Forex Trading Fees in India www.deekpay.com

What is a foreign exchange transaction fee?

Some banks/credit cards charge a foreign exchange transaction fee for foreign currency purchases or purchases made outside of your home country. It usually covers international processing costs, including currency exchange and brokerage fees.

existIndia, fintech companies charge less for automated international payments. Consider these free options to save money on business purchases.

Indian Credit Card Forex Transaction Fee

In the context of import and export payments in India, a credit card foreign exchange transaction fee is a charge levied by the credit card issuer for transactions made in foreign currencies or with foreign merchants. This fee is usually between 1% and 3% of the transaction amount and is used to cover the costs associated with currency conversion and processing international transactions. Businesses engaged in import and export activities should consider these fees when using credit cards for international transactions, as they can impact overall operating costs. Exploring credit card options that offer foreign exchange transaction fee waivers can help minimise fees and streamline the international payment process.

Recommended Reading:Credit Card Forex Trading Fees in India

Apply for Credit Cards in India without Forex Transaction Fees

There are several steps involved in applying for a credit card without forex transaction fees in the Indian business environment:

Research Bank of India: Explore Bank of India's credit card offerings to find options that don't charge forex transaction fees. Check out premium credit cards or travel credit cards that may offer this feature. Check Eligibility: Ensure that users meet the eligibility criteria set by Indian banks for credit card applications, including income requirements, credit scores and residency status. Compare offers: Compare the benefits, rewards, annual fees and other features of different credit cards offered by Indian banks to determine the option that best suits individual business needs. Apply online or in person: Complete the credit card application process online through the bank's website or visit a branch in person. Provide documents: Collect and submit necessary documents such as proof of identity, proof of address and proof of business income as required by the bank. Wait for Approval: After submitting your application, wait for the bank's review and approval process, which can take anywhere from a few days to a few weeks. Receive and activate credit card card: If the user's application is approved, the credit card will be received by mail. Follow the instructions provided to activate the card before using it for transactions. Enjoy free transactions: After activation, the user can use the credit card for international transactions related to one's India business without paying foreign exchange transaction charges.

How to avoid paying forex transaction fees in India?

Adding mark-up fees for foreign currency transactions to your budget may not be the best option, but it may be necessary when dealing with foreign vendors. This however, there are ways to avoid credit card fees associated with foreign currency transactions.

One of the best ways to get a credit card with no forex fee is to get a credit card with no forex fee. Another option to consider is to get credit cards with no forex trading fees. These cards do not charge extra fees for foreign exchange transactions and are available from various credit card providers including MasterCard.

However, obtaining such a card includes research, application and setup time. In addition, these cards usually come with terms, conditions and other fees that you should be aware of.

‍ Note: Need to enquire about forex transaction fees please submit a request to your bank. In India, fintech companies charge less for automated international payments.

Business remittances with foreign exchange transaction charges in India

The specific types of business transactions for which foreign exchange transaction fees are charged may vary from bank to bank and financial institution to financial institution. However, common scenarios in which a foreign exchange transaction fee may be charged include

international telegraphic transfer Remittances to foreign business partners or suppliers via international wire transfers may incur foreign exchange transaction fees.

Assume that TechSolutions Pvt Ltd, an Indian software development company, needs to pay a software licence fee to SoftwareTech Inc., an American software provider. The licence fee is USD 50,000 and TechSolutions wishes to transfer this amount via international wire transfer.

Convert to local currency:

TechSolutions uses the current exchange rate to convert the licence fee from USD to INR. Assuming an exchange rate of $1 to ₹74: $50,000 converted to Indian Rupees: $50,000 * ₹74 = ₹37,00,000.

International wire transfers:

TechSolutions initiated an international wire transfer from its Indian bank account to SoftwareTech Inc.'s U.S. bank account.

Foreign exchange transaction fees:

TechSolutions Bank charges a foreign exchange transaction fee of 2% for wire transfers. Forex Transaction Fee: 2% of USD 50,000 = USD 1,000.

Total cost:

The total cost of an international wire transfer is the sum of the converted licence fee and the foreign exchange transaction fee. Total cost: ₹37,00,000 + $1,000 = ₹37,01,000.

In this example, TechSolutions would pay a total of ₹37,01,000, including foreign exchange transaction fees, for a $50,000 international wire transfer.

