NEW YORK, June 27 — A new analysis from a senior executive at the financial services firm Niyo indicates international travellers can reduce card-related fees by as much as 12 percent on each transaction, depending on the payment method chosen. Vivek Bagree, Chief Business Officer for Cards at Niyo, provided the calculations. The record shows the potential savings apply to both everyday purchases and ATM cash withdrawals made abroad.
According to Bagree, the cumulative cost difference between payment options is often larger than travellers anticipate. This is especially true for high-value trips or for individuals who travel two or three times per year.
He stated the savings can accumulate to the equivalent of a free trip every few years for frequent travellers. The biggest cost differentiator, Bagree noted, is the forex mark-up. Most traditional credit cards charge between 2 and 4 percent on every international transaction, with Goods and Services Tax applied on top of that mark-up.
On a single coffee purchase, the cost appears trivial. Over the course of a full trip, the analysis shows it compounds quickly.
ATM cash withdrawals represent the other major cost that travellers typically overlook. Bagree’s filing details that on a regular credit card, an overseas ATM withdrawal generally attracts a cash advance fee of 2.5 to 3.5 percent, subject to a minimum. Interest accrues from the day of withdrawal until the dues are paid in full.
The forex mark-up on the rupee equivalent is also applied. The analysis breaks down the costs associated with three spending options: credit cards, forex cards, and pre-paid travel cards. Bagree stated there is no single “best” option.
The right choice depends on how a traveller spends, the duration of the trip, and how much certainty they want on exchange rates. Travellers should also be mindful of Liberalised Remittance Scheme limits and Tax Collected at Source provisions beyond the fees, according to the analysis.
These can apply depending on the nature of the transaction.
