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Why is sending money to India from Australia expensive?

Updated on November 05, 2019 11:13 am
Sending money to australia

If you are wondering why the cost of sending money to India from Australia is high, you have come to the right place. Considering India is one of the highest recipients of remittances from Australia, one would expect cheaper rates in sending money from Australia to India. Unfortunately, it is not. Have a look at the average cost of remitting from G20 countries.

Cost of Remitting from G20

First, let us understand how expensive is expensive According to the World Bank Report, the global average cost of sending money is 6.84%. Now, sending money from Australia costs an average of 7.68%. Although, less than 1% may seem insignificant in absolute terms. In relative terms, Australia is the 4th most expensive country to send money from in the world, just behind South Africa, Japan, and Germany amongst the G20 countries. Now that we have established it is expensive. Let?s understand why is it expensive
Expensive remittances to Aus

  • Regulations:
  • Australia took a global leadership position by creating the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006. This act is administered by the Australian Transaction Reports and Analysis Centre (AUSTRAC) to ensure compliance and reduce perceived risks associated with the remittance sector. The unanticipated consequences of extensive regulation is a rise in remittance cost. Have a look at the infographic below to understand the complexity of the remittance industry.
    Govt regulations in Aus

  • Lack of competition:
  • Strict regulation hampers a competitive environment. New entrants are deterred by having to deal with multi-level rules and compliances and incumbents are struggling to remain compliant resulting in closure. This has led the Australian Remittance and Currency Providers Association(ARCPA) to make a submission to the Productivity Commission Inquiry into Competition in the Financial System.
  • Duopoly in the Remittance Industry:
  • Western Union and MoneyGram have held a duopoly in the remittance market for a long time. Besides being the oldest MTOs, the ability to hold monopolistic operations are attributed to their extensive networks and brand awareness. It is still one of the best ways to make money transfer to India in case of an emergency because of its speed of delivery. However, monopolistic presence brings with it non-competitive rates and high service fees driving up the cost of remittance.
  • Quadropoly in the Banking Industry:
  • Four banks own the majority of the market share in the banking industry in Australia. Namely, Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (Westpac), Australia and New Zealand Banking Group (ANZ), and National Australia Bank (NAB). The popularity also allows for consolidated services. Put differently, anything service involving money is transacted through the banks including remittances. Banks are the most expensive mode of sending money with a global average of 10.49%. There are three main reasons why remitting through banks are expensive when you are converting Australian dollar to Indian rupee:
    • Fixed fee - Banks charge a fixed AUD fee for converting AUD to INR and transferring money to India.
    • Percentage fee - It is the fee that is charged on the total amount you transfer. It can range from 0.5 % to 2 % or more. So the less you send, the less you pay.
    • Exchange rate markups - Banks offer a marked up exchange rate which is higher than the interbank exchange rate. So, the recipient receives less money than you have sent.

    Is it expensive to be poor?

    The short answer is yes! Let?s dive deeper into how expensive it is being poor. We have compared the cost of sending $200 and $500 using the World Bank data on Remittance Prices Worldwide.

    New entrants to the rescue

    We see positive shifts in the industry favoring the customers with new entrants entering the remittance market. These fintech disruptors equipped with massive leaps in technological developments are poised to challenge the titans of international payments. Traditional money transfer operators are facing a challenge with newcomers such as Wise (formerly known as TransferWise), Remit2India, and WorldRemit in the remittance industry. Users are now taking advantage of the revolution in remittance by fintech startups, which are offering a cheaper, faster and safer way of sending money to India from Australia. We recommend that you compare all the money transfer service providers before sending money to get the best exchange rates and the best deals that suit you. We have compared the top money transfer companies here.
    Cost of remittance to Aus

    The volume of remittance reveals that the vast majority of transfers going to developing countries like India, banks, and cash are inevitably the preferred mode of receiving remittances. Due to the lack of proper digital infrastructure and the convenience of having a vast network of access points. However, both cash pickups and bank transfers are expensive payment methods. Here are more ways of receiving money in India.

    What is the future of sending money online to India from Australia?

    Despite the remittance cost, as per the World Bank report, US1.944$ billion was sent to India from Australia in 2018. MTOs typically cost nearly 3% per transaction, such services are by far more cheaper compared to banks, which charge between 12 to 15%. The volume of transactions reveals that few people use MTOs to send remittances from Australia to India. They are safe and secure and most importantly offer the lowest transfer fees, and the best foreign exchange for international money transfer. If you are looking for the cheapest way to send money online from Australia to India, go online! That is the future.
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However, this option may not be suitable for everyone due to its volatility and complexity.Frequently Asked QuestionsHow much is 1 dollar to Philippine peso?The exchange rate between the US dollar (USD) and the Philippine peso (PHP) can fluctuate daily based on market conditions. To find the current exchange rates, you can check financial news websites, use currency converter apps, or contact your local bank. As of 9th September, 1 USD equals 56.66 PHP.How to convert PHP to USD?To convert Philippine pesos (PHP) to US dollars (USD), you can visit a currency exchange service, a local bank, or use an online currency converter tool. Simply enter the amount in PHP, and it will provide you with the equivalent in USD.How to send money to the Philippines?There are several ways to send money to the Philippines: bank transfers, money transfer services, mobile wallets, etc. Refer to the blog for the details.What is the cheapest way to send money to the Philippines?The cheapest way to send money to the Philippines can vary depending on factors such as the amount you're sending, the exchange rate offered, and the fees involved.Generally, online money transfer services like Wise often offer competitive rates and lower fees compared to traditional banks and other transfer options. However, it's essential to compare rates and fees to find the cheapest option for your specific needs.How much does it cost to send money to the Philippines?The cost of sending money to the Philippines can vary widely depending on the service provider, the amount being sent, and the method of transfer.Some providers may charge a flat fee, while others may have a percentage-based fee. Additionally, exchange rate margins can impact the overall cost.To find out the exact cost, you should check with the specific service provider you plan to use, as fees and rates can change over time.ConclusionMaximizing the US dollar to Philippine peso currency exchange rates involves knowing how exchange rates work, staying informed, timing your currency exchange carefully, and selecting the right money transfer service. By following these tips and monitoring historical trends, you can enhance the value of your currency conversion.Keep in mind that exchange rates fluctuate, so adjusting your approach to current market conditions is essential. Whether sending money to family or handling international transactions, informed choices can lead to long-term savings.If you're looking for the best USD to PHP today, use CompareRemit to discover top remittance providers and the best dollar-to-Philippine pesos exchange rate!

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