Money matters in Iran, mostly because if you don’t bring it with you in cold hard cash you aren’t going to have any to spend! Iran is one of the few countries in the world that are not connected to the international banking network. There are ATMs here but they only accept Iranian cards. Travellers cheques and credit cards are similarly useless.
You need to bring all the funds required for your trip in hard currency. U.S. dollars or Euros get the best rates but exchange shops in the bigger cities can change most things into Rials for you.
If the idea of carrying around several weeks worth of cash gives you a fright, take heart from the fact that living costs are low here so you may need less than you think and Iran is one of the safest countries in terms of crime levels. If you do get robbed or buy one too many carpets, it is possible to arrange an international bank transfer but this will take a few days. Some of the biggest carpet shops do offer credit card advances but they are few and far between and you can expect to pay heavily for the privilege.
Once in Iran with your wads of cash, obtaining Rials is best done at an exchange shop or in your hotel. The rates there are every bit as good if not better than the bank and the process takes only seconds, compared with about half an hour at the bank where you need to fill in several forms and show your passport. Only branches of Bank Melli will change foreign currency for you.
You can also change money on the street. Just listen for people saying “change money, change money” as you pass by. Don’t worry, they’ll find you. They tend to hang around in groups near key tourist sites and on main streets. Make sure you know the rough exchange rate and count carefully as this is the most likely place to get ripped off when you’re changing cash. Don’t worry about counting a huge pile of bills in the middle of the street. It’s quite common!
Notes of 20,000 and 10,000 Rials are the common dispensation of currency you get from banks and money changers. There isn’t a need to worry about having smaller currency all the time. Shops always seem to have change, which wasn’t the case in Syria for example, and if not they’ll just give you something extra to make up for any tiny shortfall. Notes of 50,000 Rials do exist but you have to ask for them specifically. Currently if you change $100 U.S. you’ll get about 930,000 Rials which works out to 46 notes of 20,000 Rials 93 notes of 10,000 Rials – a hefty lot of bills to carry around. Bring a big wallet!
There is a proposal from the Iranian government to change the currency; knocking off 2 or 3 zeros and giving it another name, making it a little easier to work with instead of always talking in thousands all the time.