Here’s how to get the best foreign exchange rates

Vacationing abroad involves a lot of planning. From buying airline tickets, hotel bookings to the most important question of how to carry money while travelling abroad. While many prefer exchanging cash at airports others may depend on prepaid travel cards or international credit and debit cards.   

Whatever be your source of buying foreign currency it is important to compare and negotiate the rates. This is because by careful planning you can reduce the cost, considerably. For example buying from airports and hotels should be the last resort because of higher fees and currency conversion charges. Similarly, at the time of dealing with banks or exchanges you should not take the rates straight away as they may be charging a hefty margin in the rates.   

“There are two major issues people face when they visit the bank or money exchanger for converting their money. One that neither of them shares live rates and secondly they add hefty margin in the rates they quote. Rates by banks and money exchanger depend on the size and volume of the transaction and also who the customer is. Since most consumers and companies are not aware of the live rates and also the fact that these rates are negotiable, banks and money exchangers tend to take advantage of this information arbitrage. Moreover due to small volumes most MSMEs fail to negotiate unlike larger companies,” says Anand Tandon, founder and CEO of Myforexeye, a Noida-based fintech company that provides foreign exchange services to SMEs, large companies and high networth individuals. The app offers diverse services including real-time rate check, alerts and single click dealer connect.  

Asit Oberoi, regional director (South Asian operations) of iPiD, agrees.   

“Aside from the simplicity of the user experience that iPiD brings, one of the important things for people who want to either send payment overseas or receive payment into India is to have a sense of interbank dollar rupee rate at that moment. So based on that rate, one can negotiate and get better rates otherwise a bank / money remittance business players can quote higher rates with a significantly higher spread. Typically, outward foreign currency payments on credit cards have the highest spread.  So you have to know the interbank rate and negotiate with your provider,” says Oberoi.   

iPiD simplifies cross-border payments as a text message. It makes cross-border payments easy by needing only a simple proxy for the payee’s identity. The company enables global payments based on a phone number, email address, QR code, corporate registration number, among other things.  

Experts advise that one should compare rates just the way one looks for the cheapest deal while buying a mobile phone. The multiple rates can give a better picture of ongoing rates serving as a negotiating tool. “In the course of my work, I observed clients had to forgo up to 1.5 per cent of the transaction value because of inaccessible forex rates and assumed non-negotiable bank charges. There was no way that clients could check the real-time rates in the absence of forex terminals, which are expensive to buy. We leverage technology to make forex rates accessible to MSMEs without burning a hole in their pockets,” says Tandon.   

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