Rs. 1,700 cr: Hidden cost of sending money abroad

Families sending money abroad to support their children's education paid an estimated Rs 1,700 crore ($200 million) in bank fees and currency markups in 2024, a report released by Redseer Strategy Consultants and Wise, a global cross-border payments company, showed.

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According to the study, more than 95% of India's annual student remittances, estimated at Rs 85,000-93,500 crore ($10-11 billion), flow through traditional banks, which typically apply a 3-3.5% exchange rate markup and take between two and five days to complete transactions.

Families remitting Rs 30 lakh annually can lose up to Rs 75,000 in hidden costs. The estimates of the costs tie in with what World Bank has had to say on the cost of cross border remittances. The costs are slightly lower than what migrant workers in rich countries pay to send money home. According to World Bank, the global average cost of sending $200 was 6.4% of the amount sent, a slight increase from 6.2% a year earlier.