Discover infinity
Posted on Mar 12, 2025
Let's imagine this now: You've just closed one of your first big deal with a U.S. buyer. They’re wiring you $10,000 for your latest batch of handcrafted fabrics, and you're already calculating your margins for the deal.
But when the money hits your account, the amount is, surprisingly, lower than what you thought. Confused, you call your bank. And that’s when it hits you:
Hidden conversion fees
Poor exchange rates
Sneaky transaction charges that no one warned you about
This is happening to tens of thousands of Indian SMEs each day. Your profit gradually disappears during the process of currency conversion, and you don't even notice it.
But what if you could minimise these losses?
What if you could retain more of your profit and still receive international payments effortlessly?
That is exactly what we will discuss here, when you finish reading the guide, you will have a much better understanding on currency conversions, prevent unnecessary charges, and make smarter payment options.
Let's dive in.
What Exactly is Currency Conversion?
In plain terms, currency conversion is the act of converting one nation's currency into another.
Being an Indian exported, you will primarily recieve payments in foreign currencies such as USD, EUR, GBP, or even AUD. Your business is operating in India, hence you will require the payment to be converted to INR(Indian Rupee) for you to utilise it further. This is primary use case of currency conversion.
Here's a Quick Example:
Let's say you shipped handcrafted jute bags to a US customer. The customer pays you $5,000 USD.
The exchange rate is $1 = ₹83.
You should get ₹4,15,000.
But here's what really happens:
The bank charges a cut (spread) on the exchange rate.
There are other hidden charges deducted along the way.
You actually get about ₹4,00,000 or less.
That's a loss of ₹15,000 — just due to currency conversion charges.
How Currency Conversion Fees Impact Your Profit Margins?
Let's now dissect where your money really goes when you exchange foreign payments to INR.
1. Exchange Rate Spread (The Sneaky Cut)
Here what happens is that every time you receive the money in a foreign currency, your payment provided or bank will not provide you the the true market exchange rate. For instance, if the true market rate is $1 = ₹83, your bank may give you $1 = ₹81.5.
This exchange rate difference of ₹1.5 per dollar is referred to as the exchange rate spread — and this is where most banks earn their money from your transactions.
So if you receive $10,000, you lose about ₹15,000 without even realising it.
2. Conversion Fees
In addition to the spread, banks tend to charge a currency conversion fee — usually 2-4% of the value of the transaction.
So if your bill is for $10,000, you end up paying for your payment:
2% conversion fee: ₹16,600 lost.
3% conversion fee: ₹24,900 lost.
4% conversion fee: ₹33,200 lost.
The more transactions, the larger the hidden loss on your payment.
3. Miscellaneous Charges
Most payment gateways and banks charge hidden fees such as:
Transfer fees.
Service charges.
Processing fees.
By the time, you get your money, most of your profit is already lost.
How to Choose the Right Currency Conversion Method?
Here's the bad news — you don't have to continue losing money. You simply need to select the proper currency conversion method. Let's go through your choices.
Option 1: Banks (Old School Method)
Most exporters use banks to receive international payments, yet it's not the best choice. Banks tend to:
Provide terrible exchange rates.
Levy high conversion fees.
Take longer processing times.
Pros: Easy to use since you already have a bank account.
Cons: High fees, bad exchange rates, and slower payments.
Option 2: Payment Gateways (Such as PayPal, Stripe, etc.)
Payment gateways such as PayPal, Stripe, or Razorpay are popular with Indian exporters for receiving international payments for their business. They still:
Charge a conversion fee (approximately 2.5-4%) on your payment.
Provide lower exchange rates than the market rate.
Charge international transaction fees on all your transactions.
Pros: Convenient and quick.
Cons: High conversion fees and decreased profit margins.
Option 3: Specialised Currency Conversion Platforms (Such as Infinity)
This is where intelligent exporters succeed. Tools like Infinity's Currency Converter provide:
True real-time exchange rates with no secret spread.
Lowest conversion charges.
Rapid payouts without unwarranted deduction.
So if the market rate is $1 = ₹83, you receive ₹83 per dollar — without parting with any cash to secret charges.
Pros: More money, quicker payments, and transparency in sight.
Cons: None, if you play it smart.
Related Reading: How to Select the Best Payment Gateway for International Transactions.
Common Traps in Currency Conversion (And How to Steer Clear of Them)
Even seasoned exporters commit blunders in currency conversion. Here's what not to do:
1. Accepting Bank's Standard Exchange Rate
Banks will never provide you with the rea exchange rate on your transaction. For this always try to verify the real-time rate in the market prior to your transaction in your business.
2. Overlooking Hidden Fees
In the industry there are certain payment channels having a fee which can go as high as 4% for converting currencies where there is not any transparency. For this read the fine print or opt for payment channels such as Infinity that are transparent.
3. Conversion with a Time Delay
Taking your time to make currency conversions will also do you harm if there is an unforeseen fall in the exchange rate. Use payment channels that convert real-time to ensure your earnings are safe.
How Infinity streamlines currency conversion for SMEs?
This is precisely why savvy Indian exporters are making the shift to Infinity's Currency Converter. It's specifically made to:
Provide live exchange rates.
Reduce conversion charges.
Be totally transparent that is 0.5% platform fee — no secret fees, ever.
Make payments faster without unwanted deductions.
So, rather than losing ₹15,000 to ₹30,000 per transaction, you retain more profit in your account.
Take a look at Infinity's Currency Converter here.
Final Thoughts
You're an Indian exporter. Rupees matter. Spending 2-4% of your income on currency conversion can silently erode your profit margins without you ever realizing it.
The clever choice?
Avoid the use of legacy banks.
Eschew high-conversion fee payment gateways.
Switch to a platform such as Infinity that provides real-time exchange rates and clear pricing.
Save more on currency conversion today with Infinity. Explore Infinity's Currency Converter Now.
FAQs
1. How long does currency conversion normally take?
So, in case you're working with traditional banks, the process can take longer, which can go upto 2-5 business days. But with platforms such as Infinity, you receive your money within 24-48 hours.
2. Can currency conversion rates be negotiated?
Yes, but only if you're getting large volumes of transactions. With platforms such as Infinity, you receive the best market rate automatically without negotiation.
3. What's the best way to reduce currency conversion costs?
The quickest method is to shift away from banks or payment gateways to a sole-purpose currency conversion platform such as Infinity. This saves you immediately thousands per transaction.
