Bank Transfer, Credit Card, Wise, Paypal, Mobile payment getaways – These days travelers have an array of choices when it comes to making payments for their travels. In this post I wrote for Market Transfer Comparision, I have detailed the pro’s and con’s of using one mode over the other.
The synopsis clearly states that Wise/ Bank transfers are the cheapest ways to pay for your travels as credit cards/ Paypal etc incur heavy fees. However, the latter options allow for complete security and safeguard you against possible fraud with their chargeback options.
Questions like these still daunt travelers before and during their trips–
- Is it better to pay in local currency with a credit card?
- Is using debit cards internationally a good choice?
- Is using credit card in foreign country safe and easy?
- Can you pay for hotel with bank account?
- How safe is bank as payment method for your travels in 2024?
- Pros and cons of using a credit card abroad?
And many more.
In this post for MTC, we have tackled all of these FAQ’s as we compare various modes of payment for various travel expenses like – hotels, tours, cruises, safari holidays, car rentals and the likes.
My research for MTC states that in some cases bank transfers are a cheaper alternative to credit and debit cards, if used correctly. Some cards charge upward of 3.5% as foreign exchange fees – eeks!
I use cards for most of my travel payments and lo behold when my card bill arrives a month later, I realize I ended up shelling a lot more than I would’ve liked to in fees.
Plus, India has recently introduced TCS (tax collected at source) which is a huge 5% on all foreign payments, that too when PAN card is provided. Of course this TCS can be refunded when you file your taxes (if you are eligible for a tax refund) but so far it has been “adjusted” in my taxes so I take it as a 5% immediate “loss”.
Then if you opt to use the hotel’s billing system and charge in your local currency but with their exchange rates, you may have to pay an additional 7% in foreign exchange fees.
In some cases, hotels also toss in a fee of 2.5-3.5% on top of the card’s currency markup just for the usage of an international card. Plus my Indian TCS of 5% – without even doing the math, we can safely say its a huge fee.
With that being said, bank transfers can be expensive too. MTC’s bank transfer cost research shows that the average FX fees charged by banks could be as high as 5% and the flat fee range from $15-$30 with most banks across the globe. That can translate to as much as $130 in fees on a $2,000 transfer.
Hence a good payment mode for your travels, if you don’t have a specialized travel credit card (my research has also shown that some cards in some countries are incredibly cheap for overseas transfers), is to use a money transfer service provider like Wise.
Check out which one could work the best for you on MoneyTransferComparison and make an informed decision after comparing the best available options.
Comparison of Fees – Bank Transfer, Wise & Credit Card
While researching my post for MTC, I talked about this specific example of paying for a trip to Bali. Let’s say a local Balinese tour company charges a 3% credit card processing fee (like most operators do).
Now if you plan on paying £1000 via credit card, you end up shelling out a good £95 in just fees (this is not just your 3% processing fee but a 2.99% foreign transaction fee plus a whooping 3.5% Fx markup). All these add up making this the most expensive way to pay for your Balinese holiday.
If you choose to pay with your local EU bank (let’s take an example of Lloyds Bank). They charge a fixed transaction fee of £9.5 to Indonesia plus a Fx markup fee of 3.55%, which sets you back £45.5 in charges.
Neobank of Wise, comes with the least fees at 0.56% Fx markup and just £0.46 fixed fee to Indonesia. This gives us a total fee of just £6.06 on a £1000 payment. How cool is that?
Popular Payment Methods for Different Travel Products
Paying for Safari holidays
Payments made by Wise (fees as low as 0.5%) are rising in popularity in all top wildlife destinations of India, Sri Lanka, South Africa and East Africa. Transfers are instant, there are no hidden fees and its a convenient way to pay for your expensive wildlife safari bookings. Almost all major currencies are accepted – GBP, EUR, USD, AUD and NZD.
Other payment modes like PesaPay (East Africa’s Paypal) incur a fee of 3.5% whereas Paypal is a whooping 8%. Debit/ credit cards merchant fees can be anywhere from 3 – 5% based on the company you book with. Using Paypal while traveling can be very convenient if you forgo the hefty conversion/ upload fees.
Currency conversion is cheaper with Wise as most of your payments will be in USD.
Paying for Cruises
Cruises are another high-ticket travel product so fees can add up quickly.
You have options of paying via EMI’s on your credit card which makes cards a preferred way of paying for your cruise holiday (Especially since it comes with sure shot security). Most cruises charge a deposit for security on your card as it is.
If you pay using bank transfer in one go some companies like Viking Cruises offer a 3.3% “discount”. This should convince you to make that transfer and save on card fees plus get a discount while you are at it.
