UPI vs forex cards vs cash: Indian travellers may want to check the hidden costs first. (Image: Google)
Mumbai: For Indian travellers, making payments abroad is becoming increasingly convenient. Instead of searching for local currency or pulling out a card, travellers in participating countries can simply scan a QR code, enter the amount and approve the transaction using UPI. The Unified Payments Interface (UPI) has expanded its international reach to 11 countries, giving Indian users another option for making payments overseas.However, while the convenience is clear, one question remains important for budget-conscious travellers: does using UPI abroad actually cost less than cash, forex cards or international credit and debit cards? The answer is not straightforward.
International UPI can be economical in some situations, but it cannot automatically be considered the cheapest payment method for every traveller or every transaction. The final cost depends on the exchange rate, currency conversion charges, bank fees and the type of payment instrument linked to the UPI account.
A payment may appear to be fee-free when it is made through UPI, but that does not necessarily mean there is no currency-conversion cost. The most important figure for an Indian traveller is the final amount deducted from the bank account in rupees. The exchange rate used for converting the foreign currency into INR can have a direct impact on that amount. A small difference may barely be noticeable on a low-value purchase such as coffee or a snack. However, the impact can become much larger when the traveller pays for hotels, shopping, restaurants, transportation or other expensive services.
Akshay Mehrotra, MD and Group CEO of Fibe, said travellers should compare the overall cost instead of assuming that a particular payment method will always be cheaper. According to him, consumers should look at the final INR cost, as exchange rates and conversion charges can make a significant difference, particularly when transactions are frequent or involve larger amounts.
Forex cards remain popular among international travellers because they can provide greater certainty about the exchange rate. When foreign currency is loaded onto a forex card, the rate is generally determined at the time of loading. This can be useful for people planning their travel budget in advance and wanting to avoid depending entirely on the exchange rate available during their trip. However, a forex card is not necessarily the cheapest option in every case.
Travellers should look at the complete fee structure, including card issuance, loading, reloading and ATM withdrawal charges. Destination-specific costs can also affect the overall expense.
Credit and debit cards continue to be useful overseas, particularly in destinations where card payments are widely accepted. The important factor is the card's foreign exchange markup. Some cards charge relatively high forex fees, while others offer low or even zero forex markup. As a result, a suitable international card can sometimes compete with or even beat UPI on total cost. Travellers should also watch out for dynamic currency conversion (DCC).
If a foreign merchant asks whether the payment should be processed in Indian rupees instead of the local currency, the option may look convenient because the rupee amount is immediately displayed. However, the exchange rate used for such a conversion may not always be favourable. In many cases, paying in the local currency and allowing the card issuer or network to handle the conversion can be more beneficial.
Despite the growing popularity of digital payments, travellers should not completely abandon cash. Local markets, small shops, taxis and merchants without digital payment facilities may still require physical currency. Keeping some local cash can therefore be useful as a backup. However, cash comes with its own costs. Currency exchange providers may build a margin into their rates, while carrying large amounts of money also creates security concerns. ATM withdrawals can add another layer of expense. The traveller's bank, the overseas ATM operator or both may charge fees, while currency conversion can further increase the final cost. For this reason, repeatedly withdrawing small amounts of cash during a trip may prove expensive.
UPI has become a routine payment method for millions of Indians at home, from grocery purchases and restaurant bills to transfers and everyday merchant payments. Its international expansion is now bringing some of that familiarity to overseas travel. At participating merchants, travellers may be able to use the same basic payment process they already know in India.
This could reduce the need to carry substantial amounts of cash or use a physical card for every small purchase. Mehrotra said the international expansion of UPI is giving travellers greater choice and flexibility, allowing them to select different payment methods depending on the destination and type of transaction. The expansion into markets such as Uzbekistan is another development in this broader international push.
Despite its growing international presence, UPI is not a universal replacement for cash and cards. Acceptance can differ between countries, cities and individual merchants. Travellers should therefore check whether international UPI is supported at their destination and whether their bank account is enabled for such transactions. Payment limits should also be checked before departure. Banks and payment providers may have specific limits for international UPI transactions.
Before confirming a payment, travellers should carefully check the foreign currency amount, INR equivalent, exchange rate and any applicable charges. Security is equally important. Users should scan only genuine merchant QR codes and verify the merchant's name and transaction amount before entering their UPI pin. The pin should never be shared, and unexpected payment requests should not be approved.
There is no single winner for every international transaction. UPI can be highly convenient and potentially cost-effective, especially for smaller merchant payments where it is accepted. Forex cards can offer greater predictability, while low-forex-markup cards may be competitive for larger purchases. Cash remains essential as a backup in places where digital payments are unavailable.
For travellers, the smartest approach is not to depend on one payment method. Compare the exchange rate, conversion charges, bank fees and withdrawal costs before deciding how to pay.
