Debit cards are emerging as the cheapest way to pay for purchases and withdraw cash abroad, a study said on Monday.
The study of the real costs of foreign currency transactions for outbound travellers in 12 markets in Asia, Africa and the Middle East by MasterCard found that debit cards had the lowest overall costs among the foreign currency products.
Cash and traveller's cheques incurred high breakage costs, the amounts spent converting unused foreign currency back into local currencies, said the report published in
The Business Times
"What we've found is that consumers may want to separate their travel budget from other spending," Robert Walls, head of debit product management for the Asia-Pacific, Middle East and Africa, was quoted as saying.
The study estimated direct product costs such as transaction fees charged by card issuers and additional margins built into the exchange rate offer by a card issuer.
Debit costs using personal identification numbers had the lowest average products costs across the markets when used to pay for purchases.
For a $500 transaction, the cost was typically 1.9 percent. Credit cards, traveller's cheques and cash averaged 2.5 to 2.6 per cent.