Digital Multi-Currency Accounts For Travel & Remittance: Which is the best multi-currency account?

Travel and tech-savvy Singaporeans are no strangers to the popular multi-currency digital wallet YouTrip and multi-currency savings accounts like the DBS Multiplier.

This month, TransferWise and Revolut will launch in Singapore, joining the fray of digital multi-currency accounts.

If like me, you still exchange large sums of cash before you travel, you may be wondering if you can skip the money changer entirely by using a digital multi-currency account like Youtrip, TransferWise and Revolut. Or, are these new services actually better than a multi-currency savings account provided by a bank?

Let’s review and compare.

YouTrip vs Revolut vs TransferWise vs InstaReM: Which is the best multi-currency account? 

Launched in August 2018, YouTrip has enjoyed a huge lead over the rest of the market, but is it really the best after the launch of TransferWise, Revolut and InstaReM?

TL;DR

Easy-to-use app: Having signed up for all of them, the interfaces of YouTrip and TransferWise are the cleanest and easiest to understand for me personally.

However, this might be because Revolut has more features (saving vaults, watchlists and an in-built budgeting tool). InstaReM’s registration form is slightly convoluted. I was asked to fill in my occupation, industry and net worth (do you even know your net worth?!). They also have an InstaPoints system that you can use to earn points for signing up and referring friends.

Best exchange rate: All digital multi-currency accounts use either mid-market rates or Mastercard wholesale rates, which means they’re similar and much closer to what you see in online currency converters than that of banks.

Cheapest fees: YouTrip advertises no fees at all, and Revolut states that it charges no fee for most currencies during foreign exchange market hours. Outside of those hours, for Hong Kong, Australia, US, UK and Europe, TransferWise and Revolut offer lower than average fees at 0.44%.

Able to remit money and convert money online: As of now, only TransferWise and Revolut can do both.

YouTrip fees and app features

For the uninitiated, YouTrip is developed by You Technologies Group Limited and based in Hong Kong and Singapore. Their primary target is travellers. You can get a YouTrip card and convert currencies in-app using Mastercard’s wholesale rates. YouTrip does not have remittance services.

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Having a YouTrip card means that you don’t need to specially go down to a physical money changer and can get rates that are real-time and “close to what is published on Google”. The card is a Mastercard debit card with a 16-digit number that can also be used as an EZ-link card in Singapore, which is a plus for some.

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Signing up is easy peasy, but it takes 7 to 12 days to process the application and deliver the card, which is kinda long.

Travellers who use YouTrip say that they like that you can monitor the conversion rates, exchange and store foreign currencies for use at a later time (10 selected currencies).

Withdrawing money overseas incurs $5 each time, which isn’t exactly cheap, so it’s still important to bring some cash along.

Ok! All caught up with YouTrip. What about the newer players?

TransferWise Singapore fees and app features

UK-based TransferWise offers low-cost online remittance services and a “borderless account” that comes with a neon green debit card. You can use it to pay overseas as long as there are payment terminals that support Mastercard.

The TransferWise platform is easy to use and very transparent. In other words, what you see is what you pay. They promise low conversion fees based on mid-market rates. Signing up is easy with no need for a minimum balance and you get your card in about 3-4 days.

With the card, you can withdraw up to SGD $350 overseas with no card fees (every 30 days), but additional fees may be imposed by partner banks and ATM terminals.

The average fee is 0.67% when making cross-currency transactions, 6 times cheaper than the market average of 4% per card in Singapore to convert currency for spending overseas or remittance.

TransferWise also has an edge over other services for certain currencies, with fees as low as 0.44% for Hong Kong, Australia, US, UK and Europe, which are popular destinations where Singaporeans study or work overseas.

Revolut card and app features

Revolut has garnered the attention of many Singaporeans who have joined their waiting list since the start of 2019. Like TransferWise, it provides online remittance and currency conversion at low fees of between 0.35% and 2% (outside foreign exchange market hours).

