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What are traveller’s cheques and are they still useful?

7 min read

What are traveller’s cheques and are they still useful?

Written By

Ryan Severance
Ryan Severance

Rounding it up

  • Traveller’s cheques are hundreds of years old and slowly but surely going out of style

  • Lost or stolen traveller’s cheques are reimbursed, making them a safe payment system

  • Credit cards, debit cards, and prepaid cards are popular modern alternatives to cheques

  • Digital payment systems like PayPal and Venmo are also popular with tech-savvy users

It’s imperative to keep your money safe whenever you venture abroad, though that’s easier said than done. Historically, traveller’s cheques have enabled tourists, traveling professionals, and adventure enthusiasts to roam anywhere with a sense of financial security.

These days, however, traveller’s cheques are rather antiquated and less common than ever before. How do traveller’s cheques really work, and are they still useful in this digital day and age?

Understanding Traveller’s Cheques

Traveller’s cheques originated as a form of payment that could replace hard currency, like Dollars or Euros, when venturing abroad. Carrying cash around your person is dangerous under any circumstances, but it’s particularly dangerous when travelling abroad in unfamiliar territory where you’re an easy target for criminals. By replacing cash, traveller’s cheques let tourists pay for souvenirs and services without having to tote around a hefty amount of currency.

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But what happens if a criminal steals your traveller’s cheques? Unlike hard currencies, a bank or issuing authority of the traveller’s cheque will usually secure the cheque against loss, theft, or accidental destruction. A tourist who loses their traveller’s cheques when going abroad thus avoids the financial calamity of losing hundreds or thousands of dollars at once.

Tourists love these cheques because they facilitate safe spending abroad. Local vendors eagerly accept them as a form of payment because they can rest assured that the cheque’s issuer will guarantee the payment even if the traveller is untrustworthy. Ultimately, they spread across the world because they made life easier for everyone.

Traveller’s Cheques In The Modern World

The history of credit is long, disputed, and not easily surveyed, but many experts believe that the earliest form of what we currently call traveller’s cheques probably originated in London during the 1700s. Since then, they evolved into a common method of secure payment that tourists and other travellers could rely on in unusual financial circumstances.

Are traveller’s cheques still around today? It’s certainly the case that you can find partners willing to issue traveller’s cheques in the 21st century, though the practice is far less common than it once was. As a matter of fact, major financial actors are beginning to slowly but surely end the practice of issuing traveller’s cheques because there are other modern alternatives that are proving to be more attractive for tourists and banks alike.

Debit cards and credit cards were some of the earliest modern inventions that threatened the continued relevance of traveller’s cheques. Like these cheques, credit cards could reliably be used to purchase goods or services around the world without fear of losing one’s money if the card itself is lost. Unlike cheques, credit cards were also regularly used for domestic shopping, too, thus elevating their salience and utility in the eyes of many consumers.

Nevertheless, some credit/debit cards have foreign transaction fees or other features that make them less-than-perfect replacements for the dedicated traveler’s cheques that have existed for so long. It wasn’t until digital payment options like smartphone apps became truly ubiquitous that traveller’s cheques became obsolete in most use-cases.

According to American Express, the key motivating reasons for ending their use of traveller’s cheques are:

  • Improved card acceptance in foreign markets,

  • Enhanced ATM access in popular tourist areas,

  • Advanced digital payment options available worldwide, e.g. Venmo/PayPal

  • Widespread merchant acceptance of chip-enabled payment cards

AMEX nevertheless stressed that previously-issued traveller’s cheques would still be honoured. In most cases, it seems that financial actors who discontinue(d) traveller’s cheques will have a vested interest in continuing to honour previously-issued cheques for the immediate future to avoid consumer backlash.

Safely Spending Money Abroad

Traveller’s cheques can still be useful in many cases, but the vast majority of tourists will be ready to switch over to more modern (and usually digital) payment options. Those who want to safely spend their money abroad may be interested in prepaid cards, which are perhaps the most direct descendent of traveller’s cheques in terms of how they work.

One such option is the KOHO prepaid Mastercard, which functions similarly to a chequing account while simultaneously offering the benefits of a credit card. Tourists who travel abroad will find that the KOHO prepaid card is a secure payment method that allows them to budget their journey ahead of time to avoid overspending. For those who want to see the world but can’t afford to waste valuable money, pre-travel budgeting is essential.

In addition to offering enticing perks like cash back rewards, the KOHO prepaid Mastercard helps prevent fraud by adding an extra layer of security during online transactions. Even if a prepaid KOHO Mastercard is compromised while booking a trip online, the actual bank account and savings connected to it would still remain out of harm’s way.

The immense popularity of Mastercard around the world also ensures it will be accepted by virtually all major vendors. Like traveller’s cheques, merchants everywhere will eagerly accept this payment with no questions asked.  Unlike traveller’s cheques, KOHO’s prepaid Mastercard can easily and quickly be used to facilitate digital transactions around the world with almost no user effort.

Finally, a KOHO prepaid Mastercard features unique financial perks that antiquated traveller’s cheques simply can’t match. KOHO contains no hidden fees, for instance, but still allows users to earn interest on their accounts as they explore hidden corners of the world. With .5% cash back on every purchase, a KOHO card also lets tourists splurge at the gift shop without parting ways with too much of their cash.

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A KOHO prepaid Mastercard is excellent for adventure enthusiasts who want to guarantee their financial flexibility in any corner of the world. Still, there are other digital options to consider, especially if you intend to trade money or goods with other travellers instead of vendors. Tourists who want to conduct quick and minor transactions with other travellers may find that digital apps facilitating cash-swapping are a good route.

Digital Payment Apps

Digital services like PayPal and Venmo let you move money around quickly in various parts of the world, though they may include costly international fees. Always check for international fees ahead of time to avoid unnecessarily losing money when travelling and spending abroad. In certain countries, peer-to-peer banking transactions may be possible without the need of a third-party app or fee.

Some digital-thinkers are insisting that cryptocurrencies may become a popular digital payment system in the near future, but few tokens have the widespread popularity and adoption to be useful in tourist circumstances. While some businesses in the West are accepting cryptocurrencies as payment, tourists may prefer more stable and established digital payment systems to ensure their own financial security.

Other safety mechanisms that can be relied upon to avoid financial catastrophe in strange and distant lands include investing in traveler’s insurance. Many tourists can recuperate lost money if a trip is unexpectedly cancelled or luggage is lost. In the same way that a customer can get a refund for a lost or stolen traveller’s cheque, traveller’s insurance lets them refund medical expenses or personal losses they may experience during a vacation or work trip.

Finally, it may be smart to sign up for a credit card in another country if you frequently find yourself travelling there. In Canada, the United States, and most developed nations, it’s very possible to get a credit card as a non-resident. You’ll start building a credit history in that country which could prove handy if you want to move or work there in the future.

Saying Goodbye To Traveller’s Cheques

Traveller’s cheques aren’t extinct just yet, but most major financial companies and the bulk of travellers everywhere seem to be moving on toward greener pastures. With credit cards, debit cards, and prepaid traveller’s cards becoming the norm in most places, few financial actors have any incentive to keep issuing traveller’s cheques into the future.

The continued proliferation of digital payment systems will also provide travellers with many safe, reliable, and easy ways to move cash around when voyaging abroad. We may be saying a slow goodbye to traveller’s cheques, but it’s becoming easier and more affordable than ever before to spend your money in any corner of the world with each passing day.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Ryan Severance

Ryan Severance is a professional freelance author and the owner of American Scribe LLC. With degrees in political science and socio-legal studies, he writes about business, politics, and law for clients around the world.



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