Banks, Fintechs Offer Zero Forex Cards to Young Indian Tourists

The problem of forex markup fees

Traveling abroad is no longer a luxury for young Indian professionals, who are increasingly exploring new destinations and cultures. However, one of the biggest challenges they face is the high cost of foreign exchange transactions, which can eat into their travel budget.

Typically, when you use a credit or debit card for international transactions, you have to pay a markup fee, which is a percentage of the transaction amount that the bank or card issuer charges for converting your currency to the foreign currency. This fee can range from 1.5% to 3.5%, depending on the card and the currency.

For example, if you spend $1000 on your card abroad, you may end up paying an extra ₹1,500 to ₹3,500 as markup fees, depending on the exchange rate and the card you use. This can add up to a significant amount over the course of your trip.

According to the India Tourism Statistics 2022, outbound tourism in India rose to 7.29 million people in 2020, at a CAGR of 4.67% from 1.94 million registered in 1990. Assuming an average spend of $1000 per person per trip, this translates to a potential forex markup fee of ₹1093 crore to ₹2554 crore in 2020 alone.

The solution of zero forex markup cards

To address this pain point, a new trend of zero forex markup cards is emerging in India, as banks and fintech startups collaborate to offer attractive deals for overseas travelers. These cards allow you to load money in Indian rupees and spend in any foreign currency without paying any markup fees. You only pay the interbank exchange rate, which is the rate at which banks trade currencies with each other.

Some of the benefits of zero forex markup cards are:

• You save money on every transaction abroad, as you don’t pay any extra fees for currency conversion.
• You get transparent and real-time exchange rates, as you can see the exact amount you are spending in your app or online portal.
• You can load money in your card anytime and anywhere using UPI, NEFT or IMPS.
• You can use your card at any merchant or ATM that accepts Visa or Mastercard worldwide.
• You can manage your card settings, such as blocking or unblocking, setting limits or disabling tap and pay from your app or online portal.
• You can transfer the remaining balance back to your bank account for free after your trip.

The popular zero forex markup cards in India

Some of the popular zero forex markup cards in India are:

• Fi Money: A digital banking platform that offers a Visa debit cum forex card with zero markup fees. It also offers a zero balance account, zero annual charges on debit card, no account opening or maintenance fee, and 24×7 live chat support from the app.
• Niyo Global: A fintech startup that offers two types of cards: a credit card backed by SBM bank and a debit card backed by DCB bank (currently inactive). Both cards offer zero markup fees, zero TCS on unlimited international spends, free airport lounge access at international terminals in India, and no annual charge .
• Jupiter Money: A neobanking platform that offers a Visa debit card with zero markup fees. It also offers a 1% cashback on all spends, up to 6% interest on savings account, no minimum balance requirement, and instant customer support from the app.

The impact of zero forex markup cards

The emergence of zero forex markup cards is a financial revolution for young Indian travelers, who can now enjoy their trips without worrying about hidden charges or fluctuating exchange rates. By partnering with fintech startups, banks are able to offer innovative and customer-centric solutions that cater to the evolving needs and preferences of this segment.

As more players enter this space and competition intensifies, we can expect more features and benefits to be added to these cards, such as insurance coverage, rewards programs, travel discounts and more. Zero forex markup cards are not only a win-win for travelers and card issuers, but also for the economy, as they encourage more spending and consumption abroad.

According to a report by FICCI and KPMG India, Indian outbound tourism expenditure is expected to grow at a CAGR of 9.3% from $21.4 billion in 2018 to $35.7 billion in 2024. This implies a huge potential for zero forex markup cards to capture a significant share of this market and create value for both customers and providers.

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