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Indians Paid ₹263 Billion In Foreign Exchange Fees In 2020: Report

A significant portion of these fees paid on remittances to India come from people in Gulf countries where most people are employed in blue-collared jobs to support their families back home in India.

Wise, the global technology company building the best way to move money around the world, has released a new study revealing that Indians paid over ₹263 billion on foreign exchange fees in 2020, of which roughly ₹97 billion were hidden as exchange rate markups on currency conversions, payments and card purchases. The remaining ₹166 billion were spent on transaction fees.

These figures were from an independent research carried out by Capital Economics in August 2021 which aimed to estimate the scale of foreign exchange transaction fees1 in India. The research also reveals that between 2016 and 2020, the annual amount Indians lost in fees and exchange rate markups increased from ₹187 billion to ₹263 billion.

Indian consumers continue losing out on hidden fees

While the overall amount Indians have spent on transaction fees for sending money abroad have decreased over the past five years, the fees paid to exchange rate margins are growing. This highlights a lack of transparency in remittance fee structures, putting consumers at risk of hidden fees as they unknowingly pay more than advertised for the remittance service in the form of a marked up exchange rate.

Fig 1: Total foreign transaction fees (INR) paid on remittances from India


Consumers sending money into India from abroad are not spared from hidden fees. Over the past five years, money lost to exchange rate margins on inward remittances have grown from ₹42 billion to ₹79 billion. Meanwhile, fees paid to transaction costs have grown from ₹102 billion in 2016 to ₹140 billion in 2020.

A significant portion of these fees paid on remittances to India come from people in Gulf countries where most people are employed 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%).

Fig 2: Total foreign transaction fees (INR) paid on remittances to India


The study also revealed that pre-pandemic, Indian travellers spent ₹42 billion in foreign exchange fees in 2019 alone, of which ₹24 billion is hidden in exchange rate markups.

Ambiguous remittance pricing structures

Most people today are unable to understand the actual costs of sending money abroad due to a continued lack of transparency around fee structures. There are two costs associated with foreign currency transactions: the upfront transaction fee and the exchange rate. The upfront fee can vary but would often not represent the total cost of the transaction as traditional banks and providers tend to add an undisclosed markup on the exchange rate, instead of using the fair, mid-market rate. The difference between rates result in a hidden fee, which unnecessarily costs people a lot more when sending money abroad.

Call for greater transparency across the industry

The India survey marks Wise’s continued global fight against hidden fees in foreign exchange transactions. Wise’s campaign (#WiserBanegaIndia) against hidden fees calls on banks and brokers to:

● Provide a clear breakdown of the costs associated with every transaction

● Show the difference between the exchange rate offered by the provider benchmarked against the mid-market rate

● Put an end to the use of misleading terms such as ‘free' and ‘0% commission'. Providers often say they have low, or even no fees, but sneak extra charges in the fine print or hide hidden fees in the form of a marked up exchange rate.

Commenting on the survey, Rashmi Satpute, Country Manager, Wise India said, “While technology and internet has eased some of the issues related to the convenience and speed of foreign funds transfers, the age-old practice of hiding fees in the exchange rate results in people spending too much on hidden foreign currency fees — money which should rightfully stay in their pockets.”

She further added, “Any time the rupee changes into a dollar or Euro or any other international currency or vice versa, consumers find themselves tangled in a web of hidden exchange rate markups, high fees, delays, and small print. Today’s research exposes a severe lack of transparency in foreign exchange transactions — for far too long consumers have been fleeced into paying unnecessary costs for foreign transactions when providers hide fees in exchange rate markups.”



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