Tag: Wise

Indians paid Rs 9,700 crore in hidden forex fees, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Indians paid nearly Rs 9,700 crore in the form of fees hidden in inflated exchange rates while making remittances in 2020. This is more than a third (36%) of the total fees of Rs 26,300 crore that Indians paid for sending money across their country’s borders.

The fees reflect a lack of transparency and high charges applied by banks on remittances. Banks have been reducing the fees on foreign remittances and their income under this head fell from Rs 15,017 crore in 2016 to Rs 12,142 crore in 2019. However, they have protected themselves by recovering Rs 4,422 crore through exchange mark-up in 2020, which was up from Rs 2,505 crore in 2016.

These figures were from independent research carried out by Capital Economics in August 2021, which aimed to estimate the scale of foreign exchange transaction fees in India. The study was released by Wise, the technology company that was founded with the objective of reducing cross-border remittance costs.

Overseas workers sending money into India are also losing money. Over the past five years, money lost to exchange rate margins on inward remittances has grown from Rs 4,200 crore to Rs 7,900 crore. Meanwhile, fees paid to transaction costs have grown from Rs 10,200 crore in 2016 to Rs 14,000 crore in 2020.

“A significant portion of these fees paid on remittances to India come from people in Gulf countries where most are employed in blue-collared jobs to support their families back home in India,” a statement issued by Wise said. Of the share of total fees paid on inward remittances to India in 2020, Saudi Arabia ranked first at 24%, followed by the US (18%), the UK (15%), Qatar (8%), Canada (6%), Oman (5%), UAE (5%), Kuwait (5%), and Australia (4%).

“While technology and internet have 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,” said Wise India country manager Rashmi Satpute. Indian consumers spending abroad paid Rs 1,441 crore as transactions fees, of which Rs 1,303 crore was hidden charges in the form of exchange mark-up.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Fintech Wise to digitally disrupt outbound remittances from India

Banking & Finance

[ad_1]

Read More/Less


British fintech company Wise, a digital cross-border money transfer solutions provider, has now set its sights on disrupting outbound remittances from India, launching a digital solution in this space in the Indian market, a top official said.

With the launch of this service from June 1, Indians can now use Wise to send money to 44 countries around the world.

“Outbound market in India is $14-15 billion every year. For us, as a global company, that is a large interesting opportunity where we believe we can be one of the solutions to the problem. Historically, it (outbound remittance) is a space that has not been invested in and we believe that we can bring some competition and disruption in the Indian market in this space,” Venkatesh Saha, Head of APAC & Middle East Expansion, Wise told BusinessLine.

“We already have a formidable business of bringing money into India. We have had that for a number of years. We use the most competitive, cost-effective and transparent methods to send money to India. Now that we can do that, moving forward we would like to see how we can be a part of solution to improve outbound payments from India.”

For Wise, sending money to India started in 2013. Wise most recently enabled Google Pay users in the US to send Indian rupees to Google Pay users in India.

Founded in 2011 by two Estonian gentlemen in London, Wise, which was formerly known as TransferWise, got itself directly listed at the London Stock Exchange (LSE) last week, giving the firm a market value of over $ 11 billion on market debut. This strong listing has now turned its founders Kristo Kaarmann and Taavet Hinrikus into billionaires.

Money transfer solutions

With India now becoming the largest inbound remittance recipient market (about $85 billion a year), processes are quite a breeze when it comes to transferring money into India from jurisdictions abroad. However, the same cannot be said for outbound remittances where a lot of “friction” exists in the processes and the opaque bank charges for international money transfers are still a pain point.

Ten years ago, making an outbound remittance from India was an experience riddled with a lot of frustration and anxiety. If you wanted to send money abroad (say for your son or daughter’s education), you would have had to walk to a bank branch, fill up a form and then you would not know how much you would be charged for your remittance and you wouldn’t know how much you would get on the other side and when your recipient would get the money, etc. However, things are beginning to change as this is where fintechs like Wise are seeing opportunity, promising reliable transparent and cost effective technology solutions for international money transfers.

Multi-currency account

Wise, which is now regulated in 13 jurisdictions around the world including home market UK, EU, US, Canada, Brazil and several countries in Asia Pacific, currently has over 10 million people and businesses using its fully digital services.

Going forward, Wise, which now has only its remittance service in India, may also bring its multi-currency account offering that lets you hold 40 currencies in the account and convert from one currency to another, according to Saha.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,