Foreign currency invoices and payments If a business receives an invoice or payment in a currency other than the local currency (Indian rupees), a foreign exchange transaction fee may apply.

Example, Global Fashion Ltd, an Indian company, purchases clothing materials from ChicFabrics S.r.l., an Italian supplier, and receives an invoice in foreign currency:

Foreign currency invoice amount: Chic Fabrics S.R.l issued an invoice for the supply of textile materials in the amount of €20,000.

Conversion to Local Currency: Global Fashion needs to convert the invoice amount from EUR to INR. Assume 1 Euro to ₹85:

Conversion of 20,000 Euros to Indian Rupees: 20,000 Euros * ₹85 = ₹17,00,000.

Foreign Exchange Transaction Fee: Global Fashion's Indian bank charges a currency conversion foreign exchange transaction fee of 1.5% when Global Fashion pays in Euros.

Forex Trading Fee: 1.5% of ₹17,00,000 = ₹25,500.

TOTAL COST: The total cost of the payment (including the FX transaction fee) is the sum of the invoiced amount and the fee after the exchange. Total cost: ₹17,00,000 + ₹25,500 = ₹17,25,500.

Accordingly, Global Fashion will pay a total of ₹17,25,500, including foreign exchange fees, for the invoice of EUR 20,000.

This example illustrates how a foreign exchange transaction fee is incurred when a business processes a foreign currency invoice and pays in a currency other than the local currency. Actual fees and exchange rates may vary, so please contact Karbon Forex to learn about the markup fees you may qualify for under the Forex Transaction Fee!

Overseas purchases and expenditures The use of an Indian business account to pay for business transactions involving the purchase of goods or services from foreign suppliers or overseas expenditures may incur foreign exchange transaction charges.

Example:

Suppose XYZ Electronics Pvt Ltd, an Indian electronics manufacturing company, needs to purchase machines from TechMachines GmbH, a supplier in Germany. The price of the machine is 100,000 euros.

Conversion to Local Currency: XYZ Electronics needs to convert the purchase amount from Euros to Indian Rupees. Assuming an exchange rate of 1 Euro to ₹90:

Conversion of 100,000 Euros to Indian Rupees: 100,000 Euros * ₹90 = ₹90,00,000.

Overseas Payments and Forex Transaction Fees: XYZ Electronics uses their Indian business account to make payments to Tech Machines GmbH. Their bank charges a foreign exchange transaction fee of 2% for currency exchange.

Foreign Transaction Fee: ₹90,00,000 for 2% = ₹1,80,000.

Total cost: The total cost of overseas purchases (including foreign transaction fees) is the sum of the converted purchase amount and fees.

Therefore, XYZ Electronics will pay a total of ₹91,80,000, including foreign transaction fees, for the EUR 100,000 machinery purchase.

Cross-border trade and commerce Any cross-border trading activity, including the import or export of goods and services, may involve specific foreign exchange transaction costs.

Example:

ABC Furniture purchased furniture valued at MYR50,000 from Timber Craft and converted it to MYR9,00,000 at an exchange rate of MYR1 to MYR18.

Foreign Exchange Transaction Fee: ABC Furniture's bank levies a foreign exchange transaction fee of 1.5% on the amount exchanged.

Foreign Exchange Trading Fee: MYR 13,500.

Total cost: The consolidated cost including foreign exchange transaction fees is MYR 9,13,500.

In summary, ABC Furniture purchased furniture worth MYR50,000 from TimberCraft Sdn Bhd at a total cost of MYR9,13,500. This included the conversion of Malaysian Ringgit into MYR 9,00,000 at an exchange rate of MYR 18 to MYR 1 and the foreign exchange transaction fee of 1.5% levied by the bank totalling MYR 13,500. The foreign exchange transaction fee adds to the overall cost and highlights the importance of considering such fees in cross-border transactions.

concluding remarks

In summary, foreign exchange transaction fees can be a significant cost when doing international business in India. Businesses need to be aware of these costs and consider how they can minimise them, for example by using credit cards that do not have foreign exchange transaction fees or by working with local banks that offer lower fees.

Atpay - we are a professional provider of payment solutions and have been deeply involved for many years inIndia PaymentsWe have successfully provided payment functions for countless customers at home and abroad. We are fully confident in payment integration and high-risk payment processing, and welcome inquiries and exchanges.