Currency exchange office: an outdated solution
A currency exchange office is a commercial establishment where individuals can exchange one currency for another, according to current exchange rates. These offices are typically located in areas frequented by travelers, such as airports, train stations, or in tourist zones.
The problem is, they are expensive: even though the real-time exchange rate may be favorable, the imposed fees weigh down buying power. Commissions depend on the office, and unfortunately, they are often not very transparent.
For example, for 100 € on January 27, 2024, you get 83.50 British pounds in a large Parisian exchange office. However, the rate at the same time is 85.80 British pounds for 100 €. In the end, changing your euros costs 2.3 pounds, which is 2.69 %. Depending on the amount to be exchanged, other operations may be more interesting.
Today, there are several alternatives to traditional currency exchange offices that offer lower fees... and that are more convenient than currency sales establishments.
Withdrawing foreign currencies from a local automatic teller machine (ATM)
One alternate solution is to withdraw money from an ATM, upon arrival at your destination. These "ATMs" are especially available in airports and train stations. Again, fees may apply and depend on your banking institution and the bank owning the concerned ATM.
Some online banks offer very low fees, or even none, on foreign card withdrawals. At Fortuneo and Ma French Bank, foreign withdrawals are free. Boursobank offers 1 free withdrawal per month then charges 1.69% on subsequent withdrawals. Revolut allows 5 free withdrawals per month and 0% fee up to €200, then 2% afterward. At Monabanq, 3 withdrawals are free per year, then the fee is 2% on each additional withdrawal. Other neo-banks have set affordable rates, like 1.70% per withdrawal at N26.
Traditional banks are much more expensive. For instance, a fixed commission of €5 per withdrawal at Credit Cooperative, roughly €3.20 + 2.4% per withdrawal at Credit Agricole (rates vary depending on regional branch), €3 + 2.70% at Societe Generale, and up to €3 + 2.90% at CIC.
Note also that cash withdrawals can sometimes be almost unnecessary depending on the destination. In some countries, this form of payment is becoming increasingly marginal. Inform yourself in advance about local practices, as well as bank fees for card payments. The fees charged by banks are different here. Some online banks stand out with no fees on certain bank cards, while others feature exorbitant commissions.
Prepaid travel cards
These cards allow you to load the foreign currency of your choice, with competitive exchange rates and no high transaction fees. You can use them just like a normal bank card. They are available from MasterCard and Visa, among others.
These prepaid travel cards are very practical because they can be reloaded. You can add funds to them before or during your trip, often in several different currencies. This allows you to control your travel budget and avoid exchange rate surprises.
One of their main advantages is their level of security. In the event of loss or theft, they can be quickly blocked. They are also practical for budget control, as you cannot spend more than the pre-loaded amount.
Here too, however, you need to be careful about charges.
Mobile money transfer applications
Unlike in France, cash is tending to disappear in some countries. What's the point of exchanging currency for cash when you can pay with your smartphone?
In China, for example, mobile payment applications have revolutionized the way transactions are carried out, making the use of cash and traditional bank cards almost obsolete.
Alipay (Zhifùbao) and WeChat Pay (Weixìn Zhifù) have become the country's biggest mobile payment platforms. They enable users to link their bank accounts and carry out a variety of transactions, including merchant payments, money transfers, bill payments and even financial investments directly from their phones.
These applications primarily use QR codes for transactions. Users simply scan a merchant's QR code to pay, or present their own QR code to receive payment.
Sweden, a country outside the euro zone, is often cited as the country that uses the least cash in the world. In this country, the majority of banks no longer handle cash, and many shops, restaurants and other services only accept payment by card or mobile app. Mobile payment applications such as Swish are very popular and widely adopted by both individuals and businesses.
Finally, in Anglo-Saxon countries in particular, mobile payment solutions such as Apple Pay can also be used, making the need for cash less pressing for users of these solutions.
Despite these technological advances, however, it's still a good idea to hold on to a few banknotes, which can come in very handy when the going gets tough.
