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Understanding and minimising these hidden costs can help exporters, freelancers, and businesses retain more of their earnings.
What are forex markups?
Forex markups are additional charges applied by banks and payment providers when converting foreign currency.
While many assume they get the real exchange rate, banks often add a hidden margin.
For example, if the actual market rate is ₹87 per sollar, a bank may apply a 2-2.5% markup, lowering the exchange rate to ₹85 per dollar.
On a $10,000 payment, this seemingly small difference translates to a ₹20,000 loss.
“Forex markups are often overlooked but can significantly impact cash flow, especially for businesses handling frequent global transactions,” says Srivatsan Sridhar, Co-Founder and CEO of Skydo, a cross-border payments platform.
Tips to avoid forex markups in international transactions
Check the live forex rate
“Always compare your bank’s exchange rate with real-time rates from platforms like Google, XE, or Bloomberg. If the offered rate differs by more than 0.5%, you might be overpaying,” advises Sridhar.
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Use multi-currency accounts
“Global banks and fintech platforms offer multi-currency accounts, allowing you to receive payments in foreign currency without immediate conversion. However, under Indian regulations, you must convert your funds into Indian rupee within a specified period,” Sridhar explains.
Leverage RBI’s retail FX portal
“The Reserve Bank of India’s Retail FX Portal provides a transparent platform for forex transactions, helping businesses and individuals access competitive exchange rates directly,” Sridhar points out.
Watch out for additional hidden fees
“Beyond forex markups, look out for wire transfer fees, intermediary bank charges, and service fees, which can further reduce your earnings,” warns Sridhar.
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First Published: Mar 22, 2025 1:27 PM IST
