#Kolkata: Indians usually turn to banks or remittance service providers for transactions in international accounts. Many people spend money using foreign currency or use Indian ATM, debit card or credit card (Debit and Credit Card) to spend money while on holiday abroad. But we unknowingly deduct a hefty extra charge from our account for all these services. In the end we have to pay hidden money or hidden fees for remittances.
According to a 2021 survey by Wise and Capital Economics, a company listed on the London Stock Exchange, Indian consumers spent more than Rs 26.3 crore on foreign exchange fees in 2020. Of this, Rs 9.6 crore has been paid as ‘hidden fee’ for currency conversion, payment and card purchase. According to the report, in 2016, Indians paid a total of Rs 5.9 crore in additional ‘hidden fees’. In 2020, the total amount of ‘Hidden Fee’ paid in one year will increase to 9.6 crore.
“Whenever money is converted into dollars or euros, customers fall into the trap of hidden charges,” said Rashmi Satpute, Country Manager, Wise India. He added that the survey highlighted the lack of transparency in foreign exchange conversions. For a long time, customers have been unknowingly incurring “unnecessary expenses for foreign transactions”. “Banks and foreign exchange brokers can bring transparency in foreign exchange transactions by stopping the use of misleading words like ‘free’ and ‘zero percent commission’,” Satpute said.
What is Forex Currency Mark-up Fee?
When a customer swipes an Indian bank card abroad, the amount spent is converted into Indian rupees. The Forex currency mark-up is then charged as a transaction fee. The amount of this additional charge is 2% or more of the transaction value. The amount of this charge varies according to the bank.
When a consumer uses an Indian debit / credit card abroad, 1% to 4% of the amount withdrawn at each withdrawal is deducted from the bank account. For this reason, when using an Indian card abroad, one should keep an eye on the currency mark-up fee, transaction fee and how much is being charged for withdrawal.