The article first appeared in The Economic Times on Dec 2, 2024.
As global mobility increases, more individuals are living and working abroad, with India alone home to a diaspora of over 1.5 crore Non-Resident Indians (NRIs). These individuals collectively send billions of dollars back home every year, helping to support family needs, according to the Reserve Bank of India. Having moved to Singapore in 2006 for education and later for work, I, too, send money home regularly. Through my experiences, particularly after joining a company specializing in cross-border payments, I’ve realized that the process for most people is often more complicated and expensive than necessary.
International money transfers, especially for NRIs, can be a hassle. Despite the growing need for seamless cross-border payments, traditional methods remain slow, opaque, and costly. In the past, these transfers often passed through intermediary banks, each adding their own fees. This outdated system doesn’t keep pace with our increasingly interconnected world, turning what should be a simple transaction into a complex maze of costs and delays that eat into the final amount sent back home.
To understand international transaction costs better, think of them as an iceberg: the visible fees are just the tip, while hidden costs like inflated exchange rates and intermediary charges lie beneath the surface. Many providers advertise “zero fees” or “free transfers,” but these often mask hidden costs, especially in exchange rate margins. The rate you see on Google is often not the one you get from your transfer provider, which may seem minor but can result in significant losses over time. For instance, in 2020, remittance senders to India paid over ₹21,900 crores in foreign exchange fees, with nearly ₹7,900 crores hidden as exchange rate markups.
Moreover, there are intangible costs like delays, which can have real-world consequences. A delayed educational payment can lead to late fees or missed deadlines, while a delayed business investment might result in missed opportunities. The uncertainty surrounding when funds will arrive, and how much will actually be received, adds stress to what should be a straightforward process.
To avoid these hidden costs, it’s important to look beyond the advertised fees and choose specialized, regulated providers that prioritize international money transfers. These companies often have better infrastructure for cross-border transactions, leading to lower costs, better exchange rates, and more transparency. They also offer features like transaction tracking, giving you peace of mind that your funds are on their way. When comparing providers, ensure the exchange rate is the same as the one you see on Google, and for larger transactions, take advantage of tools like rate-lock or rate-alert features.
As the cross-border payments landscape continues to evolve, it’s essential to stay informed, compare options, and choose the provider that helps your money go further—allowing you to stay connected to your loved ones without unnecessary stress or frustration.
Read More: The Economic Times
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