Fintech startup NiYo, a brand of Finnew Solutions Pvt. Ltd, launched a global travel card earlier this year. The company claims that a traveller having a NiYo global travel card will not need any other multi-currency forex card while travelling abroad for making international transactions. All this at zero additional cost to you. We take a closer look at the card and its features.
How is it different?
While travelling abroad, forex cards are an effective option as they eliminate the lack of transparency on foreign exchange-related charges on a credit and debit card. As a user of a forex card, you are certain about the conversion rate you are spending at.
According to Vinay Bagri, co-founder and chief executive officer of NiYo, the NiYo card makes the transactions further cost-efficient for a consumer. In case of a forex card, you first have to purchase a card, then load the foreign currency on it. “This in most cases is a physical process. There is a mark-up that you are charged. While abroad, you spend some part of the money loaded on the card. Upon return, you again need to go back to your bank to convert the remaining forex into rupees and will be charged a mark-up again. This double charging of mark-up can be a sizeable chunk of money for most users," he said.
Even if you get a card completely online, documentation like submitting your passport, visa and tickets for travelling abroad, is required at the time of buying a card as well as at the time of reloading or unloading it, Bagri said.
The NiYo card is more like a rupee-denominated prepaid debit card that you can use abroad unlike a forex card that is denominated in foreign currency.
Users of NiYo card can also use the company’s app to monitor and control their card usage. So you can keep the NiYo card completely locked unless you want to use it. You can also lock only card-not-present transactions, which means that the card cannot be used for online transactions where a PIN is not required.
Also, when you use the card abroad, you will be charged the existing exchange rate at the time of transaction; this is also shown and updated live in the app. A regular forex card, on the other hand, is loaded at the conversion rate applicable at the time of loading the card.
How much does it cost?
The NiYo global travel card is issued by DCB Bank Ltd. To get the card, you have to apply for it on NiYo’s website. You will then be required to submit your KYC (know-your-customer) documents in person to a company representative. Under KYC for the card, you will also have to submit the details of your passport.
Bagri said that as of now there is no cost for a consumer to get the card. So how does the company make money? “How card issuers earn is through foreign exchange mark-up and merchant commission in the form of merchant discount rate (MDR) that the merchant pays for each transaction. So for us, MDR itself is good enough and that is how we make money. The MDR goes to the bank and we get a share out of it," he said.
Should you go for it?
According to Naveen Kukreja, chief executive officer and co-founder, Paisabazaar.com, a loan and cards aggregator, the forex mark-up is charged on a forex card if the transaction is made in a currency other than the one loaded on the card. Moreover, forex cards cannot be used for transactions in India. “This is where NiYo global card can emerge as an alternative. Being loaded in Indian currency, the NiYo travel card can be used both in India and foreign locations. On using the card in any foreign currency jurisdictions, the amount is automatically converted to local currency without charging any currency mark-up fee. This can be especially helpful for those travelling across several currency jurisdictions," he said.
However, a foreign exchange service provider who also markets forex cards, said, on the condition of anonymity, that there are some compliance concerns regarding the NiYo Card. In any financial year, any Indian cannot use or send abroad more than $250,000, and all forex sellers and banks offering forex cards need to take customers’ forex-specific KYC, which includes passport, visa and travel tickets for travellers. Bagri said they take a copy of the passport in order to be able to report to the regulators when required. Moreover, the transactions done abroad via the NiYO card will be reported to the government against your PAN (permanent account number), a process followed for debit and credit cards as well, Bagri said. The responsibility of not exceeding $250,000 lies with the individual, he said. DCB Bank did not respond to a request for comment. “As long as a customer is not breaching the limit of $250,000 for forex transactions, the NiYo card is good for a customer. If there are compliance issues, it would be for the bank and not the customer. We are still not sure if it is a better value proposition, but it is certainly better in terms of convenience," the forex service provider cited above said.
Mint Money take
As far as convenience is concerned, the card scores over existing forex cards. The feature of monitoring your spends real time through an app as well as instant lock and unlock feature through the app is an important addition for the customer. However, not having a pre-determined exchange rate like in a forex card is a dampener. Since it comes at no extra cost, you can try carrying it while travelling abroad, along with a forex card.