Zero markups on interbank rate guarantee best forex rates: BookMyForex’s Sudarshan Motwani – Moneycontrol

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The appetite for international travel has been gradually growing and is now at its highest point since the Covid pandemic started. But with the rupee depreciating by more than 11 percent against the dollar so far in 2022, people are looking for cheaper destinations and deals.
BookMyForex, a foreign currency exchanger and international money transfer firm, has found that millennials have become a fast-growing travel segment apart from family and business travellers. They have been choosing emerging destinations and are attracted to exclusive deals and packages from industry players, it says. Sudarshan Motwani, Founder & CEO of BookMyForex, shares his views on the rising demand for forex cards compared to the pre-Covid period, the advantages of carrying these cards instead of currency, and more.
Edited excerpts: 
What kind of demand have you witnessed for forex cards lately compared to pre-Covid times?
Travellers are back, and we are seeing higher demand for forex cards. In March 2022, we issued 3.5 times more forex cards compared to pre-Covid times.
A forex card is a prepaid card that is loaded with the foreign currency of the customer’s choice. It resembles a debit card in every aspect of functionality but it is a prepaid instrument that is denominated in multiple foreign currencies as per your travel itinerary. You need to inform the card issuer how much money in a specific currency you want to load on your forex card. When you buy any item abroad, you only have to swipe it at the checkout counter; the money will be debited and the forex balance on your card will reduce. A forex card can even be used to withdraw money from a foreign currency ATM. It can easily be reloaded during the trip.
While traveling abroad for vacations, do you recommend carrying a foreign currency or forex card?
I would recommend carrying both, i.e., foreign currency and a forex card, in a particular ratio. However the product ratio totally depends on the destination country. For instance, say you are traveling to the US  or Europe, which are cashless countries and merchants accept the forex card. You can carry 90% of your travel money in the card and keep 10% in cash for small-ticket purchases such as buying train tickets, paying taxi fares, rent for airport trolleys, and so on.
But, if you are traveling to countries like Vietnam or Indonesia, you may carry cash in a higher proportion, i.e., 30-40 percent, as card payments are less popular. You can use your forex card to even withdraw cash from an ATM in case more currency is needed. Another devil here is that if you plan to take only the currency of Indonesia or other not so popular foreign countries, you may have to take it at a high premium because these currencies are not popular. Hence, a mix of both card and currency is advisable.
Sudarshan Motwani
What is the ideal approach to buying forex cards and currency?
Forex cards are available at banks, money changers, online marketplaces and airport counters of authorised forex companies. Buying foreign currency or a forex card from the airport is prohibitively expensive and should be avoided. At airports the forex rates are marked up by over 6 percent or even 15% for various foreign currencies, so avoid it.
Usually, banks have static rates and charge 2-6 percent over the interbank rate while buying foreign currency, so this is also expensive.
Online marketplaces are often the best (that is, cheapest) places to buy a forex card or currency. You should, however, check if the selected website shows dynamic (live) rates that are linked to inter-bank rates and are therefore completely transparent. Usually, good retail forex marketplaces charge a minimal or almost negligible markup on a forex card.
For example, we were the first to offer forex cards with zero markup on the live interbank rate. During regular bank treasury hours, international travellers will be able to buy forex cards at interbank rates with zero added markup, i.e., at the live and actual rates at which banks deal with each other for major currencies. There are zero issuance, reload or unloading charges on the card.
But even banks now offer credit and debit cards with zero markup fees…
Some banks are issuing zero mark-up cards by partnering with fintech firms, which may logically sound like the best rates, but there is a catch. Zero mark-ups usually mean zero markups on rates provided by payment networks or partner banks and not on interbank rates, which are live and real-time rates. The interbank rate is the rate at which banks deal with each other in real time.
Zero markup rates on INR debit or credit cards are always static, unlike the rates that banks use for interbank dealings. Hence, zero markup rates on all INR cards may be different and higher than interbank rates. Zero markups on interbank rate guarantee best forex rates.
Sudarshan Motwani-1
The mark-up on foreign currency notes is more than on forex cards. Why?
You’ll always find foreign currency notes more expensive than forex cards because the rates for forex cards are determined by market dynamics; however, that is not the case with currency notes. Currency note rates are static. There are several factors that determine currency note rates and the demand-supply issue is the biggest factor.
For example, there is a higher influx of Canadian dollars in Punjab compared to the rest of India and therefore, you will find the CAD cheaper in Jalandhar compared to Kolkata. Similarly, a lot of people from Kerala or South India are working in the Middle-East (West Asia). They bring foreign currency while coming to India. And that is why, in all probability, you may find the Saudi Riyal or Qatari Riyal to be cheaper in Kochi than even in Mumbai.
Then there are other factors like lack of competition and transparency, which increases the mark-up on currency notes further. The shortage of currency notes definitely leads to an increase in the mark-up and this is the reason the currencies of Indonesia, Vietnam and Maldives,for instance, are expensive.
In case of loss of a forex card while travelling abroad, what immediate measures can a cardholder take?
Immediately block your physical forex card in case of theft or loss of your card. You can apply for a new forex card and the funds can also be transferred immediately to a new forex card. The issuer will courier a new forex card to the foreign country you are in.
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