Most Indian businesses evaluating cross-border transactions focus almost entirely on headline exchange rates, unwittingly allowing 3 per cent to 4 per cent of their invoice values to leak through hidden costs, intermediary bank fees, and opaque markups. According to Ashwin Bhatnagar, Co-founder, Xflow, this happens because traditional banks quote rates marked down by up to 3.5 per cent without explicitly breaking out the margin. According to experts, growing businesses must shift their focus toward upfront payment guarantees, stringent regulatory accountability, and data-driven decision-making to reclaim control over their margins.
Here are some of the points such businesses should keep in mind:
1. Check the rate against the mid-market rate
Most Indian businesses only check one thing before converting a payment: the exchange rate. But the rate is rarely where the money actually goes missing. “Banks quote a rate that’s already marked down 1.5-3.5 per cent from the real market rate, and that gap never shows up as the rate “moving”; it’s baked into the number you’re quoted, so it looks like nothing changed even when you’ve already lost money,” said Ashwin Bhatnagar, Co-founder, Xflow.
2. Check every charge hidden in the payment chain, not just the headline fees
According to Bhatnagar, part of why this stays invisible is that most people genuinely don’t understand it. The bigger leak is everything around the rate. A typical SWIFT transfer passes through two to three correspondent banks before it lands in an Indian account, and each one can deduct its own fee without disclosing it upfront. Businesses often find out only when the amount that lands is a little short of what was sent, with no way to trace where it went.
Even with other payment providers, several hidden charges can show up, like a platform fee plus GST, a separate charge for FIRA or FIRC, and an FX markup folded into the “rate” rather than shown as a line item. None of this shows up as the exchange rate moving. “Together, it can eat 3-4 per cent of the invoice value while the FX rate looks perfectly steady,” he added.
3. Check who’s regulated because that determines what happens if something goes wrong
Given how fragmented this is, the businesses that protect their margins best aren’t chasing the best exchange rate on a given day; they’re asking for what the industry calls a payment guarantee upfront: exactly how much will land, exactly when, and what happens if something goes wrong. If a provider can’t commit to those three things before the money moves, that’s the real red flag, not the rate itself.
4. Check how much documentation and compliance load you’re actually taking on
Speed and documentation follow the same pattern. Standard SWIFT transfers take three to five business days, compared with same-day or next-day settlement on modern rails. That is a real gap in working capital for a growing business. Documentation is worse than people expect: every bank formats its FIRC (Foreign Inward Remittance Certificate) differently, so even trying to independently check what you were actually charged after the fact becomes its own project.
“Most customers we talk to genuinely don’t know their true cost. They’ve been told by their bank that the markup is negligible, and they take that at face value because there’s no easy way to verify it. My advice to any business reading this: before you switch providers or negotiate with your bank, go check what you’re actually paying today. You can’t fix a cost you can’t see,” he said.
5. And here’s the one nobody talks about: Are you converting on data, or just guessing?
Everyone focuses on the rate, the fees, and the paperwork. What almost nobody checks is whether they’re actually making an informed decision on when to convert. The USD/INR rate moves constantly throughout the day, often enough that timing the conversion matters as much as the rate itself. Yet most businesses convert the moment money lands, purely out of habit, with no visibility into whether that’s actually a good moment to convert. On a USD 100,000 conversion, even a small improvement in the rate you convert at can mean tens of thousands of rupees.
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