Forex markup fee explained: the hidden cost eating 3-5% of your international payments

You sent an invoice for $5,000. Your client paid it three days ago. But your bank account shows only ₹3,98,500 instead of the expected ₹4,15,000.

Where did ₹16,500 disappear?

Welcome to the hidden world of international payment fees. These charges eat into your earnings silently. Most freelancers and exporters lose 3-5% on every foreign payment without realising it.

That's ₹15,000-25,000 lost on a ₹5 lakh payment. Over a year, you could be losing several lakhs to fees you never agreed to pay.

This guide shows you exactly where these fees hide and how to avoid them. We'll break down every charge, compare real costs across platforms, and share practical ways to keep more of your money.

In this guide:

• What are international payment fees
• Where fees hide in foreign transfers
• Real cost comparison: Winvesta vs other platforms
• Seven ways to reduce payment fees

What are international payment fees

International payment fees are charges applied when money crosses borders. Banks and payment platforms add these fees at multiple stages of the transfer process.

Unlike domestic transfers, foreign payments pass through several intermediaries. Each one takes a cut. The problem? Most fees remain invisible until the money lands in your account.

Three types of fees hit your payments

1) Transfer fees
Banks charge a flat fee to process international transfers. This ranges from ₹500 to ₹2,000 per transaction. Some banks call this a "wire transfer fee" or "SWIFT processing charge."

Your client's bank charges a sending fee. Your bank charges a receiving fee. Any intermediary bank in between charges a handling fee.

2) Currency conversion markup
This is where banks make their real money. They convert your dollars or euros to rupees at a rate worse than the market rate.

The market rate today might be $1 = ₹83. But your bank converts at ₹80.91. That ₹2.09 difference per dollar? That's their markup fee. On a $5,000 payment, you lose ₹10,450.

Banks call this their "forex margin" or "exchange rate spread." It typically ranges from 2-3.5% but can go higher.

3) Platform or intermediary charges
Payment platforms like PayPal add their own fees on top of everything else. These include transaction fees (usually 3-4.4%), currency conversion fees (another 3-4%), and withdrawal fees when you move money to your bank.

A $3,000 payment through PayPal could cost you ₹15,000-20,000 in combined fees.

Why these fees hurt so much

Let's look at real numbers. You're a software developer billing $4,000 monthly to US clients.

With traditional bank transfers:

• Expected amount: ₹3,32,000 (at ₹83/$1)
• Wire fees: ₹1,200
• Forex markup at 2.5%: ₹8,300
• Actual amount received: ₹3,22,500
• Loss per month: ₹9,500
• Loss per year: ₹1,14,000

That's more than one month's income gone to fees.

Small percentages compound into massive losses over time. A 3% fee doesn't sound terrible. But when you receive ₹40 lakhs annually in foreign payments, you're losing ₹1.2 lakhs every year.

The worst part? These fees are rarely disclosed upfront. Your invoice shows $4,000. Your client confirms they sent $4,000. But you receive less. The difference vanishes into a complex fee structure you never agreed to.

How banks hide the real cost

Most banks don't show a line item for "forex markup fee." They simply apply a worse exchange rate and call it their "prevailing rate" or "card rate."

Your Foreign Inward Remittance Certificate (FIRC) shows one exchange rate. Google shows another. The gap between these two rates represents money taken from your payment.

Banks count on you not comparing rates. They know most people accept whatever amount appears in their account. This lack of transparency lets them charge higher markups without questions.

Where fees hide in foreign transfers

International payment fees lurk at every stage of the transfer process. Understanding where they appear helps you spot and avoid them.

Bank wire transfers through SWIFT

SWIFT remains the most common way to receive business payments from abroad. It's also one of the most expensive.

Sending bank charges
Your client's bank charges them $25-50 to send the wire. Sometimes clients deduct this from your payment. Other times, they pay it separately. Either way, it affects the final amount.

Intermediary bank fees
Money rarely travels directly between banks. It passes through 1-3 intermediary banks. Each one charges $10-25 for handling the transfer.

These fees get deducted automatically from the transfer amount. You never see them itemised. The money simply arrives with less than what was sent.

Receiving bank charges
Your Indian bank charges ₹250-750 to receive the foreign wire. This appears as a deduction on your bank statement, usually labelled "inward remittance charges."

