Outlook Business Desk
As more people live and work abroad, the demand for cross-border payments continues to grow. India is home to over 1.5 crore Non-Resident Indians (NRIs) who send billions of dollars back to their families each year, often to support their financial needs
Traditional money transfer methods are slow, expensive, and opaque, as they involve multiple intermediary banks that add fees and delays. This outdated system increases costs and reduces the amount of money that ends up reaching the recipient
The costs of international transfers can be compared to an iceberg, where the visible fee is just a small part, and the larger, hidden costs—such as inflated exchange rates and intermediary fees—are often overlooked. "Zero fees" or "free transfers" may mask these hidden costs
A 2020 study revealed that NRIs sending money to India paid over Rs 21,900 crores in foreign exchange fees. Of this, Rs 7,900 crores were hidden as exchange rate markups, while Rs 14,000 crores were spent on transaction fees
In addition to financial costs, there are other factors, such as time sensitivity, that impact the recipient of the funds. Delays in payments can result in missed deadlines, late fees, or lost business opportunities. The uncertainty of when funds will arrive can also cause emotional stress
Specialized, regulated providers focused on cross-border payments generally offer better infrastructure, lower costs, competitive exchange rates, and more transparent fee structures, than banks when it comes to international money transfers. When comparing providers, it's important to focus on the exchange rate rather than just the upfront fee, and features like rate-lock or rate alerts
Specialized payment providers are making cross-border transactions more efficient and affordable. By staying informed about fees, comparing options, and choosing the best providers, individuals can ensure that their money transfers are more cost-effective