Millions of expats living in the US regularly send money to their families in countries like India. Sending remittances is not as costly nowadays as it once was. Yet, costs can vary with channel, source, and other factors. Optimization can bring serious savings to those who regularly send money to India. Here is how.
It’s Not Just About the Cost
Selecting the right money transfer service can prove to be tricky. Many remittance senders automatically opt for the cheapest service. In doing so, they may overlook some of the more important factors. In addition to being affordable, a money transfer service must be fast. It must also be secure. Above all your remittance provider must offer peace of mind. In the era of online remittances, service providers differentiate themselves less and less on cost. Instead, a good money transfer service stands out for the value it adds.
India’s central bank, the RBI does not allow resident Indians to hold other currencies in regular savings accounts (except NRO/NRE). A mandatory currency conversion takes place when sending remittances from the US to family in India. Money transfer agencies and banks differ greatly in the exchange rates they offer. The exchange rate is where most banks earn most of their profit. As a result transfers through banks are almost always the most expensive. Compare the costs, specifically the exchange rates across providers. Online currency converters such as XE are a great source of instant information. Note that online converters often feature mid market rates which are not available to end users. The solution is to use a tool like the Ria Money Transfer App, which has an in-built cost calculator.
Third Party Fees
The operating processes of banks which determine the costs of transfers are overly complex. They are buried deep inside the ‘terms of service’. In many cases banks levy a third party charge and sometimes also a surcharge. The result is that remittances are subject to fees at both ends. The beneficiaries receive less than the amount sent. Avoid the uncertainty and be sure of the cost of transfer by opting for a channel with a fixed service charge. Often the obvious choice is not banks, but reputed independent service providers.
Speed and Security
For remittance recipients, overseas money transfers are often their only source of income. That means speed is important. Banks generally fail in this department. Dated systems and archaic manual procedures cause remittance transfers via banks to take a few days or more. For a speedier solution, turn to other services. Money transfer agencies are no less secure since they operate in the same regulatory environment as banks. All money transfer agents operating in India are bound by the same RBI guidelines. In addition to being secure, they are lightning fast. For example, transfers sent through the Ria Money Transfer App are often credited into recipients’ accounts within minutes.
Purpose of Sending
The choice of transfer channel often boils down to the intended purpose of sending money. Each purpose warrants its unique priority. For example large infrequent transfers such as college fees and property downpayments prioritize transfer cost over speed. Timeliness is more important for regular smaller transfers such as household expenses, bill payments, and monthly installments. The sender’s priority can change depending on what the transfer is meant for. Some years back quicker (express/urgent) transfers used to cost more. That’s not the case anymore. Nowadays an international money transfer service can be both fast and affordable while being reliable.
Ways to Remit to India
There are many ways for expats in the US to send remittances to India. A single channel is rarely perfect for all types of remittances.
Bank transfers: Banks are still the first options that come to the mind of many NRIs. Expats can remit to India through IFSC or SWIFT. Indian banks generally don’t charge any ‘fees’ for international transfers. However, they do levy a ‘service charge’ on foreign currency conversions. This can be in the range of $3-5 per $1,000. The beneficiary account is charged 18% GST on 1% on the converted amount for remittances up to INR 100,000. Note that exchange rates offered by banks are typically 3-6% higher than actual. Some banks charge a flat rate per transfer, which is costlier for frequent small transfers.
Money transfer services: International money transfer agencies provide simpler and faster payments across borders. They beat the currency exchange rates offered by banks by a wide margin. For instance, sending a remittance to India through Ria Money Transfer costs just $1 for every $500 via bank-to-bank transfers.
Cash pickup: A handful of services including Ria also offer the convenient option of instant cash pickup. This is a great way to send money to someone who does not have a bank account. Also convenient for recipients who prefer to receive payments in cash, such as those in unbanked remote areas. Thousands of agent locations (brick and mortar offices) in India facilitate cash pickup services. Ria offers same day transfers at the most affordable rates of all providers who offer comparable services.
About The Author:
Hemant G is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency. When he’s not writing, he loves to travel, scuba dive, and watch documentaries.