The Revolut card (debit) is supported by VISA. It isn’t launched yet, but once you have access to the Revolut app, you can top up $20 and apply for the card. Within the Revolut app, you’d also get budgeting tools, vaults for saving toward your goals and watchlists to monitor foreign currency movements.

You can withdraw up to SGD $350 overseas with no fees (every 30 days), although overseas ATM terminals and banks may impose their own fees.

According to finder.com, Revolut may come with more caveats and subscription fees for transferring higher amounts when compared to TransferWise.

One interesting feature Revolut provides are disposable virtual cards, but you only get them with the paid membership tiers. The virtual card has location-based security and it can be destroyed to prevent fraudulent transactions. The paid membership tiers also offer loungekey passes, but I guess they’re more for business travellers.

Revolut has over 8 million users in Europe and Australia. Signing up for an account is free, but you need to top up a minimum of $20 in your balance before you can apply for a physical Revolut VISA card.

InstaReM fees and app features

InstaReM is primarily an online remittance company. The Singapore-based fintech company is in 60 over countries and receives good reviews for offering low commission and fixed fee transfers. As they’re the first non-bank to offer money remittance out from India, you might find it useful if you have connections there.

You get to earn bonus InstaPoints upon joining, referring members and transferring money, for businesses who need to pay freelancers working in remote countries.

The service is designed for people studying and working overseas and businesses who need to pay freelancers, vendors and staff working remotely in different countries. InstaReM currently only has business debit cards, but there are plans to launch consumer funded cards.

What are “mid-market rates”? 

TransferWise, InstaReM and Revolut use mid-market rates. But what are these magical low rates they speak of?

Mid-market rates are basically the average of all the buy and sell rates currently in use. Banks use them too, but only to trade between internal partners. They then mark up the rates for consumers.

Therefore, by converting your currencies at mid-market rates, you get rates that are closer to what you find on online currency converters and hence, more favourable to you. You can check with sites like xe.com or use a tool like TransferWise’s currency converter.

Does that mean I don’t have to exchange foreign currencies ever again?

This is because many countries are still very dependent on cash and the limit of $350 without fees (TransferWise and Revolut) may not be sufficient for long trips.

Don’t forget that you’d have to hunt down the right ATM terminal overseas to get fee-free withdrawals. Otherwise, admin/processing fees may apply.

Is using a digital MCA better than a bank’s MCA?

Banks rely on legacy structures that are still in place, which can mean unfavourable exchange rates and high fees.

But borderless multi-currency accounts like TransferWise, Revolut and InstaReM are not tied to legacy structures like the SWIFT network and multiple bank partnerships. Therefore, they can provide much lower fees, up to 6 times cheaper for currency conversion and remittance.

Example: SGD to THB on 9 October

*Before fees are applied.

As you can see, TransferWise’s rates were equivalent to XE’s live rate. Factoring in TransferWise’s transfer fees of approximately 0.66%, converting SGD $1000 cost $6.60, yielding a net of THB 21,833. Overall, that still yielded more than the DBS multiplier.

A digital multi-currency account may be more convenient to apply as well. Opening a bank account comes with requirements, one of which is to maintain a minimum balance. You don’t have to do that for electronic multi-currency accounts.

An irritating thing about using a multi-currency savings account is that you’d retain cents in various currencies that can’t be converted back after your travels.

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With a digital multi-currency account like TransferWise, you can spend with your borderless Mastercard or VISA card and have the system choose the best existing currency to convert from. This gives you a chance to spend loose cents that you can’t convert back to SGD.

That said, using a local multiplier savings account is convenient as you can use it to pay and withdraw money in Singapore seamlessly. You can also earn interest rates on certain foreign currencies.

In contrast, you can only withdraw up to $350 per month with no card fees overseas with an electronic multi-currency account and you can’t withdraw local currency in Singapore when Payment Services act comes into effect in the later part of 2019.

So, if you’re someone who only travels once in a year, multi-currency savings account from a bank might be sufficient.

However, if you have financial obligations overseas or frequently travel, having a digital multi-currency account on hand definitely generates significant savings over time.

This article was first published in MoneySmart.