Indians inadvertently paying more for sending money home from abroad

- Indians inadvertently pay more for remittance service in the form of markup exchange rate

In the year 2020, Indians paid Rs. 3 billion, of which approximately Rs. 3 billion. There were hidden costs as exchange rate markups on currency conversion, payments and card purchases. The remaining Rs. 15 billion was paid as transaction fees. According to a study conducted by Capital Economics, between 2012 and 2020, Indian consumers lost an amount of Rs. It has increased from 12 billion to 3 billion.

The total amount of transaction fees paid by Indians for sending money abroad has declined in the last five years while the fees paid for exchange rate margins are increasing. It indicates low transparency in the remittance fee structure and poses a risk of hidden fees to the customers as they inadvertently pay more for the remittance service in the form of markup exchange rate.

Even customers who send money to India from abroad cannot escape the trap of hidden fees. In the last five years, the exchange rate margin on inward remittances has been Rs. 5 billion to Rs. 3 billion.

Meanwhile, the fee paid on transaction expenses in the year 2016 was Rs. 103 billion to Rs. 150 billion.

The bulk of this fee paid on remittances comes from Gulf countries to India. In 2020, Saudi Arabia topped the list of total fees paid on inward remittances in India with 9%, followed by the United States (15%), the United Kingdom (15%), Qatar (3%), Canada (9%) and Oman (5%). The United Arab Emirates (3%), Kuwait (3%) and Australia (3%).

Before the epidemic, Indian tourists paid Rs. 3 billion were paid. Out of which Rs. There are 3 billion hidden exchange rate markups.

Due to the lack of transparency in the fee structure, most consumers today are unable to understand the real cost of sending money abroad. There are two costs associated with foreign currency transactions: upfront transaction fees and exchange rates. Upfront fees may vary, but do not reflect the total cost of the transaction as traditional banks and providers add an unknown amount to the exchange rate. Do not use market rates. The difference between the rates results in hidden fees, which cause people to spend unnecessarily more when sending money abroad.

Regarding the survey, experts said that with the help of technology and the Internet, official issues related to foreign fund transfers have become easier, while consumers spend more on hidden FX fees due to years-old practice of hidden fees in exchange rates, which should in fact be in their pockets.