NRI Banking Services

Forex Card vs Credit Card vs UPI for NRIs

Hatim Dudhiyawala
Written by Hatim Dudhiyawala
Updated on: May 1, 202617 mins Editorial Standards
Forex Card vs Credit Card vs UPI

A forex card is a prepaid travel card loaded with various foreign currencies, issued by Indian banks or financial institutions. You can use it to pay for all your expenses in the local currency of the place you are in. It is widely accepted at ATMs, online, POS (Point os Sale), and by major merchants across foreign countries. It avoids the risk of theft as you are ot required to carry hard cash and offers locked-in exchange rates.

International credit cards have a pre-approved usage limit for international transactions. These are highly secure against fraudulent activities and are accepted almost everywhere. Frequent travelers can benefit from these cards, as they can get access to a premium lounge, air miles, etc. Moreover, UPI allows individuals to make real-time payments via smartphones. It allows sending and receiving money, making transactions, pay bills through QR codes, VPA, or a UPI-registered mobile number.

The ideal choice among a forex card, a credit card, and UPI for NRIs depends on the location, transaction frequency, need for credit, and other factors. Keep reading further to know more about which is the best digital payment instrument for both domestic and international transactions.

Key Takeaways
  • A forex card can be used to pay for all expenses in the local currency of the places you visit. It allows ATM withdrawals, and it can be reloaded online via the bank at the current rate.
  • It reduces the burden of carrying hard cash, hence avoiding the risk of theft. However, it cannot be used to make domestic transactions but some cards may allow limited domestic usage depending on issuer policies.
  • A Forex card cannot be reloaded instantly, and it might take up to 12-24 hours. Also, NRIs may need to pay additional fees, such as ATM withdrawal fees, reloading fees, and refund fees.
  • International credit cards are supported by major payment processing networks. Due to its pre-approved international usage limits, it can be very useful in an emergency abroad.
  • The banks may freeze the card sometimes on suspected fraud, or failing to repay the balance can attract a higher interest rate.
  • UPI payments are widely accepted by merchants across India, and it allows 24/7 real-time payment processing at no cost.
  • The transaction may face transaction failures sometimes, and a lack of digital knowledge can cause fraudsters to scam people.

Forex Card vs Credit Card vs UPI for NRIs

Choosing among a forex card, a credit card, and UPI for daily expenses can be confusing. The table below lists the key differences between a forex card, a credit card, and a UPI for NRIs:

Basis Forex Card International Credit Card UPI
Definition It is a card preloaded with foreign currency that can be used to pay for all expenses in the local currency of the place you visit. These are payment cards designed for global use and have a pre-approved usage limit. UPI (Unified Payment Interface) allows real-time fund transfers via smartphone.
Usability in India It is widely accepted at ATM, online, and POS. It is widely accepted everywhere Accepted by most merchants via NRE/NRO accounts
Usability Abroad Works in countries with loaded currencies Works globally UPI is primarily designed for India. Limited international acceptance exists through partnerships (e.g., UAE, Singapore, France), but usage is still evolving.
Cash Withdrawal from ATM ATM withdrawal is allowed, but a small fee may apply per withdrawal Available but expenses as it charges 2-3% fees Not applicable to UPI payments
Security Since it is preloaded, the loss will be limited to the loaded amount. If lost, it has high-risk. However, chargeback protection is available. It is very secure as it has banks' 2-factor authentication and UPI PIN as well.
Top-Up/Reload Reload online or through the bank at the current rate Not applicable as the credit keeps revolving The amount is auto-debited from the linked NRE/NRO account
Best Suited For NRIs travelling frequently or someone who wishes to lock the foreign exchange rate in advance Large purchases, emergency spending, or covering travel expenses Day-to-day expenses in India

What are Forex Cards?

Forex cards are prepaid cards that are accepted internationally. It is issued by banks and financial institutions, and users can pre-load it with several foreign currencies. Once loaded, you can use it to pay for all your expenses in the local currency of the place you are in. These cards are classified into two different categories based on their usage, such as single-currency forex cards or multiple-currency forex cards.

When you are still in India, you can load the forex card as per the applicable forex card rates of the bank. Once you reach your destination, use it to make payments just like a debit card. You can even use the card to withdraw local currency from ATMs abroad.

