Where the money goes on an export payment
- The exchange rate markup. The gap between the market rate and your bank's rate. On $10,000 at ₹95 a dollar, a 1% markup costs about ₹9,500.
- Bank charges. Inward remittance, FIRC or e-BRC fees, and sometimes charges from intermediary banks along the way.
- GST on conversion. 18% on a deemed value set by the GST rules, shown in the table below.
| Amount converted | Deemed value for GST | GST at 18% |
|---|---|---|
| Up to ₹1,00,000 | 1% of the amount, minimum ₹250 | Minimum ₹45 |
| ₹1,00,000 to ₹10,00,000 | ₹1,000 + 0.5% of the amount above ₹1 lakh | ₹180 to ₹990 |
| Above ₹10,00,000 | ₹5,500 + 0.1% of the amount above ₹10 lakh, up to ₹60,000 | ₹990 to ₹10,800 |
How to pay less
- Ask for a better card rate once your receipts are regular. Show your bank this comparison.
- Compare specialist export payment providers, which often charge a published fee instead of a hidden markup. Check that they issue the FIRA or e-BRC you need.
- Invoice in a major currency such as US dollars, euros or pounds, where conversion is cheapest.
- Price the exchange rate risk into your quote for long payment terms. The terminal's payment and credit risk tool shows the effect of hedging.
Common questions
What is the mid-market exchange rate?
It is the midpoint between the buying and selling rates in the wholesale currency market, the fairest reference for what a currency is worth right now. This tool uses the European Central Bank's reference rates, which are published once each working day.
How do banks make money on export payments?
Mainly through the exchange rate. When a foreign payment arrives, the bank converts it at its own card rate, which is usually below the market rate. The gap is a hidden charge on top of any inward remittance fee.
What is a fair markup?
It depends on the amount and your bank relationship, but a markup above about 1% on regular export receipts is worth negotiating. Bigger and regular receipts usually qualify for better rates.
Is GST charged on currency conversion?
Yes. GST at 18% applies to the bank's conversion service, on a deemed value: 1% of the amount up to ₹1 lakh (minimum ₹250), ₹1,000 plus 0.5% of the amount between ₹1 lakh and ₹10 lakh, and ₹5,500 plus 0.1% above ₹10 lakh, capped at ₹60,000.
Quote in your buyer's currency with confidence
Corridor Terminal builds your price in any currency from a full landed cost, with the exchange rate you choose.
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