Example breakdown: Your client sends $5,000. By the time it reaches you:

• Sending bank fee: $30 (deducted by client or from the amount)
• Two intermediary banks: $15 each = $30
• Amount reaching your bank: $4,940
• Your bank's receiving fee: ₹500
• Forex conversion at 2.5% markup instead of the market rate

You expected ₹4,15,000 but received ₹3,98,350. Total loss: ₹16,650.

Payment platform fees

PayPal, Payoneer, and Stripe help you receive money from other countries. But they take a cut—sometimes a bigger cut than you'd expect.

PayPal

PayPal charges you twice:

1. Transaction fee: About 4.4% of whatever you receive
2. Currency conversion: Another 3–4% when they convert dollars to rupees

What this looks like: You invoice a client for $2,000. After PayPal's fees and currency conversion, you end up with around ₹1,53,000 instead of ₹1,66,000. That's roughly ₹13,000 gone—about 7–8% of your payment.

Payoneer

Payoneer says they have "low fees," but the cost is hidden in the exchange rate.

• They give you a worse dollar-to-rupee rate than the actual market rate
• This hidden markup is usually 2–3%
• Add in their receiving fees (1–3%), and you're losing 3–4% total

It's cheaper than PayPal, but still adds up.

Stripe

Stripe is mostly used by businesses selling online. Their fees stack up like this:

• Base fee: 2.9% + $0.30 per transaction
• International cards: Add another 1.5%
• Currency conversion: Add another 1%

For a $10,000 sale from international customers, you could lose around $540—that's about 5.4%.

Credit card payments

When clients pay you via credit card (especially through platforms), multiple fees stack up.

The payment processor charges their fee. The card network (Visa/Mastercard) adds an international transaction fee. Then currency conversion happens at unfavourable rates.

A consultant charging ₹50,000 ($602) receives approximately ₹47,150 after all fees. The card processing company keeps ₹2,850.

The forex markup trap

This deserves special attention because it's the largest hidden fee.

Banks don't charge you a separate line item. They manipulate the exchange rate itself. This makes the fee invisible to most people.

How to spot it: Check the market rate on Google or xe.com when your payment arrives. Compare it to the rate shown on your FIRC. The difference is your forex markup.

Market rate: $1 = ₹83 Bank rate on FIRC: $1 = ₹80.91 Markup: ₹2.09 per dollar (2.5%)

On a $6,000 payment, this costs you ₹12,540 that simply vanishes.

Indian banks typically charge 2-3.5% markup. Some banks go higher for small amounts or infrequent transactions.

Correspondent bank charges

Lesser-known but equally costly are correspondent bank charges. These occur when your bank doesn't have a direct relationship with the sending bank.

Money routes through correspondent banks that facilitate the connection. Each correspondent bank deducts $15-30 from the transfer amount.

You can't avoid these unless you use a platform with direct connections to foreign banking networks. Most traditional banks use correspondent banking, which means these fees are unavoidable.

International payment fees: Winvesta vs other platforms

Let's compare what you actually receive from a $5,000 payment across different platforms.

Baseline: Market rate of ₹83 per dollar = ₹4,15,000 expected

Assumptions & disclaimers:

• Mid-market rate assumed at ₹83/USD for illustration purposes; actual rates change throughout the day
• Fee structures based on typical published ranges as of 2025; actual charges vary by provider, account type, and corridor
• Annual losses are illustrative estimates assuming constant exchange rates and fee structures
• Winvesta offers 0% FX markup and zero receipt fees on supported currencies. Standard payout or withdrawal charges may apply depending on the route.

Why Winvesta costs less

Traditional payment systems rely on correspondent banking networks. This means multiple intermediaries, each taking a cut. Currency conversion happens at bank-controlled rates with hidden markups.

Winvesta operates differently. You get actual foreign currency account details (USD, EUR, GBP). Clients transfer money as a local payment in their country. No SWIFT fees. No intermediary banks. No automatic conversion.

Money sits in your foreign currency account. You decide when to convert it to rupees. Conversion happens at live market rates with zero markup.

This isn't just cheaper. It gives you control over your money and timing.

How to reduce international payment fees

You can't eliminate all fees entirely, but these strategies significantly reduce what you lose on foreign payments.

Get dedicated foreign currency accounts

This is the single most effective way to cut payment fees.

