Diwali may be over, but there’s no reason why you shouldn’t send a little money home to help with the post holiday blues. When you’re transferring money to India, do you go through a bank, or an external provider? If you’re concerned about costs, speed and security, your choice makes a huge difference. We’re going to take you through the things you need to look for to get the most bang for your buck when you transfer money to India from Australia.
Exchange Rates – A Hidden Cost
The exchange rate is the “conversion rate” of your local currency to the destination currency. Essentially, this is the amount of rupees (INR) your Australian Dollars (AUD) are worth. But this rate isn’t fixed – it differs with every provider each day. For example, with OrbitRemit, the AUD/INR exchange rate is 47. This means that for every $1AUD, you get 47 rupees.
Compare this to Western Union, which offers an AUD/INR rate of 46.8.
Looking at these rates, you’d want to use the AUD/INR exchange rate of 47 if you were converting AUD to rupees – because you’d be getting 0.02 INR more.
But does this work the other way? If you wanted to exchange rupees for Australia Dollars, you’d want to take the lower rate – as Dollars seem to cost less rupees that way. After all, 1 AUD should cost you 46.8INR. But does it? Using Western Union’s calculator, INR rupees gets you…
Not 1 AUD? What? Why? Where did those 4 cents go?
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. This means that it’s important to examine exchange rates and fees together – you want to look at 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, so you don’t see what you’re missing out on.
As well as charging a spread, providers will charge a fee – which will either be fixed, or a percentage of your total transfer. It’s important to look at this in conjunction with other factors, like the exchange rate. Western Union charges around $5 – 25, depending on the service you receive and the transfer time, while MoneyGram offers something similar. OrbitRemit charges between $0 – 8. Paypal charges 3.4% + NZD $0.45, which, being a percentage, can add up pretty quickly if you’re sending larger amounts, but can work out a little more favorably if your only dealing with a small amount.
Be careful of surprise fees on the other end too – some providers will charge you a sneaky “receiving fee” that you’ll want to be aware of and factor into the total cost of the transaction.
While most providers transfer directly to a bank account, not all providers will, making things a headache to co-ordinate. For example, Paypal only allows you to transfer to another Paypal user’s account. Once the recipient receives the money, they then have to transfer it from their Paypal account to their bank account – adding an extra step to complicate things.
Western Union allows you to pick up the money from a physical Western Union outlet or store. While this is useful in some cases, generally a direct transfer to a bank account is the safest way to go. This way you can be sure it’ll reach its destination.
Time is money. This is especially true in the area of international transfers. Faster transfer times tend to come with much higher fees. For example, Paypal may charge a reasonably high fee, but transfers to another Paypal account almost instantly (and is accepted exclusively by many online retailers for this very reason). MoneyGram is similar. Western Union can take from 1 – 5 working days to transfer. OrbitRemit transfers in just one business day. The general trend is that if you’re prepared to wait just a little, you’ll be rewarded with significantly lower cost transactions.
Security and Vulnerability to Fraud
A transfer can be cheap and fast, but it’s entirely useless if it doesn’t reach your loved ones that actually need it.
Some of the larger transfer providers are more vulnerable to fraud than smaller providers, due to their widespread nature. Take Western Union. Over the years many internet scammers have taken to the provider to run “Lottery” and “Nigerian Prince” scams, enticing people to wire money to a fraudulent account. Western Union have taken steps to educate their customers, but these scams are still common. You can find more here.
MoneyGram have also had a number of security issues, with licensed MoneyGram agents facilitating fraud and money laundering in the last decade – and the franchise failing to address this. You can read more here.
Smaller, online only businesses, like OrbitRemit, are less susceptible to these issues, due to their small size. We also offer strong, personal customer support in the event that there ever is an issue if you want to send money to India.
OrbitRemit offers generous exchange rates and no receiving fees. As a primarily online only business, we can pass the savings from our lower operating cost onto you. Check out our calculator on the top right hand side of the screen to get an idea of what we can offer you.