Since Wise is more popular with SME’s, big cruise companies seldom have that as a payment option and this is one of the best way to pay for a holiday.
Paying for Car Rentals
Most car rentals accept cards and its surely the best way to pay for your car hire.
Auto Europe accepts only cards, Discover cars accept cards and Paypal, Hertz accepts all major credit and debit cards and even cash once you register for a cash deposit ID card.
Paying for Hotels
While paying for hotels in person by walking in, I usually pay using cash (Especially in India) – this helps you get a better deal too.
However, most online aggregators like Booking, Agoda etc accept card payments.
Airbnb rentals accept cards, Apple pay, Paypal and Google pay (in India). They also have Wechat and Alipay in China and various different local payment modes in other countries.
Things to Know Before Using Bank Transfer for your Travels
As mentioned in this piece by Forbes, bank transfers DO carry a certain degree of risk which no travel insurance covers either. There are a multitude of online scams going on and you can never be too safe.
However, there’s a little-known act in the US – Regulation E, that can in fact safeguard your transfer. It works more or less like a chargeback and you can contact your bank if the services you paid for have not be rendered.
Of course there’s always more scope for human error in a bank transfer too but these are minor hiccups especially when you save fees on bigger payments like – safari or cruise bookings. Most credit/ debit cards have daily limits which can curb your capacity to make big payments.
Saugat Adhikari from Magical Nepal says, “We accept bank transfers at no additional cost whereas local and international cards incur a whopping 3.5% credit card procession fees.” Now if we take the average cost of a multi day trek in Nepal as $1000, you end up shelling out $35 extra just on these fees – plus the FX markup from your local bank.
How Good is Bank Protection in Lieu of Scams?
As a queen of travel fails, I have many a scam and misadventures under my belt.
Living in India, I was under the impression that a bank debit card chargeback would be literally impossible vs a credit card chargeback – More so since your money is already gone when you use a debit card and get scammed.
However, it turned out I was totally wrong. Whilst sunning on the beaches of Bali one fine day, I suddenly started getting messages of ATM withdrawals on my ICICI bank platinum chip card. In batches of 4 withdrawals, I was debited upwards of $1000 in a matter of 30 seconds whilst I was holding my debit card in my hand.
So even though I had my debit card on me, someone was using the very same exact card to withdraw cash from my bank account through an ATM.
How was it even possible I wondered?
Much later I discovered this scam of cloning ATM cards at the ATM machines.
So simply by using an ATM for withdrawing cash, you are risking your hard earned money. The fraudsters add skimming devices to the machine that clone your card. Even though you have your card in hand, they have a replica which can be used to withdraw money.
A generic tip to avoid this ATM skimming fraud is to use ATM at the airport and stay away from ones close to popular spots as those are more sought after by fraudsters. Also using traveler checks, having multi-currency cards with limited balances or using bank transfers where you can, is a possible solution to avoid this ATM cloning scam.
The upside of this whole ordeal was that once I submitted an FIR at the local Balinese station and submitted proof of my flights and hotel stay in Bali to my ICICI bank in India, they did reimburse me in full.
Ofcourse it took a few months and several follow ups but eventually the money which I was so sure was long gone, was refunded to my bank account.
To be honest, I was quite surprised and happy since our bank cards literally have zero security or chargeback options as money is already debited from the accounts. Sometimes, I guess there is a silver lining and regulations that work in our favor, which we are seldom aware of.
How Secure is Paypal as a Mode of Payment for Travels?
Some people use Paypal as a mode of paying for travels especially high ticket products like luxury vacation rentals or cruises. This mode is very safe as Paypal offers buyers an option to open a dispute within 180 days of making the transaction. If it is not resolved amicably, then it is further escalated to the Paypal team for a claim. If you have sufficient proof of fraud, Paypal claim is generally favoring buyers.
The downside of Paypal is that many countries don’t support Paypal.
I was quite surprised while traveling around Turkey, I could not even login to my Paypal account. Later, I read that Paypal has shut their operations in Turkey.
How to Pay for a Trip in 2024 – By Travel Experts
So, I collated inputs from frequent travelers on how they pay for their travels in various countries. How do FX rates and multi currency cards work? What do travelers from around the world prefer as a mode of payment?
For me, personally, for domestic Indian travels, bank transfer, Paytm and debit/ credit cards are all equally used, based on deals offered by brands and preferences from local agencies.
Mobile processors like Paytm have taken the Indian market by storm. Paytm offers special coupons and discounts for using them as a payment mode for flights and tours. Even top local agencies like Yatra have special deals with Paytm. It is easy to use but with zero security, yet a common form of payment in India now.
