Understanding what a money changer is, its functions, and currency exchange procedures

When traveling abroad, there are three ways you can obtain cash or its equivalent. The first is to bring a credit card or a debit card with a Mastercard or Visa logo. The second is to exchange for foreign currency (in cash) at a bank, and the third is to exchange money at a foreign currency exchange service or money changer.Each alternative for obtaining foreign currency has its advantages and disadvantages. In this article, the author will discuss what a money changer is and how to exchange money at this institution.

A money changer is a non-bank financial institution that operates a foreign currency exchange business. In Indonesian, this business is often called a Kegiatan Usaha Penukaran Valuta Asing (KUPVA) or Foreign Currency Exchange Business Activity.

Companies operating KUPVA must possess legal authorization from Bank Indonesia. This is because, according to Bank Indonesia Regulation Number 18/20/PBI/2016 Year 2016, these companies must adhere to accounting principles, anti-money laundering regulations, and maintain customer data security.

Functions of a Money Changer

1. A Place for Foreign Currency Exchange other than Banks

As discussed above, you can indeed exchange foreign currency at a bank. However, it is not uncommon for foreign exchange stock at banks to be quite limited, especially for currencies of countries with less demand, such as Vietnamese Dong or Thai Baht. The stock may also be limited if the bank is located in a small town or district.

The existence of foreign currency exchange services can be an alternative for those of you who want to travel to those countries. However, to shop more economically abroad, avoid exchanging money at exchange institutions inside the airport.

2. Providing Rupiah for International Tourists

Conversely, a money changer is also a solution for international tourists or Foreign Citizens (WNA) who wish to vacation or reside in Indonesia. Therefore, it is not surprising that these services are often found in large airports or train stations in the capital city.

How to Exchange Money at a Money Changer

1. Choose a Licensed Money Changer

Before exchanging money at a Foreign Currency Exchange Service, it is best to first check the company's legality on the official Bank Indonesia website. This is to minimize future risks, as not all KUPVA operators are legal. Even if they are legal, their permit might be revoked due to various reasons.

2. Determine the Desired Amount of Money

The next step to exchange money at a money changer is to determine the desired amount of foreign currency and check the latest exchange rate on Google. This is because the company's profit comes from the difference between the real-time exchange rate and the exchange rate you receive.

For example, the current AUD to IDR exchange rate is Rp11,000 on Google, so the KUPVA can add Rp300 per 1 AUD, making 1 AUD equal to Rp11,300. Thus, if you want to get AUD 100 for a holiday in Australia, you would have to spend Rp1,130,000 instead of just Rp1,100,000.

This makes exchanging money at a foreign currency exchange service advisable when you need a considerable amount of cash. If you don't need a lot of cash while traveling abroad, you can simply bring an Honest Credit Card. Not only does this card offer competitive exchange rates, but it also provides zero foreign transaction fees and has a point rewards feature that can be redeemed for many discounts during your holiday.

3. Bring Identification

One mandatory requirement for exchanging money at a money changer is to bring a valid ID, such as a KTP, Passport, NPWP, or SIM. This is because your identity data needs to be recorded by the company. You are also required to bring a power of attorney if you are collecting money for someone else.

4. Confirm the Exchange Rate

The money changer staff will inform you of the exchange rate you must pay on the spot. This is because foreign currency exchange rates fluctuate constantly. The foreign currency exchange transaction will only be carried out once you agree with the rate offered by the company.

After that, the company's customer service will ask for your identification as mentioned above, record it, and provide the money along with the transaction receipt. Check the money carefully and save the receipt as a precaution.

There are times when the money changer you choose does not have the currency the customer wants. If this happens, the company will usually ask the customer for a down payment (DP) and give the customer the DP receipt, while they search for the currency stock from other KUPVA providers. The customer must bring this DP receipt at the specified time to obtain all the foreign currency they desire.

A money changer is a suitable place to meet short-term foreign currency needs. For the long term, use the Honest credit card and the Honest App while abroad for safer and more economical shopping without worrying about exchange rates and foreign transaction fees.

Frequently Asked Questions

1. How much is the fee to exchange money at a money changer?

Generally, the exchange fee at a money changer varies, which is between 3-7%.

2. What is the minimum amount of foreign currency to exchange at a money changer?

There is no minimum limit for exchanging money at a money changer; you can adjust it to your needs.

3. How long does the foreign currency exchange process take at amoney changer?

The foreign currency exchange process at a money changer generally takes 10 minutes and a maximum of a few hours, depending on the number of transactions and the queue.