You send USD 5,000. Your relative receives USD 4,955. Nothing has gone wrong and nobody has taken a cut improperly — the money passed through a correspondent bank that charged for the passage. Whether that happens, and to whom, is a choice made on the form, and most people are never told it exists.
Why there is a middle bank at all
Your bank in India does not hold an account with every bank in the world. To move dollars to a small bank in Ohio it uses a correspondent — usually a large US bank that both institutions deal with. Sometimes there are two. Each one handles the payment and each one may charge for it, typically USD 15 to 40.
The three charge options
- OUR — you pay everything. The beneficiary receives the full amount. Your bank charges more upfront to cover the correspondent fees.
- SHA — shared. You pay your own bank's charges; the correspondent and beneficiary bank charges come out of the amount in transit. This is the default at most banks, and it is why amounts arrive short.
- BEN — the beneficiary pays everything, including your bank's charge, deducted from the transfer.
If it matters that an exact figure lands — a tuition invoice, a rent payment, a supplier bill — ask for OUR and confirm it is on the instruction. Paying a fee to avoid a shortfall is cheaper than a second remittance to cover it.
Where a tuition payment goes wrong
A university bills USD 12,000. The parent sends USD 12,000 under SHA. USD 11,970 arrives. The university's system records an underpayment, the student gets a balance notice, and a second transfer costs another set of charges to move USD 30.
Two fixes, both simple: send under OUR, or add a small buffer of USD 30 to 50 on invoice payments. Most people who have done this once do both.
The other costs alongside SWIFT charges
- 1The exchange margin on converting rupees to the foreign currency. Usually the largest cost, and the one worth comparing.
- 2Your bank's own remittance or handling fee.
- 3GST on the deemed value of the conversion, under Rule 32(2)(b).
- 4TCS, if your remittances for the year have crossed ₹10 lakh.
- 5Correspondent charges, per the option above.
Making sure it lands cleanly
- Beneficiary name exactly as the receiving bank holds it, including middle names.
- IBAN for European beneficiaries, routing number for US ones, alongside the SWIFT code.
- Send in the currency of the beneficiary's account. Sending dollars to a euro account invites a second conversion at their bank's rate.
- Put the invoice or student reference in the payment reference field, so it can be matched at the other end.
