends, and access rewards within the app.
Walmart
Pay
: Walmart Pay is Walmart's mobile payment app, allowing customers to pay
in-store by scanning a QR code at the checkout. It also integrates with the
Walmart app for a seamless shopping experience.
These
mobile payment apps offer various features and capabilities beyond basic
payments, including loyalty programs, rewards, budgeting tools, and more. It's
essential to review the security measures, fees, and compatibility with your
device and bank accounts before choosing the app that best suits your needs.
4. Foreign
Currency Cash:
This
is one of the traditional form of doing International Transaction. It is always a good idea to carry a local
currency for immediate expenses upon arrival. However the biggest bottleneck is
that you cannot carry huge cash in local currency. Moreover the risk of carrying
cash is very high in case of International tour. There are certain places where they do not
accept International Credit cards or Wallet payments, like Street food Vendors,
Local Taxi, Vegetable or grocery vendor who only takes cash. In such cases you
can carry the local currency. Denomination
is yet another disadvantage in Foreign Currency Cash. For example if you decide
to carry $2000 your trip, you cannot afford to carry $2, $5, or $10
denominations for all the amount.
Instead you need to carry only $100 denomination for the majority amount
and carry some changes in lower denominations.
Producing the exact change is required in case of cash transactions, which
is not the case in case of Credit cards or wallet payments.
Inspite
of the above drawbacks, local currency cash is always required for meeting
emergency and petty expenses.
5. Bank
Transfers:
You
can transfer funds from your home bank account to a local account in the
destination country. This might be useful for longer stays or if you have
significant expenses. This option will only be useful in case you are a regular
traveller and you have a bank account in
the destination country. For example if
you want to set up your business in a destination country where you need
significant amount of money for the initial set up expenses, then you can opt
for Bank transfers. Banks like Chase
Bank offers seamless transfers by opening a Checking Account and a Savings
Account, though Checking Account is more suitable for day to day transactions
with unlimited withdrawals using your mobile app or net banking. You can use your Savings Bank to deposit your
profits for long term investment that gives you good returns.
6. Online
Payment Platforms:
Services
like PayPal, Flywire and can be used for online purchases, and some countries
have their own similar platforms. Flywire
is most suitable in case you are going for Abroad Study, where Tuition Fees and
University payments can be made to International Universities using Flywire
seamlessly.
Flywire
is a global payment platform that specializes in facilitating international
payments for educational institutions, healthcare providers, and businesses. It
streamlines the process of making cross-border payments, particularly for
tuition fees, medical bills, and other expenses that individuals and
organizations may need to pay to entities in different countries. Key features of Flywire include:
Simplified
International Payments: Flywire provides an online platform that
simplifies the process of making international payments, offering users a
straightforward way to pay bills in their local currency.
Currency
Conversion: The platform often offers competitive exchange rates and
enables users to pay in their home currency. This can help individuals avoid
hidden fees and unfavourable currency conversion rates.
Transparency:
Flywire provides real-time tracking and updates on the status of payments,
giving users visibility into their payment journey from initiation to
completion.
Secure
Transactions: Security is a priority for Flywire. It
employs encryption and other security measures to protect user data and
financial information.
Payment
Options: Flywire supports various payment methods, including bank
transfers, credit cards, and e-wallets, depending on the user's location and
the payment recipient's preferences.
Local
Support: The platform often has local offices or partners in
different countries, offering multilingual customer support to assist users
with any payment-related inquiries.
Customized
Solutions: Flywire tailors its services to different industries,
providing customized payment solutions for educational institutions, healthcare
providers, and businesses.
Cost
Savings: By using Flywire, users can potentially save on fees that
would be incurred when making international payments through traditional
banking channels.
Flywire
serves as an intermediary between the payer and the payee, making the process
of sending money internationally more efficient, transparent, and
user-friendly. It addresses the challenges associated with cross-border
transactions, such as complex currency conversion processes, hidden fees, and
the time it takes for payments to reach their intended recipients. This makes
it particularly popular among international students, patients seeking medical
treatment abroad, and businesses engaged in global trade.
4. Cryptocurrencies:
One of the most convenient forms of payment in today’s modern world is payment through Crypto currency. I personally like this payment option as it suits the most because of its easiness in making the payment within no time. However for using this payment mode you need to have certain Mobile Apps for fulfilling and facilitating the payment. One such Wallet is the Trust Wallet. Typically a Trust Wallet will look like this.
Trust
Wallet is a mobile cryptocurrency wallet and decentralized application (DApp)
browser that provides users with a secure and user-friendly way to store,
manage, and interact with various cryptocurrencies and blockchain-based assets.
It was initially created as an Ethereum wallet but has since expanded its
capabilities to support a wide range of digital assets and blockchain networks.
Key
features of Trust Wallet include,
Multi-Currency
Support: Trust Wallet supports a broad array of cryptocurrencies,
tokens, and blockchain networks, making it a versatile solution for users who
hold different types of digital assets.
Security: The
wallet emphasizes security by offering features like biometric authentication
(fingerprint and face recognition), PIN codes, and private key encryption.
Users have full control over their private keys, which are stored locally on
the device.
Decentralization:
Trust Wallet is a non-custodial wallet, meaning that users retain ownership and
control of their funds. Private keys are generated and stored on the user's
device, reducing the risk of centralized hacks or data breaches.
DApp
Browser: Trust Wallet includes a built-in DApp browser that allows
users to directly access and interact with decentralized applications and
services on various blockchain platforms.
Swap
and Pay: Users can exchange one cryptocurrency for another within
the wallet using the built-in decentralized exchange (DEX) features, which may
leverage various liquidity sources.
User-Friendly
Interface: The wallet's interface is designed to be intuitive and
easy to use, making it suitable for both beginners and experienced
cryptocurrency enthusiasts.
Token
Customization: Users can manually add tokens to their wallet
by inputting contract addresses, ensuring compatibility with a wide range of
digital assets.
Cross-Platform: Trust
Wallet is available as a mobile app for both Android and iOS devices, providing
flexibility and convenience for users on different platforms.
Community
and Development: Trust Wallet is actively developed and
maintained by the Trust Wallet team, which is part of the Binance ecosystem.
The wallet benefits from ongoing updates and improvements.
Most
of the businesses accept cryptocurrencies like Bitcoin and other crypto coins for
payment. Following are the most widely accepted
Crypto Coins.
·
Bit Coin (BTC)
·
USDT (BEP20)
·
BNB
· BUSD (BEP20)
Here
BEP 20 refers to the Network who facilitates the transaction. Out of all the Crypto currency, BUSD offers
me the most convenient way of making payments, as the value of 1 BUSD is
exactly equal to 1 USD. Meaning you don’t
need to scratch your head in converting your local currency to USD while making
the payment. You just need to add the payee wallet address and enter the BUSD
amount which is equal to USD and with a swipe in your mobile you can make the
payment. So easy to operate. However many people are not aware of this and
do not have Trust Wallets and other Wallets that facilitates cross coin
payments.
Conclusion :
In a
world characterized by increasing globalization and interconnectedness, the
array of international payment methods has expanded to meet the diverse needs
of businesses, individuals, and travellers engaging in cross-border
transactions. This exploration into the different forms of international
payments has revealed a landscape rich in options, each with its own unique set
of advantages, challenges, and considerations. If you are using your Cards, remember to
notify your bank about your travel plans to avoid any issues with your cards
being blocked due to suspicious activity. Also, research the foreign
transaction fees and currency conversion rates associated with your payment
methods to make informed decisions.