American Express Traveller's Checks are 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, as well as bequeath). The safety of the money invested in the purchase of traveller's checks is guaranteed by the largest international corporation, whose history has been around for 164 years.
Traveller's check: concept and main functions
It is not difficult to explain what traveler’s checks are - this is a payment document, which is a monetary obligation issued by the issuing company, to pay the amount (check denomination) to the holder whose signature sample is presented on the check. In fact, they represent a full replacement for cash.
You can use the check either by simply cashing it, or by paying it for purchased goods or rendered services. For this, it is necessary to put a personal signature on the check (in its lower part) a second time in the presence of the operator or cashier.
The safety of the money invested in the purchase of traveller'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, American Express, in addition to traveller'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 with the goal of providing cash transportation services throughout the country. The business was developing rapidly, and by 1882 the company successfully competed in the field of money transfers with the US Post Office.
By 1890, remittances began to conquer the European continent, where such a service had not yet been provided. William Fargo, who had gone to Europe to set things up, was back in a rage. Although he was president of a large company, he was not able to exchange his traditional letters of credit for cash anywhere except in large cities.
Fleming Berry proposed a solution to the problem. In 1891 he invented a completely new financial product for American Express - traveller's checks.
The new means of payment quickly gained popularity: if in 1891 it was possible to sell 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 put down 2 times: on the top line - at the time of purchase, and on the bottom - when presenting it for accounting. The coincidence of the signatures confirmed the identity of the owner and guaranteed payment of the check.
Currency and face value
The first checks were issued in denominations of 10, 20, 50 and 100 US dollars. By 1955, American Express began issuing checks in Canadian dollars and British pounds.
In the 1970s, the company already issued checks in Swiss and French francs, Japanese yen and German marks. Since 1999, the issuance of travel checks in Euros with a face value of 50 €, 100 €, 500 €, 1000 € began.
To date, the most common are checks denominated in British pounds, Australian, Canadian, Singapore dollars, Swiss francs. The denomination of checks in US dollars is $ 20, $ 50, $ 100, $ 1,000.
Benefits of using
The main advantage of traveller's checks is their safety. With proper use of them, the safety of your money is fully guaranteed. Since the checks are personalized, no one except you will be able to use the lost or stolen check.
Not a single check will be cashed in the absence of its owner or without presentation of a document proving his identity. The owner of the check will be able to restore it in case of damage, loss or theft absolutely free of charge within one day.
Another important advantage is profitability. Traveller's checks in most countries are sold at a better rate than foreign currency in cash, and with a minimum commission. Moreover, their reverse exchange abroad occurs at a higher rate than the conversion of cash. A big plus is the ability to export from the country with traveler's checks any desired amount of money without restrictions.
This way of storing money when traveling abroad is especially convenient. Traveller's checks can be paid at any bank in the world that provides such a service, regardless of where they were purchased.
Points of sale
The answer to the question: "Where to buy traveller's checks?" for residents of most countries of the world it is obvious: they are sold in more than 100 thousand points of American Express and in most leading world banks.
The presence of a wide network of exchange points for traveler’s checks minimizes the loss of time during cashing and recovery. At American Express exchange points, traveler’s checks are sold and bought free of charge. To perform operations with traveler’s checks, a client’s passport or driver’s license is required.
The use of checks as a means of payment has its drawbacks: after converting checks, you still need to use banknotes of a foreign country. In addition, a certain amount of time must be spent on the search for the point of purchase / sale of checks and on their purchase.
Russian realities
American Express traveler's checks appeared in 1994 thanks to Sberbank. Operations with checks were carried out in more than 6 thousand branches of Sberbank throughout the country. Over the next 10 years, other domestic banks joined in the operations with checks, which contributed to the increase in the popularity of checks among Russians.
At the same time, traveler’s checks did not become an 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. In 2008, Sberbank of Russia became the undisputed world leader in the sale of American Express checks, selling them for a total amount of 1 billion US dollars. It was during the financial crisis that the Russians began to acquire traveler's checks in droves. Sberbank of Russia at that time acquired a large number of checks, which later were never completely sold out.
Gradually, demand for checks began to decline, and in 2011, Sberbank launched a new, joint project with American Express, the issue of premium and super premium cards.
Collapse Check Operations
Having recovered after 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 cashless payments and the development of a plastic card acceptance network have finally undermined the popularity of travelers checks. VTB Bank was one of the first in Russia to refuse operations with checks. This happened in February 2012, after a change in a part of the management of a credit organization.
Following him, the same decision was made by Sberbank of Russia. Since March 2013, he completely terminated operations on the purchase, sale, issuance of compensation and registration of inheritance for traveler’s checks. Sberbank motivated its actions by the need to optimize the retail product line and reduce the cost of cash services for individuals. Sberbank experts also noted that cooperation with American Express on card products will continue.
Following Sberbank, Raiffeisen Bank announced a decision to terminate all operations with traveler's checks in May 2013.
Cessation of sales
Having lost most of the points of sale in Russia, American Express was forced to stop selling traveler’s checks on August 1, 2013. The official position of the company came down to the fact that as a result of a deep and comprehensive analysis, its specialists came to the conclusion that the demand for this service was significantly reduced by the Russians. Further sale of traveller's checks in the Russian Federation is recognized as unprofitable.
All previously sold checks will have unlimited validity. They can still be cashed out through authorized banks, as well as at exchange points of traveler’s checks around the world.
Of the large Russian banks, only Svyaz-Bank declares that it accepts traveller's checks for payment. You can’t buy them today. You can cash checks denominated in dollars and euros by contacting the head office or regional branches of the bank and paying a fee of 2.5% of the face 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 does not seem so obvious. The increasing incidence of cyber fraud, as well as recent events on the blocking of Visa and MasterCard payment systems by cards of several Russian banks, clearly demonstrated all the negative aspects of this payment instrument.
Holders of plastic cards of the affected banks, located abroad, did not have the opportunity to use their money. Many of them at that moment envied the owners of traveller's checks, who, by definition, could not be in a similar situation.
Traveler's checks have not lost their popularity in the era of the global spread of cashless payments. One and a half centuries after their appearance, they continue to remain a convenient and reliable means of cash payments.