Indians Paid INR. 263 Billion In Foreign Exchange Fees In 2020: New Study Reveals

Wise, the global technology company operating in global money transfer ecosystem, released a new study revealing that Indians paid over Rs. 263 billion (US$ 3.50 billion) on foreign exchange fees in 2020, out of which ~Rs. 97 billion (US$ 1.29 bilion) were charged as hidden exchange rate markups on currency conversions, payments and card purchases. The outstanding Rs. 166 billion (US$ 2.21 billion) were spent on transaction fees. 

These statistics were from private research carried out by Capital Economics in August 2021 which intended to assess the scale of foreign exchange transaction fees in India. The research also discloses that between 2016 and 2020, the annual sum Indians lost in fees and exchange rate markups increased from Rs. 187 billion (US$ 2.49 billion) to Rs. 263 billion (US$ 3.50 billion). 

Indian consumers remain losing out on hidden fees

As the overall amount Indians have expended on transaction fees for sending money overseas have declined over the past five years, the fees paid to exchange rate margins are rising. This underlines a lack of transparency in remittance fee structures, leaving consumers at risk of hidden fees as they mistakenly pay more than promoted for the remittance service in the form of a marked-up exchange rate. 

Customers transferring money into India from overseas are not spared from hidden fees. Over the past five years, money spent to exchange rate margins on inward remittances have increased from Rs. 42 billion (US$ 559.77 million) to Rs. 79 billion. Meanwhile, fees paid to transaction costs have grown from Rs. 102 billion in 2016 to Rs. 140 billion (US$ 1.05 billion) in 2020.

A substantial part of these fees paid on remittances to India come from individuals in Gulf countries where most people are working in blue collared jobs to support their families back home in India. Of the share of total fees paid on inward remittances to India in 2020, Saudi Arabia ranked first at 24%, followed by United States (18%), United Kingdom (15%), Qatar (8%), Canada (6%), Oman (5%), United Arab Emirates (5%), Kuwait (5%), Australia (4%). 

The research also disclosed that pre-pandemic, Indian travellers paid out Rs. 42 billion (US$ 559.77 million) in foreign exchange fees in 2019 alone, of which Rs. 24 billion (US$ 319.88 million) is hidden in exchange rate markups.

Source:IBEF