The introduction of the prepaid travel card by Indian banks affords a big convenience to outbound travellers who can buy goods and services across the globe by just swiping it.
How does the foreign travel card compare with travellers cheques (TC) or credit cards?
The travel card is a convenient mode of payment for both corporates and for individuals as it gives them the flexibility to reload the amount instantly and protects the traveller from currency risk.
It also offers more scope to spend. For example, on a standard gold credit card, the spending limit overseas stands at roughly $2,000-$3,000, whereas the foreign travel card can be topped up to a maximum of $10,000.
It makes good business sense for banks too, what with hordes of Indians -- a good portion of them using their stock market earnings -- going abroad on holidays.
So, how does a prepaid travel card work?
It's an over-the-counter system. Banks charge a nominal fee for issuing the card ranging from Rs 100 to Rs 175 for the first issue and much less for reloads.
The traveller has to 'fill' this card electronically with the amount that he wishes to. For example, say you need a card loaded with $5,000.
You have to first pay the rupee equivalent (based on that day's exchange rate) of the amount to the bank and your card will be electronically loaded with $5,000 value.
Once you return from your trip, if there is unused money in the card, you can encash it from the bank within the validity period.
And if you are a regular traveller, the card can be used again later.
The latest bank to offer the card is IDBI Bank. Citibank, UTI Bank and State Bank of India have already unleashed their product.
IDBI bank will launch its multi currency prepaid travel card by next month, said Shameek Bhargava, head alternate channels & card products of IDBI Bank.
"We are ready to support transactions in currencies of 20 countries. We aim at issuing around 25,000 cards in 12 months," he added. IDBI Bank charges Rs 175 for the card, and Rs 90 per reload. The card will be valid for two years.
The State Bank of India, which launched its travel card on February 24, will charge Rs 100 till March 31. The card is valid for two years.
UTI Bank launched its card in September last year. It charges Rs 150 and the card is valid for two years. It's reload fee is Rs 100.
Citibank makes it mandatory for the physical presence of the customer at the time of reloading. Exception will be made for the corporate traveller who maintains an account with an authorised money changer or with the bank.
SBI, on the other hand, proposes to enable a relative in India to help the customer reload his card at any of the SBI branches.
Card holders can monitor their spends anywhere in the world. Citibank enables this feature through an electronic statement delivered by email.
Card members can also call Citiphone in India to report a lost card or to check the balance on the card.
SBI offers customers the option to check their balances either on their mobile for which there will be no cost. Alternatively, they can also check their balance through ATMs.
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