Remember the routine before your holidays pre-Covid? You withdraw cash, make a trip to the money changer, and exchange for a different currency before your flight.
With the pandemic driving a global surge in digital payments, preparing for your next trip can be much simpler – and safer.
In its 2022 study, UK-based market research firm YouGov found that nearly one in three (29 per cent) consumers in Asia-Pacific prefer to pay using debit or credit cards when they travel.
Another 7 per cent said they are keen on using multi-currency digital wallets when travelling.
There is a growing preference for digital payments, observes Mr Tan Min Yeow, 49, head of cards and payments, UOB. He shares that the number of people in Singapore who signed up for its travel or multi-currency cards doubled in the period of October and December 2022, compared to the same period in 2021.
There are still advantages to using cash, acknowledges Mr Tan. For example, people may be less likely to overspend because of impulse purchases.
Cash could also be perceived as less risky to some consumers as it can’t be compromised or subjected to identity theft and compromised personal information, he says.
“But having said that, the future is still cashless payments, and financial institutions are already putting in place steps and procedures to alleviate such concerns,” Mr Tan says.
A focus group study of 1,000 cardholders in Singapore, conducted by payment technology company Mastercard and UOB in the third quarter of 2022, found that three in four respondents preferred the use of credit cards and multi-currency cards for payment overseas.
Those leaning towards cashless payments likely prefer the convenience, perks and safety.
For example, UOB customers can set their transaction notification alert ranging from as low as $0.01 to over $5,000.
Adds Mr Tan: “They will be notified of transactions immediately, and can take action to report any unauthorised deductions from their cards.
“In our all-in-one banking app UOB TMRW, there’s also a feature that they can use to temporarily or permanently block and replace their UOB Card, when required.”
Cashless payments are gaining ground globally. In Singapore, three in five consumers said they tried going fully cashless during the pandemic, according to a Visa 2022 study.
But should you go cashless when travelling abroad? Mr Tan Min Yeow, head of cards and payments, UOB, shares some pros and cons of paying with plastic.
Convenience: Paying via a credit or debit card is more convenient than carrying stacks of cash. You can also track how much you spend easily using your mobile banking app.
Security: While carrying a card instead of cash may help to reduce the risk of a robbery, travellers should be aware of the potential issues of paying via cashless methods too.
This includes concerns such as identity theft and compromised personal information, which can happen when you give out your card details and personal credentials to scammers unknowingly.
Benefits: You can earn rewards such as airline miles, points or cashback depending on the credit or debit card you pay with. Reward points can be redeemed for items such as shopping vouchers, or used to offset purchases.
Costs: Be aware of hidden costs. For example, there will be foreign transaction fees involved when you pay in other currencies using your credit or debit card. You will incur a fee when you withdraw cash at overseas ATMs too.
If you forget to pay your credit card bill or did not pay in full, you will also incur late fees and interest charges.
Emergency: When you need cash urgently, you can call your bank to increase your credit limit for your credit card. This allows you to access funds easily, especially in an emergency.
Customers earn rewards such as airline miles with the UOB PRVI Miles Card or KrisFlyer UOB Credit Card. “They also enjoy special travel privileges such as airport lounge access or hotel discounts.”
Multi-currency accounts, such as UOB Mighty FX, are another option. Ms Jacquelyn Tan, head of group personal financial services, UOB, shares that customers can use UOB Mighty FX via the bank’s mobile banking app UOB TMRW to convert currencies at comparative and transparent rates anytime.
The multi-currency account offers foreign currency exchange rates for 11 major currencies, including Singapore dollars (SGD).
Customers can use the UOB Mighty FX Debit Card when shopping overseas, or convert their money to a foreign currency and withdraw it at any Mastercard-enabled ATM if they need cash.
“You can still convert the currencies at the airport or at your destination country, as long as you have access to UOB TMRW,” says Ms Tan.
There will be a flat fee of $5 (or the foreign currency equivalent) charged for each cash withdrawal overseas.
Customers can also set a preferred rate for specific currencies and be alerted when it becomes available via Mighty FX, says Ms Tan. “They can use the ‘Convert and Alert’ function to automatically convert their money when the preferred rate is met. The app will then notify the customer that the transaction has been completed.”
“That way, travellers won’t have to worry about carrying too much cash around when they are abroad. They can also easily track their purchases on the UOB TMRW app, which will alert them should there be any duplicate card transactions,” she says.
The Future of Finance series explores how digital solutions and insights can empower individuals and businesses in a rapidly changing world, to create a more sustainable future.
This article was originally published on The Straits Times, and was written by Kareyst Lin, Content STudio.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction
