5 things to consider before you remit to India

Choosing an online money transfer company should be an easy decision. There are a few things that you’ll need to think about first before you go ahead and transfer. Here are some key points and scenarios to consider before you remit to India.

When you regularly remit to India

Exchange rates are an important deciding factor for a money transfer to India however, they may not be as important when you regularly send money online. For example: if you are paying back a student loan then weekly payments might be necessary to avoid interest penalties. This would also hold true if you were paying a mortgage or are servicing any regular financial commitments.

The reason why exchange rates might not be as important is due to ‘dollar cost averaging’. Dollar cost averaging is a concept used in finance that takes the average value of the transfer over time. This means that when you remit to India many times over many months you will receive a ^mean exchange rate that is neither very bad nor very good. The exchange rate will be AVERAGE. In finance dollar cost averaging is considered a winning strategy and when transferring money overseas it can be a sensible way to operate, especially if you are making regular payments.

^Average

For those that send money to India once

Timing the AUD to INR exchange rate can be lucrative if you are sending money online one time only. It makes sense to make sure you squeeze every single AUD to INR possible and there are many different scenarios that could justify a single remittance. These could be moving back to India, purchasing a property, paying a student loan and many more. The advantage of timing the market is that you will get the best possible value for your dollar however, markets are unpredictable. They can be affected by elections, a big storm or just about anything! The problem with timing is that markets ebb and flow, meaning that if you are to time the market then it’s very important to be patient as it could be months before the exchange rate make any meaningful change.

Hidden costs

Within an international money transfer, there are hidden costs that are easily spotted with a keen eye. The first cost to note is the rate on offer for your remittance: There is the *interbank rate and the conversion rate.

The interbank rate is the exchange rate of your local currency to the destination currency and the conversion rate is the rate that’s offered by online remitters such as OrbitRemit. When you remit to India with OrbitRemit the conversion rate will usually be a couple of points better than other international money transfer companies and far more competitive than a bank.

For an AUD to INR transfer the conversion rates could look like this:

In this instance, you will want to use OrbitRemit to remit to India as you will get slightly more Rupee per dollar than with a competitor.

*Interbank rate is only available to banks, licensed remitters and FOREX traders

**This rate is hypothetical and used for illustrative purposes for this article. Click here to see the real conversion rate.  

There’s a gap between the buy and sell prices of any currency, called the ‘spread’. The provider takes this as profit, on top of their other fees. Every company will charge a different spread, depending on the additional fees they charge. Companies with higher fees take a lower spread, and vice-versa. Banks have a very large spread which is the reason why online money transfer companies are the best option for international money transfers. They also include a hefty fee at both ends of the transfer.

The final thing to include is the upfront fee. OrbitRemit has no fee to send money to India from Australia and a flat $4 fee from New Zealand. Banks on the other hand charge exorbitant fees (sometimes up to $50!) to send money overseas.

As you can see, this illustrates the need to examine exchange rates and fees together so that you can see the total cost of the transaction. It’s often quite easy to miss the total cost of the spread as it goes on behind the scenes.

Trust score

A safe and secure, reputable transfer service is essential. The best way to gauge this by visiting the companies Trustpilot account and checking their trust score. We recommend using companies that have at least 15,000 reviews as they have had enough business to inform your decision.

Customer service

In this connected world it’s important to understand how the companies communicate with their customers. A good indication of whether the company has a fast and effective customer service team is to take a look at their facebook page. If the response time is fast and it has many positive interactions, you can be sure that their customer service team works hard behind the scenes to field questions and speak with customers. Also, a live chat function on their website will make customer service requests even faster and more personalized.

Now you’re ready to remit to India

It’s easy to send money online. Exchange rates vary in importance depending on how you are using the service and remember to assess the hidden costs of transferring. A credible, trustworthy company will have many Trustpilot reviews and have a highly engaged social media page.

No two online remitters are the same so remember to go with the one that suits your personal needs.

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