Traveler's checks - what is it? How to pay by traveler's checks and where to buy?

Traveler's checks American Express is a convenient and reliable way to store cash in foreign currency. Possessing simultaneously the qualities of cash (purchasing power and face value), they have all the advantages of financial receipts (they can be restored in case of loss, and bequeathed). The safety of the funds invested in the purchase of traveler's checks is guaranteed by the largest international corporation, the history of which has been counted for 164 years.

Traveler's check: concept and basic functions

It is not difficult to explain what travel checks are, it is a payment document, which is a monetary obligation issued by an issuing company, to pay the amount (denomination of a check) to the owner whose signature sample is presented on the check. In fact, they represent a complete replacement of cash.

You can take advantage of a check by simply cashed it, and paid it for purchased goods or services. To do this, in the presence of an operator or cashier, put a personal signature on the check (at the bottom of it) a second time.

The safety of funds invested in the purchase of traveler's checks is guaranteed by issuers, which include travel companies, commercial banks, as well as major international corporations, in particular Travelex and American Express.

A bit of history ...

Now the company American Express, in addition to traveler's checks, issues payment cards, revolving credit cards, and is also one of the largest travel agencies in the world.

The company was organized in 1850 by William Fargo, Henry Wells and John Butterfield for the purpose of providing a cash transportation service throughout the country. Business developed rapidly, and by 1882 the company successfully competed in the field of money transfers with the post office of the United States.

By 1890, remittances began to conquer the European continent, where such a service was not yet available. William Fargo, who went to Europe to get things going, returned furiously. Although he was the president of a large company, he could not exchange his traditional letters of credit for cash anywhere except in large cities.

The solution to the problem was suggested by Flemming Berry, who invented in 1891 an absolutely new financial product for American Express company - traveler's checks.

The new payment tool quickly gained popularity: if in 1891, managed to realize checks for $ 1920, then in 1909 the company sold $ 23 million.

To determine the authenticity of checks, a simple and effective method was developed: the signature on the check was entered 2 times: on the top line - at the time of purchase, and on the bottom - when presented to the account. Coincidence of signatures certified the identity of the owner and guaranteed payment of the check.

Currency and denomination

The first checks were issued in nominal value of 10, 20, 50 and 100 US dollars. By 1955, American Express began issuing checks in Canadian dollars and British pounds sterling.

In the 1970s, the company already issued checks in Swiss and French francs, Japanese yens and German stamps. Since 1999, the issuance of traveler's checks in Euros with a nominal value of 50 €, 100 €, 500 €, 1000 € has begun.

To date, the most common are checks denominated in British pounds sterling, Australian, Canadian, Singapore dollars, Swiss francs. The nominal value of checks in US dollars is $ 20, $ 50, $ 100, $ 1000.

Benefits of using

The main advantage of traveler's checks is their security. With the proper use of them, the safety of your money is fully guaranteed. Since the checks are registered, no one except you can use the lost or stolen check.

No check will be cashed in the absence of its owner or without presenting a document certifying his identity. The owner of the check can recover it in case of damage, loss or theft absolutely free for one day.

Another important advantage is profitability. Traveler's checks in most countries are sold at a more favorable rate than cash foreign currency, and with a minimum commission. At the same time, their exchange abroad takes place at a higher rate than the conversion of cash. A big plus is also the possibility of exporting from the country by traveler's checks any desired amount of money without restrictions.

Especially convenient is the way of storing money in foreign trips. Traveler's checks can be paid in any bank of the world providing such a service, regardless of the place of their purchase.

Point of Sale

The answer to the question: "Where to buy traveler's checks?" For residents of most countries of the world is obvious: they are sold in more than 100 thousand American Express points and in most leading world banks.

The presence of a wide network of points for the exchange of traveler's checks allows you to minimize the loss of time with cashing and recovery. At American Express exchange points, travelers' checks are sold and bought without any commission. To perform transactions with traveler's checks, you need a passport of the client or his driver's license.

The use of checks as a means of payment has its drawbacks: after the conversion of checks, it is still necessary to use banknotes of a foreign country. In addition, the search for the point of purchase / sale of checks and their purchase must spend a certain amount of time.

Russian realities

In Russia traveler's checks "American Express" appeared in 1994 thanks to Sberbank. Operations with checks were carried out in more than 6 thousand branches of the Savings Bank throughout the country. Over the next 10 years, other domestic banks joined the transactions with checks, which increased the popularity of checks among Russians.

At the same time, traveler's checks have not become the official means of payment in our country. They were used as a tool for accumulating and saving foreign currency, as well as for foreign trips. Sberbank of Russia in 2008 became the undisputed world leader in the sale of American Express checks, selling them for a total of $ 1 billion. It was during the financial crisis that Russians began to acquire traveler's checks in bulk. Sberbank of Russia at that time acquired a large number of checks, which later were never fully sold.

Gradually, the demand for checks began to decline, and in 2011 Sberbank launched a new joint project with American Express to issue premium and super premium cards.

Minimizing transactions with checks

Having recovered from the 2008 crisis, many domestic banks also began to issue plastic cards at an accelerated pace and acquire their own processing centers. The growing popularity of non-cash payments and the development of a network for accepting plastic cards have finally undermined the popularity of traveler's checks. One of the first banks in Russia to refuse operations with checks was VTB Bank. This happened in February 2012, after a change in the leadership of a lending institution.

Following him, the same decision was made by Sberbank of Russia. Since March 2013 he completely stopped operations for the purchase, sale, issue of compensation and registration of inheritance on traveler's checks. Sberbank motivated its actions by the need to optimize the retail product line and reduce costs for cash services to individuals. Specialists of Sberbank also noted that cooperation with American Express on card products will be continued.

Following Sberbank, Raiffeisen Bank announced the decision to stop all transactions with traveler's checks since May 2013.

Termination of sales

Having lost most of the points of sales in Russia, American Express company from August 1, 2013 was forced to stop selling traveler's checks. The official position of the company was that, as a result of a thorough and comprehensive analysis, its experts came to the conclusion that the demand for this service from Russians was significantly reduced. Further sale of traveler's checks in the Russian Federation is recognized as unprofitable.

All previously sold checks will have an unlimited period of validity. They can still be cashed through authorized banks, as well as at traveler's checkpoints around the world.

Of the major Russian banks, only Sviaz-Bank declares that it accepts traveler's checks for payment. You can not buy them today. To cash out checks denominated in dollars and euros, you can turn to the head office or regional branches of the bank and pay a commission of 2.5% of the nominal value.

Back to the Future

Several years ago, many economists believed that traveler's checks had completely outlived themselves, giving way to plastic cards. Today this thesis is not so obvious. Increased cases of cyber fraud, as well as recent events on the blocking of transactions by cards of several Russian banks by payment systems Visa and MasterCard , clearly demonstrated all the negative aspects of this payment instrument.

Holders of plastic cards of the affected banks, who were abroad, did not have the opportunity to use their money. Many of them at this moment envied the owners of traveler's checks, which, by definition, could not be in a similar situation.

Traveler's checks have not lost their popularity even in the epoch of global distribution of non-cash payments. A century and a half after their appearance, they continue to be a convenient and reliable tool in cash settlements.