Getting and Spending Money

You might not have noticed, what with the global pandemic and whatnot, but I think we’ve passed through a golden age of paying for stuff while traveling, and have slipped into a more balkanized, complex world. Let’s try to unpack what’s happening.

It used to be that you’d land in a city, grab some cash from an ATM, and then use a mix of cash and credit cards from that point forward. However, a combination of the rise of smartphones and the push for contactless payment during COVID has brought in a new ecosystem of payment methods, often at a national or regional level. In many cases, these platforms aren’t actually available for non-residents, at least during a short-term stay.

Getting Cash

In most destinations, having some local currency in your pocket is still a good idea. Unless you need a suspiciously large amount of cash, you should visit an ATM at the airport after landing. Remember to look for an actual bank ATM, which are generally in the arrivals hall after you’ve passed through baggage claim and cleared customs. Many airports have currency exchange kiosks in the baggage claim area, with very high fee ATMs. Skip those.

In terms of value, ATMs continue to be pretty good, as long as your bank doesn’t charge extremely high fees. Most don’t these days. Keep in mind that, as a tourist, you’re never going to get the actual exchange rate you find listed on a currency exchange website – those are the interbank rates. But ATMs usually won’t be more than a few percentage points off.

Using Cash

With the exception of China and some of the Nordics, you generally won’t find a lot of places where cash is truly useless. But if you’re venturing outside of western europe, it’s worth being a little strategic in how you use cash, both to protect yourself and to be a good global citizen. Bear in mind that in many places it’s really hard for a vendor (even in a retail shop) to keep a meaningful supply of currency on hand. Banking systems make it difficult for them to acquire currency consistently, security situations can make it risky to have money on site, and many businesses don’t have lines of credit or savings that allow them to leave money sitting idle in a cash register. When you offer to pay for a coffee with a large denomination bill and get flatly rejected, it may be because they simply don’t have the cash on-hand to make change. Their only option for swapping your bill for smaller denomination bills might be to pay an informal neighborhood money changer with a high fee – not worth the trouble.

A thoughtful traveler will work to break down large denomination bills quickly and sympathetically. Transit systems, busy shops and government offices are generally good places to do that – places with a high daily turnover of cash.

Some travelers get overwhelmed learning a new currency, especially distinguishing between coins. If you find that each day your pockets are bulging more and more with coins, consider doing a nightly filter. Set aside all the lowest denomination coins and don’t stress about using them. Look for an opportunity to donate them before leaving the country. Better to leave a few dollars in a donation box than stress out about which coin is the 5 cents piece with a big line behind you.

What About Credit Cards?

Credit cards are still a great option for purchases at hotels, fancier shops and any multinational outpost. However, post-pandemic, they’re no longer the cash alternative they once were in many places. Credit card networks (VISA, American Express) impose very high transaction costs on vendors. Although the fees are lower outside the US, they can still be a substantial cost to businesses. Those fees and the mass adoption of smartphones have led to the creation of applications which provide a “digital cash” experience.

China got there years ago with the widespread adoption of WeChat for payments. Many vendors in China simply don’t deal in cash anymore. Payments are done via ubiquitous WeChat QR codes. In the US, the closest comparison might be using Venmo to pay a vendor at a farmers market or craft fair. Except instead of using it to get a dozen eggs from a card table, you might be buying a new laptop or an outfit. When you use one of these tools, you generally have an account with its own balance, which may or may not be tied back to a traditional bank account. By avoiding the traditional banking system, these applications can keep transaction fees very low.

Kenya’s M-PESA is another system which pioneered mobile payments using SMS messages. The Baltics have systems like Paysera. Vietnam has a system provided by Viettel. In almost all cases, it’s nearly impossible to sign up for one of these services without being a resident of the country due to fears about money laundering. During our recent trip to Nairobi, there were a few shops that were shocked we didn’t have M-PESA, though they were always gracious in working it out.

So, what can you do as a tourist? Do your research! Know which systems are in use, what alternatives might be available, and be ready to explain to a vendor why you’re only able to pay in cash. If you’re going to be doing a longer stay, look into whether you’re able to sign up for an account with the local service. Often it’ll require a mailing address, and sometimes a proof of a visa. This is one of those areas in which you should do your best to stay within the lines – you don’t want to end up flagged for suspicious international financial transactions.

Where We’re Going

Looking longer term, a move to digital currencies might enable low-fee payment options which could work across borders. It’s also worth remembering that many of these big shifts have taken place during the pandemic, so countries and companies haven’t necessarily had to work out how to fully serve tourists. National tourism boards know that visitors need to be able to pay for things, so we may see new short-term options become available. Here’s hoping.

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