Looking at Algarves Accepted Payment Methods for Daily Tasks
If you are in the process of relocating to the Algarve you will need to know all the options for making payments for goods or services you may require.
We have put together a general guide together to point you in the right direction and show the options on offer.
The Easiest Way for New ResidentsTo cut through the jargon below and get straight to the best options for day-to-day payments in the Algarve this section will point you in the right direction. Those who wish to know all the ins and outs can read on.
For those who are new in the Algarve or those in the motions of moving and still have UK bank accounts the easiest and cheapest option for payments would be to set up one of the following online accounts.
All are easy to apply for and your card is with you within a few weeks.
Once it arrives you can set up your card with accounts in several currencies including euro and GBP. It is then easy to exchange from one currency to another.
You can also set up bank accounts in each currency and receive Iban and sort codes for each for transfers or receiving payments.
The cost of exchanging your own money from GBP to euros is very minimal and unbelievably cheaper than UK banks.
The cards can be used anywhere in the Algarve including cash machines with no charge for using them, unlike the UK bank cards.
You will find most payments can now be done using contactless cards or if you have one of the mobile payment apps such as Google Pay these are also usable.
As a long-term resident and knowing many others this is definitely the most popular payment method like cadency in the Algarve.
Please if using ATMs with overseas cards always use the ones found outside the banks. The ones outside stores and in resorts do make a charge. The interest rate is also pretty poor, although at times they are very convenient.
Local Debit Cards So Easy
If you are planning to work in the Algarve and receive payments or take out a Portuguese mortgage then it is advisable to open a local bank account.
With every account, you open you will receive a debit card for that account. In the first instance, it will only allow you to spend the amount you have in your account.
After six months or so you can then apply to use the same card as a credit card if the bank agrees with your credit application.
Debit Card payments account for almost 75% of all cashless payments in the Algarve, which is well above the EU average. Debit cards are widely used throughout the region.
The local Multibanco card is used by more than 85% of the Algarve population and can be used as a credit or debit card once the bank has seen 6 months of movement in the account.
Banks in the Algarve offer a range of different debit cards depending on the type of account you open.
As with most debit cards they can be used online, in stores and for withdrawing money at ATMs. The majority of the stores in the Algarve accept them.
Pay With Cash
Cash is still a popular method although after covid cards are now more popular of payment in Portugal.
The country is part of the eurozone and as you would expect uses the euro as currency.
All of the main Portuguese banks are connected to the Multibanco system, so cash machines are linked across the country.
That means you don’t have to worry about bank charges if you use a Portuguese bank card at any of the ATMs.
There is a maximum limit of €3,000 for any cash transactions in the Algarve. Although cash is still popular, the European Central Bank statistics from 2022 revealed that the average amount of cash carried by each Portuguese person was just €30 being the lowest among the Eurozone countries.
Checks Are Bad News
Payment by check, as in most countries in this day and age, is not very popular with the Portuguese.
If you’re looking to use chequebooks you will have to order them separately with bank accounts in Portugal and they do charge a small fee.
Be aware that bouncing a check will cause you big problems in Portugal. In fact, it is a criminal offence to write a check if you do not have the funds in your account to cover it.
If you are caught and reported you could be charged with fraud. The penalties include fines of about 20% of the check amount and then you would be blacklisted by the central bank.
Credit cards Not So Popular
Credit cards are not as popular as debit cards in the Algarve though most banks offer them if required.
You can apply for one once you have been with the bank for 6 months. Unless you are depositing sufficient funds.
You can use the main international credit cards such as Visa, Mastercard, and American Express in Portuguese stores or with online businesses.
To apply for a Portuguese credit card, you generally need to have a good credit record. Hence the six months wait.
Cards usually have a spending limit and the deficit needs to be paid off in total periodically.
Set Up Direct Debits for Monthly Bills
Unlike some other EU countries and certainly the UK, there are fewer people using direct debits for cashless payments in the Algarve.
This is due to many people paying bills using the Multibanco system. Household services bills and many other requests for payment come with identity and reference numbers for payment. These two numbers can be used to either transfer or pay the bill at a cash machine.
Having said that it is quite easy to set up direct debits through most bank accounts online in the Algarve to pay regular or monthly bills.
They can also be used for one-off payments. Simply provide the company to which you need to make a payment with your bank details and they can set it up for you.
You can cancel a direct debit at any time. However, you’ll need to inform the company the direct debit is charged to either arrange alternative payment or cancel your contract.
It’s possible to request a refund for a direct debit if you were not informed of the amount at the time the money was taken from your account or exceeds the amount you could reasonably be expected to pay.
You would need to apply for a refund within eight weeks of the date the payment was made.
Multibanco Payments – Pay at the Cash Machine
The Portuguese Multibanco system was set up in 1985 and is an interbank network that links all of the Portuguese banks allowing the use by anyone from any bank to access their money.
Multibanco users can perform over 90 operations at ATMs including paying monthly bills, topping up mobile phones, making bank transfers, as well as paying their financial, tax or social security payments.
Online and Mobile Payments
Debit and credit cards can be used for online payments as in most countries.
Mobile payments using mobile phones and smart devices can be done using one of the payment apps such as Apple Pay or Google Pay.
If you want to open a Portuguese PayPal account you would need to open the account using your Portuguese bank details.
If you already have an overseas Paypal account you can transfer money from one to the other.
If you have a Portuguese bank you can use the MBway app to pay, send money and even withdraw cash at ATMs. It is now the most popular mobile payment app in Portugal.
Local Algarve Money Transfers
Money transfers within the EU can be made by Single Euro Payments Area (SEPA) transfer.
SEPA transfers usually take 1–2 days.
These cost no more than the normal transfer between two Portuguese bank accounts, that is as long as the transfer amount is under €50,000.
You just need your International Bank Account Number (IBAN) and SWIFTBIC (Bank Identifier Code) to give the bank that you want to receive the payment.
Local transfers between two Portuguese accounts are normally completed on the same day.
International money transfers
Transfers to or from outside the EU/EEA are subject to fees applied by Portuguese banks.
Check around the different banks to find the best rates for both exchange and charges.
There are no limits on the amount of money travelling in and out of Portugal.
But anything above €50,000 needs to be declared to the Central Bank of Portugal.
International transfers can take around 3–5 working days.