The US and India is a remittance market with big volume. The Indian diaspora is in the tens of millions, while the USD is the global reserve currency.
When weighing up the best way to send money to India from the USA, convenience is only half the equation. With infrastructure changes over the past decade, the decision mostly revolves around tech, and how fintech is outcompeting high street banks.
In fact, banks and intermediaries are often removed from the process entirely. Because of this, visibility is improved and fewer hands are taking a fee each – both of which plague the SWIFT system.
For the sender, this also means higher transaction limits, like $50,000 per day, and much less latency in fund availability.
Choosing the right payout method for your family
Just like Amazon deliveries, it’s all about the efficiency in the last-mile delivery, even in remittance. In India, the Unified Payments Interface and the Immediate Payment Service have both improved how funds are received by family members.
When selecting a service, it’s important to make sure they offer real-time credit to major Indian banking institutions, be it HDFC, ICICI, and SBI. Integration with these allows for almost instantaneous settlement via NEFT (or, for larger sums, RTGS).
Flexibility is deceivingly important, especially for family support, as many may live in rural areas. Even in many semi-urban areas in India, physical cash is still often preferred, though underbanking has improved a lot in recent years.
There are many providers with expansive physical networks – thousands of cash pickup locations exist around the subcontinent. Digital wallets like Paytm have also introduced a third layer of convenience though as these allow funds to be deposited into a mobile ecosystem. It’s direct and it’s great for immediate bill payment (when bills are also within this ecosystem). Ultimately, flexibility is key to adapting to Indian infrastructure limitations.
Avoiding sneaky fees
How costs work within international money transfers can appear complicated, but it’s just a matter of looking at the upfront transaction fee and the FX spread. For many decades, banks have gotten away with providing the former, but not being clear on the latter.
It’s certainly common to come across claims of low fees – even the traditional options, though they’re less focused on remittance. But the true cost of a wide FX margin is what hurts, especially for large sums as it’s percentage based. Ultimately, it’s the difference between the mid-market rate and what you’re being given, and modern providers are much better at expressing this.
A superior transfer service will provide transparency over all fees, but also may provide a locked-in exchange rate which can protect the sender from the volatility of the USD/INR pair during the settlement period. And many fintechs will also provide visibility over the progress of the delivery, unlike a bank.
Is it secure?
SWIFT is certainly secure, but so are the alternatives. Strict anti-money laundering regulations in the US have led to very secure practices, not just at segregating and protecting your funds but also in detecting fraud. New users can rest assured at the new set of options and take advantage of the introductory offers, which are common, as well as using different specialists for different uses. While some focus on large transfers and the South Asian market, others focus on frequent, small transfers and multi-currency wallets. Unlike a bank, it’s common to have accounts with many providers.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.
