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If you want to send some money to another country, you might find the range of exchange rates quoted by your bank somewhat confusing.
Maybe you’re an entrepreneur and need to pay a supplier overseas, or you want to transfer money to a family member studying abroad - whatever your reason for sending money to an international account, you need to understand how the exchange rate for the transaction is set.
In this guide, we'll clarify the difference between telegraphic transfer (T/T) buying and selling rates in a simple way. Let's jump right in.
|💰 Wise provides you the real exchange rate and low transparent transfer fees shown upfront.|
Let’s start at the beginning. A telegraphic transfer — which is also often called a TT, telex transfer, or a T/T bank payment — is a broad term for transferring money from one bank account to another - usually involving moving the money from one country to another, and often between different currencies.
If you’re sending money back to your home country, this payment might also be described as a remittance - but it’s basically the same thing.
When you look up the exchange rates used for TT payments, you’ll often come across a chart or set of figures which describe several different exchange rates. The ones we are interested in are telegraphic transfer buying (TTB) rates and telegraphic transfer selling (TTS) rates.
The TTB rate is the rate at which a bank will convert foreign currency sent to India, into INR. So this means that if a friend or family member sends you a remittance from abroad in foreign currency, the chances are that the rate applied to credit you INR will be the TTB rate.
This buy rate doesn’t apply only to telegraphic transfers. Here are some examples of other transactions that use it¹:
- Clean inward remittances (TT/DD) for which cover has already been
- Credited to the bank’s Nostro account.
- Proceeds of export bills/cheques etc. sent for collection.
- Cancellation of outward TT/DD etc.
- Cancellation of forward sale contract on or after due date.
- Conversion of RFC, EEFC, FCNR(B) deposits and PCFC/FC Loan into Indian Rupees.
The selling rate is used when the bank is sending INR out of the country, and into a different currency.
So for example, if you’re looking to make an outward remittance from India, and send money from your INR account to someone with a bank account held in a different currency, you need to know the selling rate (TTS).
In general, the TT Selling rate is applicable for¹:
- Outward remittance in foreign currency (TT/DD)
- Cancellation of purchase
- Bill purchased/returned unpaid
- Bill purchased/transferred to collection a/c
- Refund of inward remittances
- Forward purchase contract cancellation on or after due date
- Conversion of NRE deposit to FCNR/RFC deposits
- Recovery of interest on PCFC/FC Loan
Each bank will have its own approach to setting the buying and selling rates. To be sure of the rate that’s applied to your TT payment, you need to ask the bank directly. However, you can see how the buying rate is calculated by looking at the terms and conditions of your bank.
Let’s take Union Bank of India, for example - one of the larger banks offering retail services.¹
The Union Bank of India terms clarify that the buying rate that’s used is calculated by taking the base rate and reducing it by the bank’s margin, which is set at 0.025% to 0.080%.
The calculation is rounded for ease, and this sets the buying rate applied. You can find the full details for Union Bank of India in the source linked below or here, or check out the terms and conditions of your own bank, to make sure you’re happy with the way the calculation is carried out for your TT payments.
If you’re new to telegraphic transfers, the terminology and processes can be a bit confusing. It’s a smart idea to read up to make sure you understand the way your money is being moved, and to make sure you’re getting the best deal.
Here are some resources that might help.
Like many financial transactions, telegraphic transfers arranged by traditional banks seem to be awash with acronyms and technical language. That can be overwhelming if you’re new to it. Use this simple guide, and the resources we have picked out, to do a bit of research. Knowledge, after all, is power.
And while you’re doing your homework, check out other options for making international payments. You don’t need a degree in finance to understand a specialist services like Wise. The process is designed to be safe and simple - and could save you money.
Banks and money transfer providers often give you a bad exchange rate to make extra profits on international transfers.
Wise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save money by using Wise rather than your bank when you send your money abroad.
If you want to give Wise a try to see for yourself how well it can work for you, sign up for a free account. Registration can be done online in minutes.
- Union bank of India exchange rate mechanism PDF pg 7 - 9
Sources checked on 10 October 2022
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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