Unpacking Niyo Solutions’ zero forex markup cards

In any case, by signing up with Niyo, you open a regular savings account with one of the partner banks. For a debit card, you have to open a zero balance savings account with either Equitas or DCB Bank, whereas its credit cards are issued in partnership with SBM bank. For the prepaid cards, it has a tie up with YES Bank.

Niyo facilitates the application process and lets you bank through its mobile app. “All the savings account functions that a customer can do with a bank can be done with Niyo as well. We, as a tech company, make the banking experience better through our mobile application with superior user interface," said Vinay Bagri, co-founder and CEO, NiYo. To be sure, you can operate the same savings account through the partner bank’s netbanking service and by visiting the bank branch.

Next, you get a debit or credit card linked to this savings account. The credit card, however, is a secured card. To be sure, secured cards can only be taken against a fixed deposit (FD). The credit limit is equal to the FD amount. If the customer defaults on bill payments, the card is blocked and the FD is used to settle the outstanding bill. The card is unblocked only after the customer pledges a fresh FD of the entire amount.

Most importantly, the credit card is issued only to passport holders. “Currently, credit cards are offered only under our Niyo Global programme," said Bagri.

Niyo’s flagship product is the Niyo Global card offered as both debit and credit cards. In this story, Mint breaks down the salient features to help you decide whether you should get it.

Niyo Global

This is a travel card that is offered both as a debit and credit card. Do note that it is not a prepaid forex card.

The credit card is offered in association with SBM bank. “We started offering credit cards in January this year and the reward system was launched in July," said Bagri.

Note that the Reserve Bank of India (RBI) has barred SBM bank from transactions under the Liberalised Remittance Scheme (LRS). This means if you open an account with SBM bank, international transactions done with debit card will not get through. “Domestic transactions with debit card and international payments made with credit card will work," said Bagri.

Reward programmes are available with both the debit and credit card. The secured credit cards have a reward rate of 1%, which means you earn ₹1 on every ₹100 spent. The rewards are credited in the form of ‘global coins’, with each coin valued at 10 paise. The reward rate on debit card transactions is 0.2%, which means every ₹100 spent earns you 20 paise or 2 global coins. These reward rates apply to domestic transactions. As for international transactions, debit cards don’t earn anything while the reward rate on credit cards is 0.2%.

A customer can earn global coins on all domestic transactions, except on fuel charges and rent payments. The coins get accumulated in the Niyo account and can be redeemed on your purchases made with Niyo card after earning a minimum ₹100 worth of coins (1,000 coins). “Once you have 1,000 coins, ₹100 is automatically redeemed from global coins on the next purchase that you make," Bagri explained. Global coins can be redeemed on both domestic and international transactions.

Compared to the industry average, the reward rate on Niyo Global cards is low. However, the reward system is not the major pull in Niyo’s case as its unique selling point is that it’s a zero forex mark-up card. A forex markup is the fee that a bank or credit card company charges for enabling international transactions on their card.

“We don’t offer rewards on international transactions because we have waived off the markup fee," said Bagri. Most banks charge forex markup on international payments done with credit and debit cards but also offer rewards on credit card transactions, which may partially or fully offset the forex markup. For instance, on a credit card that earns 2% cashback for international payments and charges 2.5% forex markup, you will essentially pay 0.5% in forex markup fee.

In a zero forex markup card, the forex markup charged by the bank is waived off, but the markup levied by the payments network is charged to the customer. “It’s miniscule, at 20-50 paise. Banks charge about 2.5-3.5% forex mark-up but we have waived that off," said Bagri.

There are a few zero mark-up debit and credit cards available in the market and Niyo scores over these options. For instance, debit cards offered by Induslnd bank are available only for members of its premium banking programmes— Exclusive (minimum ₹1.25 lakh salary or savings account balance of ₹1 lakh) and Pioneer (a net relationship value of ₹30 lakh is required). Niyo lets you open zero balance savings accounts.

Other fintech companies, including Jupiter and Fi, have relatively lenient criteria on their zero forex markup debit cards. In the case of Fi, accounts that require ₹10,000 minimum balance are offered zero forex markup of up to ₹50,000 monthly spends, and those with ₹50,000 minimum balance requirement get zero forex fee on all spends. When these conditions are not met, Fi charges 2.5% forex mark-up. Jupiter offers zero forex markup on ₹25,000 and ₹1 lakh monthly spends on non-salary and salary accounts, respectively.

As for zero forex mark-up credit cards, IDFC First Wow is a secured card, like Niyo. RBL Bank World Safari is an unsecured credit card but charges an annual fee of ₹3,000.

Niyo Global cards are a good payment option for people who travel overseas frequently and for students studying outside India. Sumanta Mandal, founder, Technofino, a digital platform specializing in reviewing credit cards and other banking products, said “For credit card users, it’s a good backup card for instances when one needs to withdraw cash from an ATM. For those who don’t use credit cards, Niyo Global can be their main card for foreign spends." ATM withdrawal with a Niyo Global card is charged a fee, which is decided by the partner bank.

Bagri told Mint that Niyo will launch its first unsecured credit card in partnership with Federal Bank in October.

Niyo Solutions claims that it has issued about 1.5 million Niyo Global cards so far, out of which about 1 million cardholders have an active account with balance in the savings bank account.