Travellers' Cheque Catch-22

Summer 1999 CSANews Issue 32  |  Posted date : Mar 02, 2007.Back to list

CSA member Kenneth Ramsay wrote to warn fellow members about a sea of red tape he fell into after a recent holiday.
While on vacation in Green Valley, Arizona, he tried to present Royal Bank Visa Canadian-dollar travellers' cheques for payment at the Arizona Bank. They were not negotiable. Upon his return to Canada, he informed Royal Bank of the problem, and was told that as a requirement by VISA, banks and merchants may elect to cash only travellers' cheques that have been issued in the local currency. He was then told that the decision of whether to honour a travellers' cheque was at the discretion of the individual bank or merchant. Many of the smaller banks, in addition, had no access to Canadian rates of exchange.

When questioning the Arizona Bank's policy of cashing Canadian travellers' cheques, he was told that the only way they will cash a Canadian-dollar travellers' cheque is to open an account for the person cashing the cheque, credit the account with the face value of the cheque and later, sometimes much later, debit the account with the exchange difference.

Mr. Ramsay then called the first four banks in the Ottawa phone book and asked the same question of each ­ "I am going to the United States and wish to buy Canadian-dollar travellers' cheques. Is there any problem?" In each case, he was told that there was no problem.

His sleuthing led to phone calls to San Francisco, Baltimore and the U.K. Royal Bank's head office denied permission for him to include copies of his exchange in correspondence with them, in his letter to the CSA.

His summation of the situation? "My enquiries (it is apparent that the questions I have asked have touched a number of sensitive nerves) and the evident reluctance there has been to deal with them calls into question the wisdom of using traveller's cheques at all..."