The Hindu Business Line : Get the best of remittances

With private players and banks offering remittance services, the options today are many for sending money from overseas to India. But before zeroing in on an option, work out what is crucial for you – time or money. The answer to that will help you choose the best option.

Western Union Money Transfer, MoneyGram and Remit2India are some private money-transfer service providers. None of these service providers help in outward remittances – sending money from India to abroad. They handle only inward remittances. Western Union and MoneyGram promise transfer of funds instantaneously (within a few hours) but differ in their charges.

Banks handle both inward and outward remittances; services of most banks are largely similar save for “offers” by a few.

There are the forbidden (read illegal) channels too, where the risk is far higher than the savings, if any, that you may make.

When time is crucial

For instant transfer of money across borders, Western Union Money Transfer and MoneyGram are options that you can consider; the former is more popular with expat Indians. Remit2India takes anywhere between one and three days and requires both parties – the sender and the receiver – to hold bank accounts.

In transfers through Western Union (through phone, Internet or from an agent location), money reaches the beneficiary within hours or at best the next day, subject to the difference in time zones. Neither the sender nor the receiver is required to transact through a bank account.

The process is simple – go to an agent’s location, fill up a form (not required if you hold the Preferred Customer Card) and give the cash that you need to send and the transfer fees. The agent will give a Money Transfer Control Number (MTCN) and a receipt. Call the people to whom the money is being sent and give them the MTCN. The beneficiary can then go to collect the money from a convenient Western Union agent location; all that is required is the MTCN and a proof of identity.

The process is almost the same with MoneyGram.

We spoke to a few Indians stationed abroad to get a feel of how the transfers works.

Mr Raja Ragupathy, a research fellow with Agriculture and Agri-Food Canada, said, “I have been sending money through Western Union Money Transfer to my family in India. It’s a reliable, fast and hassle-free way to send money.”

But he cautions that the exchange rate offered by the agent is less than what a bank offers. That may make a difference when you are sending huge sums.

In fund transfers through banks, money reaches the destination after three to four days. It will take more time to get the cash if it’s a cheque or DD that’s sent, as it has to be mailed again.

It would take at least two days for your money to move from your account to the receiving bank’s Nostro account and another day for the money to move to India.

When charges matter

If the charges and exchange rate, and not time, are your priorities while selecting a transfer service, you may like to look at the services offered by banks.

Consider this: For a $1,000 transfer to India from an agent location in the US, Western Union Money Transfer would charge $15 (depending on the state or city) but HDFC Bank’s online transfer will do the same for Rs 25 a transaction.

For CAD $1,000 transfer to India from an agent location in Canada, Western Union Money Transfer would charge CAD $25 (depending on the state or city) but ICICI Bank’s e-transfer will cost just CAD $4 for credits to an ICICI Bank account and CAD $7 for cash payouts with a foreign exchange conversion fee of Rs 25.

Banks also give you a better exchange rate than private money transfer service providers, pointed out Mr Prasanna Divekar, Vice-President & Head-NRI Domestic Business, HDFC Bank. However, with transfers through banks, you have to remember that not all banks service all locations.

Further, the location from where the transaction originates may help you bag a better deal.

The IndiaLink service of HDFC Bank that serves Gulf countries doesn’t charge anything from customers for fund transfers to India. However, for transfers through QuickRemit and through Wires, the bank charges a nominal exchange conversion fees.

In wire transfers, the local banks levy charges for international transfers. In US it is $20-30 for a transaction. Thus, it is always better to check out category-specific charges and features before you decide on the service provider. There are similar differences in the case of private service providers too.

Add-ons & offers

To lure customers, banks and private money transfer agents offer many add-ons.

Western Union, for example, has home-delivery facility for cheques and demand drafts. Western Union’s gold card reward programme lets one earn reward points on money transfers and redeem them for service fee reduction, gift cards and merchandise. Remit2India has a mobile alert facility to track status of funds. It also offers the Rupee Express service for US customers, wherein fixed amounts can be transferred as you get to lock the exchange rate at the time you book the remittance. ICICI Bank is offering till June 30 free 200 minutes of India calling card for new registrations and transfer of $500 (or equivalent in other currencies).

Offers like this can get you good deals, so look out for them.

DOs and DON’Ts

Vinith Yathindranath, a PhD student at the University of Manitoba, Canada, who has been sending money to his parents in India, said, “A service provider may claim to transfer your money at a low fee or for free. If the offer sounds irresistible, chances are that there are some strings to it. Before trying out a service provider for the first time, it is better you go through the exchanger’s Web site. Enquiries with people who have used the transferor’s services will help. A careful look at the privacy policy, terms and conditions is a must.”

Chetan Basavaraj Singai, a student at Danish School of Education, Denmark, said, “Different money exchangers offer different rates. If you do your homework well and keep yourself updated about the rates, you can get some good deals.”

It is your hard earned money, so better exercise some care while transferring funds.

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