The true cost of international transactions
India is a huge exporter of services, and growing rapidly. The estimated value of services export for 2022-2023 was $323 billion, up from $254 billion in 2021-22, according to data from the commerce ministry. This includes the income of agencies, consultants, gig workers, exporters and other freelancers who serve overseas clients. If you are an exporter, a freelancer or regularly receive payments from overseas, you would know how much it hurts to pay exorbitant and opaque fees to banks and payment platforms. When receiving payment for your services in foreign currency, processing charges can range from 2% to 10% of the transaction amount. Since the break-up is usually undisclosed and borne by the recipient, these charges cut into your income. Therefore, it is important to clearly understand the common hidden charges.
SWIFT/ wire fees: These are usually fixed or slab-wise charges deducted by your client’s bank overseas while sending the payment. Depending on the country, bank and amount, these charges can be anywhere from $20-75. Your client can pay these charges, or pass them on to you. For instance, if on a $10,000payment, swift charges are $50 and the client opts to pass them on to you, you will receive only $9,950 in India.
Intermediary bank fees: Typically, in international wire transfers, the funds end up passing through several banks and each intermediary (or correspondent) bank can deduct their own fees. For instance, while receiving a payment of $10,000, intermediary banks might deduct $200, or more, as correspondent bank charges. Again, this will be deducted even before the money comes to India, so in the above example, you would receive only $9,750 in India. Both swift fees and intermediate bank fees are not
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