Remittance & Transfer Costs

Sending money abroad is a banking service, and banks charge for it. These charges sit on top of the currency markup, not inside it, so they are a distinct layer of cost.

The main one is the wire or SWIFT transfer fee, the charge for sending your money through the international banking network to your foreign account. Depending on the bank, this can run from a few hundred to over a thousand rupees per transfer.

Some banks also add a fixed remittance or processing charge of their own. And because international transfers often pass through correspondent banks, intermediary banks that relay the money between the sending and receiving institutions, each of those can quietly deduct a small charge along the way, so the amount that lands can be slightly less than what was sent even after the markup.

There is also GST. The currency conversion and remittance service attract GST on the charges involved, a tax on the service itself. It is another small layer that stacks onto the cost of the transfer.

A flat 1,000 rupee wire fee is trivial on a large remittance. On a 10 lakh transfer, it is a rounding error, a hundredth of a percent. But that same 1,000 rupees on a small 10,000 rupee transfer is a full 10% of the amount, an enormous cost. The fee did not change, but its impact multiplied, because it is fixed while your transfer is small.

This is crucial for someone running a modest monthly SIP abroad and paying that fixed fee on every single transfer. The lump-sum investor sending one large transfer barely notices the same fee. So the practical rule that falls out is important: where fixed transfer fees apply, avoid many tiny transfers.

Most of our discussion focuses on getting money in. But your money has to come back one day, and getting out has its own costs.

When you sell and repatriate, you convert dollars back to rupees, so the currency markup applies again on this leg. But beyond the markup, there can be a withdrawal fee charged by the platform for taking money out.

Some platforms that are free to fund are not free to withdraw from, and the withdrawal cost is the one people never check when they open the account.