The winter chill brings with it the excitement of a holiday. While booking flight tickets and even shopping clothes moving to the online buying channel how can your foreign exchange buying needs be left behind?
During the past couple of years banks and travel agents have been offering not just forex rate checks online, but even purchase and fixing on foreign exchange rates online. There are other online forex providers who have sprung up.
Weigh your forex options in advance to get the best deals. Here are some handy cash-saving measures when buying foreign exchange online.
Card versus Cash
With more and more Indians preferring popular foreign destination Singapore, let us consider a conversion of Singapore dollars. If asked for hard cash then the rate applicable for Singapore dollar was Rs 48.8943 at a money changer (see table). But when we asked for the same amount to be packed into a forex card, we were offered a rate of Rs 48.3411, which is a difference of 1.14%.
So carry cash only to the extent which you think would be needed for taxi or local vendors who won't have swipe machines. Even if you carry a travel card you can use the same to withdraw cash at ATMs abroad.
"A forex card offers negligible or no transaction fee as compared to credit and debit card transaction rates which can go up to 9-11% as there is currency conversion charge, transaction fee involved when using the card etc," says Ananth Reddy, founder and MD of buyforexonline.com.
Forex Provider
Choose your foreign exchange provider carefully as the rate differential varies from US$ 1 to 2.5. So if you are buying US$1000 then you would be paying Rs 2500 additional just because of opting for the highest conversion rate provider.
Even among banks, check rates with more than one bank. Online foreign exchange providers offer the cheapest option while airport money changing outlets burn a hole in your pocket.
But why this vast difference in prices? "Because of the steep rents applicable at airport outlets, they need to offer forex services at 15-18% margin to be sustainable," says an official at a money changer not willing to be named.
Asked about the cheaper online options Reddy says, "Banks typically charge the inter-bank rate of 2.5%. But we are wholesale dealers and just cover are overheads. We have a nimble operation and hence are able to offer forex at a lesser rate."
Online Purchases
There are websites that offer a bidding facility, wherein you can post your requirement and you receive calls from people who bid the lowest. These websites like Nafex, Cashkumar.com etc act as mere facilitators and the rest of the purchase has to be like the regular offline forex transaction.
Then there are other online forex providers like buyforexonline.com, bookmyforex, extravelmoney.com etc which provide foreign currency notes or travel prepaid card at the doorstep. BookMyForex allows you to get home delivery of forex only for currency worth Rs 75,000 or more.
You can either opt for market rate or fix the price by paying upfront online.
"Payment is the main pain point for individuals looking for forex at their doorstep. We have tied up with Billdesk and are the only providers to offer a payment gateway," says Reddy.
While you can purchase forex from travel agents and banks as well as airport forex counters till the last minute subject to availability, some online providers request travellers to book two days in advance. Advance purchase would be essential if you are looking at a fresh travel card as minimum 24 hours would be required to process.
Single versus multi currency
Check whether the card you are offered can be loaded with single or multiple currencies. If the card is a single currency card you would have to either withdraw cash at the relevant country to convert or take more than one card. "We offer multi-currency card, so you can use one card when you are travelling to various countries during one trip or during different time periods," said a Kotak Bank branch official.
Other banks and money changers offer multi-currency cards.
Insurance Cover
Get details of the insurance cover with the forex prepaid card wherein lost card liability, counterfeit card liability are covered. They may even offer to make emergency payments and cover your luggage in case of loss.
Value-add Services
If you have ample time to plan your foreign exchange purchase like for studying abroad then you can use the alert facility offered by websites such as bookmyforex.com to set a specific buying rate. So, if the present rate for US Dollar is Rs 63.62, then you can set an alert to notify you when the rate falls to Rs 63.04/ 62.98.
In case you experience any technical difficulties in withdrawing money, buyforexonline.com offers arrangements to deliver upto US$ 300 money to you at any point across the world," says Reddy.
A spare card is offered by some banks and online providers, which can be used if you lose your primary card. Don't make the mistake of keeping both the primary and the secondary cards at the same place.
Withdrawing from ATMs
Do not check balance at ATM and avoid using cards for withdrawal at ATMs because they slap a charge of 0.50 of the relevant currency (for balance checking) and 1.50 – 2 of the currency for withdrawal. Use the internet password instead to get details and POS terminals for paying.
"SMS alerts facility is provided wherein each time you swipe you get the balance details," says Reddy.
If you fall short of forex during the trip you can even reload the card on the go using internet banking as the bank details and credit card details can be used with authorization.
Limits
Wherever you purchase the foreign exchange from, ensure you stick to the foreign exchange ceilings set by the Reserve Bank of India. Leisure travellers are allowed a limit of USD 10,000 equivalent- in a financial year, while business travellers can get forex upto US$ 25,000 per visit. Only US$ 3000 equivalent can be carried in the form of pure notes and rest needs to be met through cards or travellers cheques.
Also, once you are back, you can keep only upto US$ 2000 or its equivalent with yourself. Rest needs to be exchanged within 180 days of return.
Caution
While there are cheaper options available, authenticate whether the provider is genuine. There have been cases where fake notes were slipped in between real foreign currency notes. Also, make online payments only if you trust the source or have trusted referrals or tie-ups that assure you the credibility. For instance bookmyforex.com has tied up with Axis and ING Vysya Banks, buyforexonline.com has a tie-up with makemytrip.com and Centrum Direct for logistics and extravelmoney.com has a collaboration of Muthoot Forex, Orient Exchange, UAEXchange.
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