A payment to an Indian supplier usually involves your bank's outgoing transfer fee, possible deductions by intermediary or correspondent banks, the Indian bank's inward remittance charges, and a margin on currency conversion. Letters of credit and documentary collections add further fees on both sides.
Exact charges vary by bank, currency and amount, so ask both banks in writing. This is general guidance, not financial advice.
Charges on a normal bank transfer
Ask your bank for its written fee schedule for international payments to India, including the exchange margin. The margin is often the largest cost and the least visible.
- Your bank's fee for an international payment.
- Intermediary bank charges, deducted along the way when the payment passes through correspondent banks.
- The Indian bank's charge for receiving a foreign currency payment.
- The exchange margin when the supplier's bank converts the currency into rupees, or when your bank converts your currency into the invoice currency.
Who pays: OUR, SHA and BEN
International transfers carry a charge code. OUR means you pay all charges, so the supplier receives the full amount. SHA means each side pays its own bank, and intermediary charges are often deducted from the amount. BEN means the supplier pays all charges, deducted from the transfer.
Many disputes over short payment are simply intermediary deductions under SHA. If your contract says the supplier must receive the full invoice value, use OUR or agree in advance how to handle deductions.
Ask the supplier which code they expect and put it on the proforma invoice. Then tell your bank, so it does not apply its default code.
Letters of credit and collections
Agree in the contract who pays which fees. A common split is that each side pays charges in its own country, but confirmation and discrepancy fees are often argued over. See what a letter of credit is.
- LC issuance fee from your bank, often linked to value and validity.
- Advising fee from the supplier's bank.
- Confirmation fee, if a bank adds its confirmation.
- Amendment fees for each change to the LC.
- Discrepancy fees if documents do not comply.
- Collection fees for documents against payment.
Ways to keep charges down
- Invoice in a major currency your bank handles directly, often USD.
- Compare the exchange margin your bank offers with alternative regulated payment providers.
- Send fewer, larger payments rather than many small ones.
- Keep LC wording simple to avoid amendments and discrepancies.
- Confirm the supplier's SWIFT code and account details once, carefully, to avoid returned payments.
How we help
We make sure the proforma invoice states the currency, the bank charge code and who pays LC fees, so there are no surprises at payment. You pay the supplier directly. For currency choice, see paying in USD, EUR or GBP, or ask for a free sourcing review.