For safari bookings in India, I almost always exclusively use bank transfer, especially while booking with reputed wildlife brands like Pugdundee or Tigerwalah.
The leading FX card in India is Niyo Global offering free lounge access across the country and zero fx markup fees.
Local birding guides in lesser-known places like La Fortuna (Costa Rica) or Assam Lingzey (India), will, for example, only accept payments in cash.
Cuba is another tricky country for travel payments and carrying cash in US dollars is your best bet – avoid cards altogether there.
Now let’s see what other travelers have to say –
By Iris Veldwijk from Mind of a Hitchhiker
Many African countries have tricky currencies with too many zeroes. Consequently, it’s often impossible to get a large value of cash from ATMs in a single withdrawal. But traveling in this region isn’t always super cheap and paying by card at restaurants, hotels, and tour operators is often impossible. So you’ll find yourself spending too much time queuing at ATMs and carrying around suspicious pockets of uncomfortable amounts of cash.
In Madagascar, it’s common to use mobile money for payments because many people and businesses do have a SIM card but not a bank account. Though Madagascar didn’t invent mobile money services, it’s one of the African countries where its benefits can be experienced in full. All you need is to buy a local SIM card and you’ll automatically have access to the mobile money service of your Malagasy provider. There are no requirements to have a local Malagasy bank account, unlike systems like WeChat Pay in China or Juice in Mauritius.
How to use a mobile money service? Ask if you can pay for a hotel or a tour like this. If it’s a yes and they grab their mobile phone, just upload money on your mobile money account from your debit or credit card. Via the app or a series of USSD codes, it’s possible to send money from your account to a local’s. Once each party receives a text, the transaction is complete and you’ve just saved yourself a couple of trips to the ATM two towns over. And now you can get back to your cocktail.
So far, there haven’t been any mobile money service scams that we’ve experienced in Madagascar. In fact, we have always been the initiators of such a cashless transaction as most locals aren’t aware that tourists also have access to this.
By Paul D’Souza of Paulmarina
A classic way to pay on a trip abroad or to get out cash is with your debit card. Unfortunately debit cards are not always a straightforward solution, yet if you don’t have a credit card or if you need money quick, this is the way to go. The efficiency of your Debit card depends on a few things.
Check with your bank if your card can be used internationally. For example, European debit cards can be unlocked with a bank app or your bank clerk does it for you. On the other hand, if you have an Indian debit card, you might want to ask your bank to give you a debit card that is unlocked for international ATMs and Point of Sales. We had instances where our European debit card wasn’t accepted at specific ATMs and payment points.
Most recently we tried to buy a metro ticket for Nuremberg in Germany at the ticket counter with our European debit card and once in Bangkok at an ATM, and it failed both times. Some ticket counters don’t always accept all debit card brands. Visa Debit Cards tend to have fewer issues in our experience, but that may depend on the area where you travel.
We always travel with different debit cards so that we can use another one if it fails. If you travel long and far, get a Visa, Master Card and also perhaps a Diners Club Debit Card. If one fails, you will have a backup option.
By Victoria from MyAustraliaTrip
Wise is the leading online bank when it comes to making payments abroad and holding different currencies. You can open an account for free (and getting a visa debit card from them costs only $5) and hold 50+ currencies. They pride themselves in having some of the lowest transfer fees around and make sending money abroad easy and convenient.
You’ll have bank details that match the currency which allows you to transfer money between Europe’s SEPA system and the US system for example. What most people don’t know is that you don’t even need to have money in your own wise account to make a transfer.
You can transfer directly from your own bank account and use wise to send the money anywhere in the world. This makes wise incredibly useful when it comes to travelling and I often use it to directly transfer money for accommodation or other payments which i normally wouldn’t be able to do if I didn’t have a local bank account.
By Melissa from Mybeautifulpassport
I prefer to use a credit card to pay for travel expenses, including tours, accommodations, and flights. As a Canadian, there are currently fewer travel credit card options available in Canada than in the US. The Scotiabank Passport Visa Infinite offers no foreign transaction fees and benefits like travel insurance and rewards points. It is a great card for travelling abroad to pay only the currency conversion from whatever currency, whether US dollars, Euros and beyond, into Canadian.
Using a credit card, depending on the travel destination, I book most things in advance, like accommodations. Through my travels, I have bought tours and accommodations in Belgium, Costa Rica, Japan, Portugal and more, all by credit card. While I have been lucky to have not been scammed, I had a freakout when my Panama City hotel reservation didn’t immediately send a confirmation email, so I called them: there was no reservation in their system. Luckily their system had yet to update, and everything came out okay.
