[Practical Finance] Comparing Foreign Currency Exchange Services of Five Companies

When Exchanging Various Currencies, Use Hana Travel Log
For Large Amounts, Shinhan-Toss Is Advantageous

With the end of the COVID-19 pandemic and the reopening of international travel, the demand for foreign currency exchange has surged significantly. In this context, major commercial banks and financial institutions are competitively launching foreign currency exchange services to attract financial consumers.

The foreign currency exchange services offered by each company have different features and advantages. Therefore, before using an exchange service, it is necessary to consider your foreign currency usage plans and desired benefits to determine which service is most advantageous for you.

According to the financial sector on the 24th, since Hana Bank launched its 'Travelog' service, others such as Toss Bank (foreign currency account), Shinhan Bank (Sol Travel Check Card), and KB Kookmin Bank (Travelers) have followed suit, intensifying competition in foreign currency exchange services. Additionally, Woori Bank, NH Nonghyup Bank, Kakao Bank, and K Bank are reportedly reviewing related products.

Advantageous Services May Vary Depending on Foreign Currency Usage Plans and Benefits

The foreign currency exchange services offered by major banks and financial companies each have distinct features and advantages. Some services allow exchange into various currencies, some offer significantly increased exchange limits, and others provide diverse domestic and international benefits.

If you plan to visit relatively lesser-known countries and need the local currency, it is advantageous to use Travel Wallet Travel Pay or Hana Travelog. Travel Wallet supports 45 currencies, and Travelog supports 41 currencies, offering a wider range compared to other services that only allow exchange of 20 to 30 foreign currencies.

If you need a service that automatically exchanges the shortfall amount when you have used all the foreign currency exchanged abroad, Toss Bank's foreign currency account, Hana Travelog, or Shinhan Sol Travel are convenient options. The automatic shortfall exchange service initiated by Toss Bank is also expanding to Hana Travelog and Shinhan Sol Travel.

If you want to exchange a large sum, Shinhan Sol Travel or Toss Bank's foreign currency account are convenient. Shinhan Sol Travel's foreign currency holding limit is USD 50,000 (approximately KRW 69 million), while Toss Bank's foreign currency account has no holding limit. Notably, Toss Bank's foreign currency account does not charge a separate fee for re-exchange, and Shinhan Sol Travel offers special interest rates on account balances after exchange (2.0% per annum for USD, 1.5% per annum for EUR), providing a small foreign exchange financial benefit.

If you want to use foreign currency exchange services with your existing bank account without opening a separate account, you can choose Hana Travelog, KB Kookmin Travelers, or Travel Wallet Travel Pay. Toss Bank requires opening a foreign currency account, and Shinhan Sol Travel can only be used by linking a Shinhan Bank account.

Since additional services differ among companies, it is advisable to carefully compare them. Travelers who want to enjoy airport lounge services will find Shinhan Sol Travel Check Card advantageous. The Sol Travel Check Card is currently the only foreign currency exchange service among commercial banks that offers free use of the airport lounge (The Lounge) once in the first half and once in the second half of the year. However, to qualify, a monthly payment of KRW 300,000 in the previous month is required.

For those who want broad benefits when using domestically, using the Hana Travelog Check Card is advantageous. The Hana Travelog Check Card accumulates 0.3% of domestic merchant spending as Hana Money. The Travelog credit card goes further by accumulating 1.0% of domestic merchant spending and 3.0% of overseas, airline, and duty-free spending as Hana Money.

If you want discount benefits, Shinhan Sol Travel or KB Kookmin Travelers are reasonable choices. Shinhan Sol Travel offers a 5% discount at the three major convenience stores in Korea and a 1% discount on public transportation when monthly payment targets are met. Overseas, it provides a 5% discount at the three major convenience stores in Japan, Vietnam's Grab and Lotte Mart, and Starbucks in the U.S. KB Kookmin Travelers also offers monthly discounts (KRW 1,000 to 5,000) once per month for payments above a certain amount at cafes, bakeries, railroads, and express buses when the monthly payment target of KRW 200,000 is met, as well as monthly discounts 6 and 10 times (KRW 500 and an additional KRW 200) for parking lots and KB Pay usage, respectively.

Why Are Banks Competing in Foreign Currency Exchange?

The primary reason why commercial banks and financial institutions are engaging in cutthroat competition in foreign currency exchange services, even at the cost of sacrificing valuable fee income, is customer acquisition. Hana Travelog, which led the exchange services, has solidified its position by surpassing 4 million subscribers recently, expanding the customer base available to Hana Financial Group.

There is also an analysis that the recent foreign exchange market situation, with the KRW-USD exchange rate moving in the high 1300s, is fueling this competition. Banks, fearing that high exchange rates might reduce travel and exchange demand, have taken preemptive defensive measures by offering fee-free services. Although it is a cutthroat competition, most foreign exchange fee income originally depends heavily on corporate demand, so the launch of these exchange services does not directly cause significant damage.

In fact, the fee-free foreign exchange policy has not significantly affected bank profits. Hana Bank, which was the first among the four major commercial banks to offer fee-free exchange through Travelog, saw its foreign exchange fee revenue decrease from KRW 263.148 billion in 2022 to KRW 248.494 billion last year. Costs increased from KRW 54.394 billion to KRW 57.789 billion, resulting in net profit from foreign exchange fees dropping from KRW 208.754 billion to KRW 190.75 billion.

However, Shinhan Bank, which had not launched related services until last year, also saw its net profit from exchange fees decrease from KRW 168.419 billion in 2022 to KRW 145.77 billion last year. KB Kookmin and Woori Banks saw increases from KRW 139.87 billion and KRW 93.237 billion to KRW 150.435 billion and KRW 94.72 billion, respectively.

A financial sector official said, “The KRW-USD exchange rate has risen to an unprecedented level this year, which may reduce travel and foreign exchange demand. Although individual foreign exchange demand does not generate large profits initially, banks that have implemented fee-free policies are attracting demand, and it appears that banks are competing to acquire customers by observing this trend.”