Pros and Cons of Forex Cards

A forex card may offer locked-in exchange rates, but there are additional fees that come along, such as reloading fees and issuance fees. The table below lists the pros and cons of using forex cards for NRIs:

Feature Pros of Forex Cards Feature Cons of Forex Cards
Globally Accepted Major merchants across countries accept foreign currencies. Limitations on Domestic Payments As an NRI, if you are traveling to India, you cannot use the card to make domestic transactions.
Reduced Transaction Costs It reduces the burden of carrying hard cash and converting it to foreign currencies. Also, in terms of transaction costs, these are a lot cheaper. Cross-Currency Transaction Fees You will need to pay additional conversion charges if you spend in a currency you didn't preload.
Easy Withdrawal You can withdraw cash from an ATM or a branch of a partner bank in the respective foreign countries. Delays in Reloading Reloading the card is not an instant process. It might take up to 12-24 hours.
Safety Against Theft Avoids the risk of theft as you don't need to carry hard cash. Even if you lose the forex card, you can replace it easily by submitting the valid documents. Additional Fees Apart from the transaction fees, NRIs need to pay additional fees as well. It includes ATM withdrawal fees, reloading fees, refund fees, and issuance fees.
Locked-in Exchange Rates The card providers lock in the exchange rate for a pre-loaded amount and for a certain period. During this period, you won't be affected by any fluctuation in exchange rates. No Credit History Unlike credit cards, forex cards are pre-paid, and hence it has no credit history.

Forex cards are ideal for tourists and short stays in foreign countries. Let's now understand what international credit cards are. 

What is an International Credit Card?

International credit cards are regular domestic credit cards that have a pre-approved usage limit for international transactions. Most of these cards are affiliated with either MasterCard, VISA, Diners Club, or American Express payment processing networks. These are accepted almost anywhere and can offer several benefits.

Pros and Cons of International Credit Cards

International credit cards are supported by major payment processing networks. However, the convenience of a credit card can lead to overspending. Here are the pros and cons of carrying an international credit card:

Feature Pros of International Credit Cards Feature Cons of International Credit Cards
Security Against Fraud Major payment processing networks support credit cards. It means these are highly secure against fraudulent transactions. High Network Exchange Rate For many currencies, the exchange rates charged by credit card processing networks can be significantly higher.
Safety Net During Emergency Credit cards can be very useful in any emergency abroad as it has pre-approved international usage limits. Unexpected Freeze Banks may freeze cards sometimes on suspected fraud, which can be troublesome when abroad.
Zero/Low Mark-Up Cards Option For example, World Safari, RBI, Scapia, and other premium travel cards. Withdrawal Fees Along with cash advance fees, cash withdrawals can also incur extra processing charges.
Accepted Globally These cards are accepted almost everywhere. Foreign Transaction Fees Separate transaction fees may be charged for processing every foreign transaction. This is in addition to the markup (2 to 4%) on exchange rates.
Benefits and Rewards It can offer various benefits to frequent travellers, such as air miles, premium lounge access, and more.  Higher Interest Rates If you fail to repay the balance on time, higher interest rates may apply.

Frequent international travellers who incur high-value expenses while living abroad can find international credit cards a beneficial option. Let's now understand what UPI for NRIs is.

What is UPI for NRIs?

UPI stands for Unified Payment Interface, which is a real-time payment system that allows instant money transfers via smartphones. It is developed by the National Payments Corporation of India (NPCI). UPI allows users to receive and send money, pay bills, and make other transactions only through a single mobile app. It allows payments through QR codes, virtual payment addresses, or UPI-registered mobile numbers, avoiding the need to enter detailed bank information.

NRIs can link their NRE and NRO accounts with UPI applications to make domestic transactions or P2P (peer-to-peer)** fund transfers. NPCI now also allows access to UPI using international mobile numbers in certain countries. It includes the UAE, Singapore, Canada, Australia, Oman, the UK, the USA, Qatar, etc.

**Peer-to-Peer (P2P) Fund Transfer: It is a payment system that allows you to send money directly to another person through a digital platform.

