The coronavirus pandemic has greatly impacted the world and financial markets. With the World Bank announcing that it expects remittances to India would drop by 9% in 2020, down to US$76 billion from US$83 billion in 2019, it is clear that remittances will not escape 2020 untouched.
As a developing nation, India relies heavily on remittances from expatriates working abroad to send money home to their families and friends. These remittances help stimulate the economy and finance projects.
If you’re a startup in India looking to keep funding coming from abroad to finance your company, here are five ways you can receive money from overseas.
Remittance apps
While overall remittances might be down due to COVID-19, some apps, such as Remitly, said that “remittance volume rose 40% from February to March”. These apps offer people looking for alternatives to banks a more cost-effective way to send money to India from abroad, which helps more money end up in the pocket of the recipient.
If your startup is reliant on funds coming in from outside of India, then a remittance app like TransferWise or InstaReM is one of the cheapest and easiest ways to get the money flowing in. These apps will almost always offer you the cheapest way to send your money abroad. One of the easiest ways to find out if remittance apps are your best method, compare them against other options using a money transfer comparison table.
Forex Provider
One of the more traditional ways to send money abroad is going with a traditional forex provider that gives you that person-to-person service that some people crave, especially when sending large sums of money overseas. Being able to speak with someone, be it in person, over the phone or via email, is something that many people value. Traditional brokers may also be able to provide you with additional collection options for receiving the funds once they reach India.
However, the downside of using a traditional broker is that they tend to charge higher fees than a remittance app. You’re also losing out on the convenience of being able to transfer funds directly from your laptop or phone.
Traditional Banks
This is probably what most people think of when they go to send money home from abroad, with some banks, such as ICICI Bank, getting in on the remittance app market in 2018 and creating the Money2India service.
However, much like forex providers, you’re paying for legacy by using these services as many of them will charge higher fees than a true remittance app service. These transfers may even be slower than using an app and the exchange rates offered might not be ideal.
Cryptocurrency
This is a fairly new and somewhat complicated way for you to get around transfer fees and move your money to India from overseas. All you’ll need is to create a digital wallet and connect it to a bank account. Once you’ve done this, head over to whichever exchange you’re interested in and buy the coin that most appeals to you. Once you have your coin, you can send it to whoever you want to back home.
While this seems like an easy way to send funds, it does present risks, including volatility in the currencies themselves. While you might try to send $500, you risk seeing those funds diminish as the value of the coin ebbs, completely negating the money you’d have saved by avoiding fees at banks and forex providers.
Money Transfer Operators (MTO)
These services have been in existence for well over a century, with the biggest names in the game being Western Union and MoneyGram. Although these giant providers offer online transfers, you’ll typically run into similar pros and cons as the other traditional providers such as higher fees and relatively poor exchange rates. MoneyGram and Western Union are worth looking into in order to get an idea of the price to send, though, so be sure to compare them against whatever service you choose.
The Power of Comparing
Because each person’s sending situation is a bit different, no option is going to be an all-time-best method for remittance to India. By comparing different sending options you’ll get an idea of what method is the best for your circumstance and learn about situations where one method typically prevails. Always be sure to compare as many options as possible to save the most money on your transfer, especially if you’ll be sending large amounts of remittance to India.
Author: Zak Killermann
About Zak: Zak Killermann is a staff writer at Finder specializing in money transfers. After getting burned once by an over-the-counter money exchange — he vowed to never settle for anything short of the mid-market rate
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