Instead of receiving dollars that get auto-converted to rupees, you receive them into a USD account. No conversion happens until you decide. No intermediary banks take cuts. No forex markup applies.

Winvesta's Global Collections Account gives you US, UK, and European bank account details. Your clients send money as a local transfer in their country. It arrives in your foreign currency account within 1-2 business days.

You hold the money in dollars, euros, or pounds. Convert to rupees when rates favour you. Or keep it in foreign currency if you have overseas expenses.

Real example: A content writer receives $3,000 monthly. Previously used bank wire transfers and lost ₹9,500 monthly to fees. Switched to Winvesta GCA. Now receives full $3,000 with zero fees. Converts at market rates. Saves ₹1,14,000 annually.

Compare exchange rates before accepting payment methods

Before agreeing on payment terms, calculate the actual amount you'll receive through different methods.

Your client wants to pay via PayPal. Calculate: $5,000 minus 4.4% transaction fee minus 3.5% conversion fee equals approximately ₹3,83,000. But bank transfer through your GCA gives you full ₹4,15,000.

Share this comparison with your client. Explain that PayPal costs them nothing extra but costs you ₹32,000. Most clients happily switch to bank transfers when they understand this.

Some clients insist on PayPal for their convenience. That's fine. Just adjust your invoice amount to compensate for the fees. Charge $5,430 instead of $5,000. Now after PayPal's 7.7% in fees, you still receive your intended ₹4,15,000.

Always check your FIRC against market rates

Your Foreign Inward Remittance Certificate lists the exact exchange rate used for conversion. This document comes from your bank for each foreign payment received.

Get your FIRC for every payment. Compare the rate to that day's market rate from Google or xe.com. Calculate the percentage difference. This tells you exactly what forex markup your bank charged.

Example FIRC analysis:

• Date: 15th December 2025
• Amount received: $4,000
• FIRC rate: ₹80.75
• Market rate that day: ₹83.00
• Difference: ₹2.25 per dollar
• Markup: 2.7%
• Money lost: ₹9,000

Armed with this information, you can negotiate better rates with your bank or switch to better alternatives.

Keep records of all your FIRCs. When you accumulate evidence of high markups over multiple transactions, you have leverage to demand better rates or justify switching providers.

Negotiate payment terms upfront

Don't wait until after work is done to discuss payment details. Address this in your contract or initial agreement.

Specify who bears transfer fees. Some contracts state "payment received net of all charges" meaning your client covers all fees. Others say you bear the cost. Negotiate this before accepting the project.

For large projects, request payment in instalments. This reduces per-transaction percentage fees and gives you more flexibility on conversion timing.

Consider invoicing in INR instead of USD for clients who regularly work with Indian service providers. They pay in rupees directly. You avoid all conversion fees and complications.

Time your currency conversions

If you have a foreign currency account, you control when conversion happens. This lets you optimise based on exchange rates.

Rupee strengthening against the dollar? Hold dollars and wait. Rupee weakening? Convert now to get more rupees per dollar.

Set rate alerts on currency tracking apps. Convert when rates hit your target. Even small improvements matter. Converting $10,000 at ₹83.50 instead of ₹83 gives you ₹5,000 extra.

Pro tip: Convert larger amounts less frequently instead of small amounts frequently. Transaction fees (if any) hurt less when spread across bigger amounts.

Use platforms with transparent pricing

Some platforms hide fees in exchange rate markups. Others show you exactly what they charge.

Transparent platforms like Wise and Winvesta separate the exchange rate from their fees. You see the real market rate. You see their fee. No hidden costs.

This transparency helps you make informed decisions. You know exactly what you're paying for and can compare options accurately.

Avoid platforms that refuse to disclose their forex markup or use vague terms like "competitive rates" or "interbank rates." These usually hide the highest fees.

Request a fee breakdown from your bank

Walk into your bank. Ask for written documentation of all charges for receiving foreign payments:

• Receiving fees
• SWIFT charges
• Correspondent bank charges
• Forex markup percentage

Most banks give vague answers. Insist on specifics. Request this in writing or over email.

If they can't or won't provide clear fee structures, that's a red flag. Banks with nothing to hide share their fees transparently.

Once you have this breakdown, compare it against alternatives. Show the bank you're considering switching providers unless they offer better rates. For high-volume customers, banks often negotiate lower fees.