With tours, some I book in advance, like kayaking the Hopewell Rocks in New Brunswick, and others upon arrival, but always by credit card whenever possible. Sometimes though, I run into situations where some places are cash only or have fees to pay by credit card. For example, in the islands of Bocas del Toro, Panama, limited places accept credit cards.
Most places are cash only, including buying tours, and there’s only one ATM on the whole island with a high fee of around $10. When booking my coffee tour in Boquete, Panama, there was a fee of about 2.5% to use a credit card, but in this case, it saved me cash as I had very limited at the time, so I paid by Visa. In this particular case, the benefit of the fee outweighed the cost.
By Rachel from Means to Explore
We always prefer to use credit cards for our expenses to get the cash back. It’s free money, and an easy way to offset costs while traveling or earn points or miles for our next trip.
Our biggest piece of advice is to make sure the cash back reward is worth it. We’ve encountered tours, usually offered by small local businesses, that offer a cash discount of, say, 5-10% if you pay with cash rather than card.
If the cash discount isn’t equal to or better than the cash back we’d get from using our credit card, we use the card despite the “higher” tour price. In the end, we’re saving more money by using the card and earning the cash back.
The tour operators can be pushy about this. We took an all-day tour around the island on our first trip to Oahu, Hawaii, and this particular company was trying to fill the last few spots on a mostly booked bus the next day.
They were adamant that the cash price was going to save us so much money, but we quickly calculated that the cash back from using our credit card would be a better deal for us. We confirmed with them that we could pay with card instead, and they reluctantly agreed.
In the end, the tour company wants to fill its bus and earn the funds, whether that’s cash in their pocket that day or a few days later when the credit card transaction clears their bank. They still get their well-earned fee for hosting a terrific tour, but you also get your cash back to help fund future travel!
By Rasika from Bae Area And Beyond
I’m a travel blogger based in San Francisco Bay Area, California and I’ve used Get Your Guide to book tours in Greece and Belgium. We booked tours in Athens, Santorini, and Brussels using Chase Sapphire Preferred credit card. It’s a multi-currency card so we paid in USD but the tours were booked in Euros.
There were no foreign transaction fees. We pay a $95 fee yearly to keep the credit card and we prefer using this Chase credit card for travel purposes so that we can get points. We get 2 points for each US dollar that we spend towards travel-related purchases including tours, hotels, rental cars and airline tickets.
We chose to use Get Your Guide instead of booking on tour websites so we could cancel or reschedule the tours if needed. Fortunately, we didn’t encounter any scams while booking our international tours or hotels.
By Daniel from Layer Culture
When it comes to traveling and spending money abroad, transaction fees can easily rank up without you fully knowing. When traveling with a debit card and you are from the UK, a Monzo or a Revolut card is your best friend since there are no fees when it comes to paying for items abroad.
Not only that, but you also get the Mastercard rate of the day when it comes to local currency conversions. However, where Revolut comes up top trumps, is when you want to withdraw more than £200 in cash in any one month. Monzo charges 3% on cash withdrawals whereas Revolut only charges 2%, so you can stretch your cash even further when paying for things on the street where your card is not accepted.
In some foreign countries, when it comes to paying for an item, sometimes the vendor will say you must pay an additional percentage or fee for using their dataphone. Always ask first if you are unsure and check the screen for the total amount before entering your pin.
By Chelsea from adventuresofchels.com
As an avid traveler over the last 10+ years, I’ve come to prefer paying for as much as possible by credit card through reputable websites on my travels. I find that by using reputable websites as much as possible, I’ve thus far been able to avoid any scams or fraud.
I personally have a travel friendly credit card through Barclays. My card has no foreign transaction fees, and accumulates points with every purchase. Some purchases are worth 1 point for every dollar and others are worth 2 points for every dollar. Points are redeemable for a variety of options but my personal choice is to redeem them against previously made travel purchases. This means for every 2,500 points I acquire, I can deduct $25 from a previously made travel related purchase.
If given the option while using my card in person when traveling, I opt to pay in local currency as opposed to USD as that avoids additional conversion fees.
This system has worked well for me thus far and I plan to keep it that way into the future!
By Julien Casanova from Oaxaca Travel Tips
Mexico is a cash-preferred society and even though I love racking up credit card points, handling cash on a daily basis is quite refreshing.
While the number of businesses in Mexico that accept credit cards is growing, so are the fees associated with swiping your card.
As an alternative, I set up a tour through my hotel when I was exploring the coast of Oaxaca, Mexico. But they understandably wanted a deposit to make the reservation.
Since they didn’t accept credit cards, they sent an associate to my hotel to confirm the tour date and collect the deposit.
