Hidden forex charges bothering you? Expert explains what RBI's rules change

RBI on forex Transaction: RBI draft mandates upfront disclosure of all fees, including intermediaries and conversion charges

The Reserve Bank of India’s (RBI’s) draft proposal on disclosure of transaction costs for foreign exchange transactions could significantly change how retail users experience overseas payments. By mandating authorised dealers to show the total cost of a forex transaction before execution, the regulator is attempting to shift critical information from after the transaction to the moment a customer makes the decision. 

According to Sitashwa Srivastava, chief executive officer and founder of Borderless, an Indian fintech platform offering global investing, multi-currency accounts and international payments, the change is less about eliminating fees and more about improving decision-making for consumers.

 

What changes at the point of transaction?

Until now, retail customers typically saw only part of the price upfront.

 

 

“Most users would see an indicative exchange rate and sometimes a remittance fee, but the real costs emerged later,” Srivastava explains.

 

These often included exchange-rate mark-ups, intermediary bank fees, receiving-side deductions and other conversion-related charges.

 

Under the RBI’s draft intent, authorised dealers will have to present a single, clear view of the total transaction cost before confirmation. This would include the applied foreign exchange rate, currency conversion charges, and both sending and receiving fees, explicitly including intermediary bank charges. 

 

Srivastava illustrates this with a common example. If a student needs to pay $ 10,000 in tuition, earlier the quoted rate might look competitive, but the university could receive less due to routing fees or deductions.

 

“The idea now is that the student should be able to see upfront how much they pay in rupees, how much the university will receive, and what the total fees are,” he says.

 

Where customers get surprised today

Hidden costs usually surface in four areas, Srivastava notes:

 

Exchange-rate mark-ups, embedded within the quoted rate

 

Intermediary bank fees, deducted during cross-border routing

 

Receiving-side deductions, reducing the final credited amount

 

Dynamic currency conversion on cards, where paying in INR abroad often costs more

 

“These costs are real, but they are not naturally visible at the moment of purchase,” he says. The mismatch between expectation and outcome is what has historically eroded trust. 

 

Impact on banks and platforms

Mandatory disclosure is likely to reduce the benefits of opaque pricing and push competition towards better all-in outcomes. Srivastava expects banks that relied on wide spreads to face pressure to justify or tighten pricing, while fintech platforms with cleaner, single-screen disclosures could gain consumer trust.

 

However, he cautions that estimating intermediary and receiving fees upfront is operationally complex, as routing can vary by corridor and bank network.

 

How consumers should use the information

 

Once disclosures become standard, consumers should compare transactions differently.

 

“The key question should shift from ‘What rate are you giving?’ to ‘What is my final outcome?’” Srivastava says.

 

For students, this means prioritising options that guarantee the full invoice amount. Families sending maintenance money should compare how much actually lands for a fixed rupee amount. Travellers, meanwhile, should remain cautious of dynamic currency conversion and focus on consistent all-in pricing.

 

The broader benefit, he says, is simple, fewer surprises and a more comparable forex market at the moment it matters most.