Pros and Cons of UPI

Although UPI can be used with an active SIM connection and a smartphone, it may have strict per-day transaction limits. The table below outlines the pros and cons of UPI:

Feature Pros of UPI Feature Cons of UPI
Accepted in India UPI payments are accepted widely by merchants across India, whether small, medium, or large. Prone to Growing Scams Although highly secure, fraudsters often try new scamming techniques to dupe people, mainly targeting elderly people. The main cause behind this is a lack of knowledge about online apps or terms.
Security Features NPCI uses two-factor authentication and encrypted messaging as standard. It makes the transaction process highly secure. Transaction Failure You may sometimes face transaction failures. It means the amount will get debited from your account, but won't get credited in the receiver's account.
Convenient to Use Only a smartphone and an active SIM connection are sufficient to make payments through UPI apps. Issues with Refund Refund for failed transactions may take longer.
Low-Cost Transactions Currently, UPI transactions are free of cost. However, UPI payment processing fees may be introduced in the future. Transaction Limits UPI applications may have strict per-day and per-transaction limits. For example, for regular UPI apps, the per-day and per-transaction limit is Rs. 1 lakh. It can make it difficult to make high-value payments.
Real-time Payment UPI has 24/7 real-time processing, which makes payments in India easier for NRIs living abroad in different time zones. Dependence on Internet Connectivity UPI transactions are heavily dependent on stable internet connectivity. Poor internet can cause transaction failure, timeouts, or money getting deducted without reaching the receiver.

UPI applications can be useful for NRIs who make domestic payments from their NRE and NRO accounts while staying abroad.

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The Bottom Line

The ideal choice between a forex card, a credit card, and UPI depends on one's personal requirements, transaction frequency, need for credit, and other factors. Forex cards are ideal for tourists and short stays in foreign countries, and UPI is useful for NRIs making domestic payments from their NRE/NRO account. Conversely, international credit cards are beneficial for frequent international travellers who incur high-value expenses while living outside India.

Additionally, remember that as an NRI, you need an NRE/NRO account to obtain a forex card, credit card, or make UPI payments. To know how to open an NRE/NRO account, connect with an expert at Savetaxs. We are a team of experts who can help you with all your NRI banking needs. Be it opening a NRI bank account or repatriation, our team can guide you throughout the process. Contact us right away as we are actively working 24/7 across all time zones.

Glossary
  • Balance Sheet: A Balance Sheet is a Financial Statement Containing Assets, Liabilities, and Equity of Shareholders.
  • Best Judgment Assessment: The Best Assessment Judgement Performed by an Assessing Officer on the Financial Conditions of the Assesse.
  • Capital: Capital, a Financial Term Used for Business Operations, Like Bank Accounts, Stocks, Assets, Etc.
  • Capital Gain: Capital Gains, Profits on the Financial Assets at the Time of Selling.
  • Double Taxation Avoidance Agreement (DTAA): DTAA, an Agreement Signed Between the Countries to Avoid Double Taxation.
  • Direct Tax: Direct Tax, a Type of Tax Imposed on Income, Sales, or Property, Based on the Ability to Pay.
  • Advance Tax : Advance Tax is a Tax Paid in Advance, in Installments, During the Same Financial Year.
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Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.

About Author
Hatim Dudhiyawala
Hatim Dudhiyawala Certified Public Accountant (CPA)

Hatim Dudhiyawala is a Certified Public Accountant (CPA) with SaveTaxs and specializes in Indian and NRI taxation. He advises individuals, NRIs, and businesses on income tax filing, capital gains taxation, DTAA benefits, fund repatriation, and tax compliance. With experience in cross-border tax matters, Hatim helps taxpayers understand complex regulations and make informed decisions. Through his articles, he shares practical insights to help readers stay compliant and manage their tax obligations with confidence. See Full Bio

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Frequently Asked Questions

The better choice depends on the use case. UPI is best for making everyday payments in India, while forex cards are best for planned foreign-currency spending. Alternatively, credit cards are best for frequent travel or reward-based spending.

Yes, NRIs can use UPI in India if they have a linked NRE or NRO account with a supported bank and a registered international number in eligible cases. 

UPI is generally the lowest-cost option for domestic payments. Conversely, credit cards often carry foreign exchange markups, and forex cards may have loading or service charges.  

A forex card is better when you want locked exchange rates, controlled spending, and reduced exposure to currency fluctuations during travel. 

Forex cards are primarily designed for foreign-currency travel expenses. It means they are less practical than UPI for everyday spending in India.