Nowadays there are several options available to send remittances from Australia. The choices include electronic bank transfers, foreign currency checks, bank drafts, wire transfers and more. Each of these has the potential to maximize utility, depending on your specific requirements and preferences. This article offers pointers that you may find useful when you send money to India.
If your beneficiaries live in a metro you likely have a range of effective money transfer options. As you move outward to the suburbs, smaller cities and remote towns your choices narrow down significantly. The only option for receiving money in a less accessible remote region of India is often a small sub-branch of a nationalized bank with very limited weekly hours of operation. Online transfer options are usually preferable to offline, although these may only be available in sizable urban areas. Some nationalized banks do offer online transfers, although several smaller branches of the same banks may not offer the same facility. The alternative may be to have an NRO joint account or to send a foreign currency check. Moreover there is the consideration of currency. All International Money Transfer (IMT) service providers handle USDs, and most are happy to also handle Euros and GBPs. Not all can transfer remittances in AUD, CAD, NZD and other less common currencies. A double conversion, from AUD to USD to INR, could cost a lot more. Essentially you must check if an IMT services your required area and handles your desired currency.
Practically all IMTs and banks can guarantee the security of your remittance. However, it is still worthwhile to check what redress process is available to you in case your transfer suffers an unexpected glitch. Banks are usually considered more secure, especially if you are an account holder of some tenure. Reputed IMTs which have been in operation for a long time and specialize in this business (such as Ria Money transfer) are equally secure, if not more so.
The cost of remittances can vary a lot across providers, and is a major factor to consider for many expats. Remittance costs depend on multiple factors such as exchange rates, bank margins, fees and so on. Some options are more cost effective for frequent small transfers while others prove to be economical for a fewer number of larger transfers. It is commonly known that banks usually charge higher fees and offer worse exchange rates than specialized IMTs. IMTs are known to have fewer hidden charges and a better transfer throughput. Conventionally offline options have proven to be slightly cheaper than online ones, although this is not universal. The overall cost of remittance also correlates with the services provided. For example an IMT that transfers remittances to your (family’s) domestic bank account will charge less than an IMT that delivers cash to the doorstep.
Taxation and limits
If you transfer more money in a financial year than your tax-free upper limit, you may face a steep rate of taxation. This can be a large avoidable cost for expats who want to remit high volumes for investment and other similar purposes. Some modes of transfer also limit the per transaction amount.
Your speed of remittance must match the needs of your beneficiaries back home. Offline options may sometimes be cheaper and more secure but they take significantly longer. Time frames of two to three weeks and longer are common for foreign currency checks and drafts to be credited. Public holidays and weekends can further delay offline remittances. Online transfers through IMTs can be near instant, regardless of bank holidays. Your choice of remittance mode must ensure that your family reliably receives money before they need it.
The money value of time is a concept better understood by Indian expats in Australia than by bank clerks in remote parts of India. Any small monetary savings you derive from using offline means of remittance may be more than offset by the time and effort you and your family must expend in tracking and claiming the transferred money. On the other hand if your remittance mode requires your recipients to transact online and they are uncomfortable with it, offline means may be preferable. Convenience should be high on the list of factors under your consideration, if not the highest.