By Christopher Elliott
"We don't accept cash" signs are popping up everywhere these days. On a recent visit to South Africa, I found them at the V&A Food Market and at the Oranjezicht City Farm Market in Cape Town. And that made me wonder: What's the best way to pay when you're travelling abroad?
When it comes to travel and money, a lot has changed since the start of the pandemic. According to a customer survey by Yoco, an African payment systems provider, the number of its businesses that don't accept cash jumped from eight percent as the pandemic was starting to 32 percent by July 2020.
"Even before the pandemic, many countries were already moving to a cashless society," says Chuck Huang, CEO of Citcon, a payment platform for businesses. "But Covid has accelerated the use of contactless payments using QR codes at checkout.
Before the pandemic, most experienced travellers carried at least two credit cards and relied on an ATM for withdrawing cash.
But today, contactless payment systems are quickly becoming the preferred way to settle your bills. Although many of these systems still rely on credit cards, there are new digital payment methods you need to know about. And some restrictions could limit your ability to use these new systems.
Experts say credit cards are slowly giving way to other, more efficient payment methods for travellers.
"Traditional credit cards aren't always the best way to pay," says Michael Sindicich, general manager of TripActions Liquid, the corporate card and expense management division of TripActions, an expense management company.
He says the pandemic accelerated the digitisation of payment systems. Contactless, smartphone-based payments have grown in popularity and are now accepted in most tourist destinations.
Nick Brennan has noticed a shift from physical to digital payments in Europe. "In the UK, I haven't paid in cash for anything for a long time. I purchase literally everything using Apple Pay on my iPhone," says Brennan, a frequent traveller who is the CEO of a phone service provider in London.
Some travellers are turning to cryptocurrencies. Digital currencies allow you to avoid several fees. Exchanging your dollars for local currency can be costly because of commissions or an unfavourable exchange rate. And many credit cards charge an exchange fee. Cryptocurrencies such as bitcoin and Ether don't require any conversion, and there are negligible fees or none at all.
In Cape Town, many merchants seemed to prefer one of the homegrown digital payment systems. One bakery at a farmers market in Cape Town wouldn't take cash or credit cards but was happy to accept a payment app called SnapScan. The digital payment company allows you to pay for pastries by scanning a QR code.
Ryan Yount, the founder of a privacy software company, has used SnapScan on his trips to South Africa.
"It's relatively easy," he says. "They have an interface that quickly links to your accounts and has simple steps for the whole sign-up process."
It's not always that easy. When I spent a few weeks in Qatar, I tried to download another payment system, Ooredoo, to pay for my passport photos. I got all the way to the screen where I had to input my phone number. Alas, it would only accept a Qatar number. I finally offered the photographer a 10 euro note, which was far more than the cost of the passport photos. He accepted.
"More vendors are accepting digital payments," says Dan Richards, CEO of Global Rescue, a travel risk management company. For instance, in the Caribbean, Richards has noticed more merchants that accept Venmo and PayPal.
Because many travellers already have these payment systems on their phones, it makes using a tap-to-pay system convenient. But don't forget to download the app before you leave, he warns. In my experience, activating the PayPal app overseas can be tricky because of the company's security measures, which frown upon foreign IP addresses.
These new payment systems are far from perfect. As new ways to pay when you're abroad have emerged, so have new scams. They include malicious QR codes that redirect payments, steal sensitive data and install malware. So before you switch to a tap-to-pay option, make sure you fully understand mechanisms such as identity verification and authentication, and always check user reviews of the payment systems before you install them.
And don't rely entirely on your phone. "Have a backup payment plan in case your device gets lost or stolen," advises Aubrey Turner, executive adviser of the cybersecurity firm Ping Identity.
What's behind the shift in payment systems? Part of the reason is the pandemic. Merchants were afraid that cash spread germs, and that fear isn't going away any time soon. But the move to digital options also represents a tectonic shift in payment methods. The new app-based payment systems are easier to use or charge lower merchant fees than credit cards, or often both.
Travellers have driven the changes, too.
"They've developed new payment habits during the pandemic," says Kristian Gjerding, CEO of CellPoint Digital, a payment platform. "Cards can still be used, but the convenience of mobile devices, e-wallet options, contactless payments and QR codes (has) transformed the way we pay for goods forever."
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