I was hesitant at first but trusted the tour operator’s relationship with the hotel. I also asked for a receipt.
The last part is key.
For obvious reasons, cash payments can be risky. And without a receipt, you have no recourse should they fail to uphold their part of the agreement.
I had a similar experience when reserving tickets for a lucha libre match in Oaxaca City. It was a big match, so I knew the front-row seats would sell out.
I contacted the promoter, chose the best available seats, and he happily sent a courier to deliver the tickets in exchange for a cash payment. When I received the tickets, I was a little concerned with the quality.
I thought to myself, “Did I just get scammed?” But again, I asked for a receipt. And I remembered that the business has a reputation to uphold.
While cash payments may take a little more effort and risk, with a few precautions and faith they can also be rewarding.
By Ashlea J. Russell from She Roams About
When booking hotels I always prefer to make my reservations by credit card and there are a few key benefits to choosing this method of payment. This is the best way to pay for vacation for me since credit cards come with a paper trail. This means that it’s very easy to see how much you have been charged and when. This is especially important when booking hotels with flexible cancellations policies that you may need to cancel in the future. If a hotel charges you for your room even though you cancelled according to the cancellation policy, it’s much easier to dispute these charges with your bank or credit card provider investigating for you.
Some people worry about credit card fraud or having their credit card used for unauthorized charges after paying by credit card. The good news is, most banks and credit card providers have dedicated teams to help you if this happens. They can conduct an investigation, reverse the charges, and cancel your card immediately and issue you with a totally new one. If this happens, it’s important to contact your credit card provider as soon as you become aware of any unusual activity.
Paying for hotels with cash or by bank transfer leaves a lot of room for uncertainty. Cash and bank transfers are a fairly final way to pay for something. If you need to cancel a reservation or get a refund you are at the liberty of whoever you paid and it’s their choice to return your money or not. The money that you pay for a journey can hence be blocked. A common bank transfer scam when booking hotels is when you pay the hotel and then they don’t provide confirmation that they received the payment, or don’t provide written confirmation that the bill has been paid in full.
When you arrive at the scamming hotel they will say they didn’t receive the payment or that it was just a deposit and the room actually costs more. This leaves you in a difficult situation. You’ve already paid and you don’t have any proof that they received the money and settled your bill. In these cases most people will pay more rather than walk away from their money and try to find somewhere else to stay.
A similar scam can happen when paying cash if you don’t ask for a receipt. You will pay at check in and then when you check out the scamming hotel will say you didn’t pay and demand that you pay again, or they will call the police – a scary thought in an unfamiliar place!
This is why I always prefer to pay for my hotels by credit card. Even if my top hotel pick doesn’t accept credit card, I will move on to an option that does.
By Anwar from Beyondmydoor
Wire Transfers are an important tool in the global Economy. Daily billions of dollars are transferred between institutions and individuals via wires and interruption to wires can cause issues with the global economy. Wire transfers have more protections for the receiver than the sender of the wires.
The reason that institutions often like wires is that they are pre-cleared (the funds are verified to exist before sending), and difficult to reverse. This way the institution knows the person paid and the money is there. Wires are notoriously difficult to reverse even in cases of fraud. The types of fraud that may allow a reverse are very limited and generally related to a transfer fraudulently initiated and not to a party who intends to commit fraud or not provide a service.
Some institutions may require this, in particular some overseas companies or schools. You should first verify if there are alternative methods to sending the money. If not, go through as much due diligence as you can to the legitimacy of the institution. If the institution is in a different country, verify the bank/country of the SWIFT information provided, scammers may not be in the destination country.
Ask the institution for arrangements for paying a deposit, or pay for a month or semester if it’s a school. This way it will reduce the potential for losses. Also ask your bank for any tracking information such as an IMAD/OMAD number for fedwire. If you are a victim of fraud, you should contact your bank and see if there are any options available. Unfortunately, especially in cases of overseas transactions legal action may be required and very difficult to initiate.
So whats the verdict?
So whats the final say? Cash and bank transfers are the cheapest (but not the most secure) ways to make your travel bookings.
As for me, I always carry 2-3 different cards and some US dollars to safeguard myself especially since my travel research before visiting a destination is pretty much zero. So it makes sense to have a few different cards – Fx card, international debit/ credit card, Paypal, some cash as well as option to use NEFT for transfers.
What do you all have to say? Share with me in comments below.
This alongside regular visits to Indian jungles in search of the Royal Bengal Tiger, fueled her zest for adventure, nature and wildlife.
Now she is a renowned travel blogger, outreach expert and has worked with over 500 travel brands in the last 15 years.
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