You pay upfront to have free entrance to key museums and art galleries and free tram, bus, metro transport. I bought one for 48 hours and found it very good value for money. I certainly got more than 43 Euros worth of museum, canal trip and transport from it.
You can buy it from Holland Tourist Information at Schipol by credit card and it makes it easier to work out a budget for the rest of your stay and you can hop on and off the fantastic trams without having to worry about buying and stamping tickets.
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