Going on safari in Kenya, Tanzania or Botswana is a dream shared by travellers the world over. Images of herds of wildebeest grazing at dawn while lions stalk them are etched in our collective popular imagination, and with good reason: A safari holiday is an unforgettable, once-in-a-lifetime experience.
Flights, guides, permits, hotels and park fees can easily add up to tens of thousands of dollars, so the last thing any of us wants is to have to find an extra chunk of cash to pay for bank transfer, card or foreign transaction fees.
Paying for your safari holiday
If you book a safari in your home country through a local travel agent, none of the following applies. The agent will invoice you in your local currency and you will pay them by credit card, debit card or bank transfer and they will take care of everything.
Of course, using a travel agent often involves extra charges for their services. That’s why it’s better to book your safari directly with an Africa-based operator. So what is the best way to pay them?
Paying for safaris by bank transfer
To book your safari, you will need to pay well in advance. The operator based in Nairobi or Gaborone will quote you a price in shillings and will probably ask you to pay by bank transfer. However, if you use a bank as your method of payment, the trip will cost you considerably more than it should.
Let’s say the quote for the safari is KSh1,250,000 (~S$13,187.10). We jump to XE and see that this equates to about $10,072. However, when we contact our bank to arrange the transfer, a couple of things happen.
Firstly, every time banks make an international payment using their SWIFT system, they charge a fee. In the US, these fees can range from U$2.75 to U$50 in some cases, and if you are sending money to Africa, you can usually expect the higher end of the scale.
In addition, the recipient’s bank will also charge a fee, which the safari operator will almost certainly expect you to pay. But there is more! If an intermediary bank is used (for example, if your bank and the Bank of Kenya don’t have a direct relationship), they will also charge a fee. It is not uncommon for Americans to pay over US$100 in fees when sending money to Africa.
But that is not all. When we send money from our bank abroad, our bank does the currency conversion. They convert the money to the recipient’s currency and then forward it. However, instead of using the open market exchange rate, they use a “marked up” rate which allows them to make 2-4% on the transaction at the expense of the customer.
Using an international credit card to pay for a safari tour
Chances are, you were already thinking of paying for your safari with a credit card. After all, they offer all sorts of protection and as long as you remember to pay the balance, you won’t incur any fees or interest.
However, even if you use your credit card, it is still considered an international transaction because you are paying a receiving bank abroad in a different currency to the one in which your balance is held. There are some complications and costs associated with using a credit card abroad.
Like banks, credit card companies apply an exchange rate mark-up to all foreign currency transactions; now you know why they always encourage you to use them when you go on holiday. This rate is usually between 2-3% in the USA. This means that it will cost you approximately US$10,323.80 to pay for the KSh1,250,000. As you can see, using a credit card in a foreign country or to pay for a safari is a big improvement over using the banks, but it could still be better.
Paying for a safari using a money transfer specialist
Money transfer companies are regulated and licensed financial services providers that essentially undercut banks for international payments by offering customers lower fees and better exchange rates.
There are many money transfer specialists operating in the US, but for this example we will focus on the UK/Estonian based fintech neobank, Wise (formerly Transerwise).
Wise offers fast, low-cost money transfers around the world and applies foreign exchange mark-ups that range from 0-1% depending on the currency. In the case of Kenyan shillings, Wise currently offers the ‘real exchange rate’ but charges a fee of US$90. Using Wise, we would have to pay US$10,090 to ensure that the safari operator in Kenya gets the 1,250,000 they are expecting for the safari, making it by far the best deal.
As you can see, paying for your dream safari holiday is more complicated than it first appears. There are a number of different methods available and each has its own costs. Using a bank as a payment method is the most expensive, and using a credit card internationally is a slight improvement, but still expensive. However, by far the cheapest method is to use a money transfer specialist such as Wise.