In an earlier article, we saw how the transfer fees and exchange rates both have an impact on your remittances. Today, we look at the various options available to you:
Option 1: Bank wires
You can make a wire transfer from your foreign bank account to an Indian bank account using the SWIFT mechanism. In this case, you must necessarily have a bank account with the bank through which you are sending the remittance.
Time taken and cost: These would depend on several factors. If you remit funds from your bank account in US which also has a branch in India, it would take you lesser time, as early as the next working day, and you may get a discount in fee or sometimes even a complete waiver.
If you remit funds from a bank that does not have a branch in India, it could take between 1 to 4 working days. This can also be an expensive affair. US banks for instance, charge anywhere between $15 to $ 45 for an outgoing wire transfer abroad.
For instance, if a Citibank customer is transferring funds from a Citibank account in the US to a Citibank account in India, they can use Citibank Global Transfer. "There is no fee, and the transfer occurs within minutes. There is a commission for foreign currency conversion. The customer sees the exchange rate, commission and total amount to be received in India before accepting the transfer. If a Citibank customer is transferring funds from a Citibank account in the US to a non-Citibank account in India, the fee (for non-Citigold customers) is $30 online or $40 in a branch. It generally takes a couple of days. If the customer requests that the funds arrive in the local currency (and therefore Citibank does the conversion), Citibank would charge a commission for foreign currency conversion," says Andrew Brent Senior Vice President, Consumer Public Affairs at Citi.
Exchange rate: Banks may offer the fixed rate or actual rate.
Limit: Each bank may have its own limits.
Tip: Bank wire transfers might be best suited for high value transfers because other services may have remittance limits. "It is advisable to choose either a foreign bank or Indian bank which has a branch at both the places so as to ensure quicker transfer," says Balwant Jain Director of online financial search engine Apnapaisa.com.
Option 2: Online money transfer service
There are several online money transfer services such as xoom.com, remit2india.com as well as similar platforms offered by banks. For instance, ICICI Bank offers the money2india service while State Bank of India offers the Instant Transfer facility. The good thing about these service providers is that you can transfer funds from any foreign bank account or even credit card to any bank account in India.
Time taken and cost: The time taken in case of these transfers is relatively short, from a few hours to a couple of days. For instance, in the case of xoom.com, if you transfer during Indian banking hours, your remittance will be received within 4 hours. For remittances above $1000, you will not pay anything by means of transfer fee. You will pay $2.99 per transaction up to $500 and $4.99 per for remittances between $501 and $1000. "How we differentiate ourselves is that we are able to transfer the money very quickly, within a few hours. Our current transfer time of 4 hours is in fact the lowest among all transfer options. I think that is important in current volatile times when you want to lock into a good rate before it changes. We also try to keep costs as low as possible so that we can deliver maximum value to the customer," explains Ruchika Kohli, Director Marketing at Xoom Global Money Transfer.
With Remit2India, remittances over $1000 are free while for a $1000 remittance, the cost would be around $5. While wire transfers and online transfers take less time, between 1 to 2 days depending on the time it is booked, ACH transfers take slightly longer, about 3-4 days. "It is important to note that the time zone differences also play a vital role in the duration of the transfer as the transaction has to marry with Indian banking hours," says Avijit Nanda, CEO of Timesofmoney.com which offers Remit2india money transfer service.
Exchange rate: Exchange rates can vary significantly between providers. Some offer a fixed rate option where the rate is fixed upfront before you initiate a transaction. Others offer an actual rate option.
"We believe in passing on the benefits to our customers and thus book the rate when the transaction is being processed. While it can also go the other way, in recent times most of our customers have benefitted. We also give customers exchange rates based on slabs determined by the amount being sent. However the more they send, the better the rate we are able to provide," Nanda explains.
Limit: Limits may apply. Says Kohli, "Xoom.com has a limit of $2,500 per transaction. If you fulfill the Know your Customer (KYC) requirements, you can remit up to $9,999."
Remit2india on the other hand does not have any upper limits. However you will have to provide additional documentation for high value transactions.
Tip: This can be a quicker and more cost effective way to transfer funds as compared to direct bank wires. But make sure you compare the exchange rate that you will get on conversion because that can be a hidden cost. Also, make sure you check the exchange conversion rate for the exact dollar amount that you want to send. This too can vary depending on how much you send.
Option 3: Online-Offline
Some banks and service providers receive your remittance from overseas and send a physical draft to the beneficiary in India, thus combining an online and offline model. Western Union for instance provides the option to remit either online or with physical cash/cheque from overseas (to a WU physical location) along with the option to receive cash/cheque in India. Remit2India also has a service where collection is made online and a draft is delivered to the doorstep of the beneficiary.
Time taken and cost: "Right now, we have several models. You can use our online service and pay using a credit card and the cash will be available at pickup location within minutes (cost $10 for $1000). Alternately, you can use WUpay, the company's online service through which you can send money from your overseas bank account ($6 for $1000). The cash will be available for collection at more than 115,000 locations in India within 1-3 days. The third option is to visit an overseas branch in person and hand over the cash. In this case too, the money is available in India within minutes ($13 for $1000)," Rajiv Goradia Senior Vice President, Consumer Money Transfer for Western Union explains.
Remit2India sends a draft by courier to the beneficiary. This could take up to 7 days depending on the time taken for courier and Rs 250 draft charges would be deducted.
Exchange rate: WU has a fixed rate option, that is, you will know beforehand the rate of exchange on your transaction. You will know how much will be received in India. Remit2India again uses the actual rate model.
Limit: Limits may apply. "Currently we have a limit of $2500 per transaction for up to 30 transactions in a year. Moreover, we do not make cash delivery for amounts over Rs 50,000, that is around $1000. It must be through a banking channel," Kiran Shetty, Regional Vice President - India for Western Union says.
Tip: These services are great in cases where the beneficiary does not have a bank account and would like to receive cash in India.
All good things come at a cost. So don't be swayed by zero transfer fees and don't be put off if that fee is high. Look at the exchange rate and evaluate your entire value from the transaction.