Pratyush Jha 

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A foreign transaction fee is charged when you make a card payment in a foreign currency to an overseas merchant or through an international payment network. The fee structure will depend on the individual card issuer. The total cost of an international card transaction can include currency conversion costs, a forex markup charged by the issuer, network charges, any applicable taxes, and in some cases, Dynamic Currency Conversion (DCC) fees.

You may incur foreign transaction fees when using Indian credit cards outside India. Charges may also apply to software subscriptions, cloud services, streaming platforms and other products or services billed by an overseas entity.

Forex markups on Indian credit cards range from <a href="https://www.forbesindia.com/article/upfront/brand-connect/zero-forex-markup-credit-cards-the-smartest-way-to-spend-and-withdraw-cash-abroad/2994469/1">1% to 3.5%</a>, depending on the issuer and variant of the card. The actual foreign transaction fee is often variable.

A foreign transaction fee works by passing your payment through several parties, each of which can add a charge, before it lands on your statement. The transaction may look simple at checkout, but the settlement process involves the merchant, the card network, and your card issuer, with taxes layered on top. Here is how each step works:

Some merchants have Dynamic Currency Conversion (DCC) which allows you to pay the bill in INR instead of local currency. While paying INR in a foreign country may be convenient, DCC usually leads to a poorer exchange rate (plus potentially some extra merchant markups). Thus, sometimes paying in local currency is relatively cheaper.

What Types of Transactions Have Foreign Transaction Fees?

Any transaction that is processed in a foreign currency or routed through an overseas payment network can attract a foreign transaction fee. They are not limited to international travel, and can show up on everyday domestic payments like online purchases, card transactions, or subscriptions. Transactions that could be subject to these fees include:

<a></a>Example of Foreign Transaction Fees

For example, a customer is travelling in Europe and uses an Indian credit card to buy something for €300.

Based on the exchange rate alone, the purchase costs ₹27,600. However, the final amount charged is ₹912 higher because your card issuer levies a foreign transaction fee (forex markup) of ₹733, along with ₹139 as GST on that fee.

A single charge of ₹912 is easy to overlook. The cumulative cost adds up with many international transactions. Hotel stays, meals, local transport, and shopping also attract similar charges.

The exchange rate is just the starting point. The total cost of an international transaction often includes hidden costs, such as foreign transaction fees charged by your issuer and the taxes applicable to those fees.

<a></a>How To Calculate Foreign Transaction Fees?

You can calculate foreign transaction fees by converting the purchase amount into Indian rupees, applying your card issuer's foreign transaction fee (forex markup), and adding GST on that fee. Follow these steps to estimate the total amount you will pay.

First, state the foreign currency the merchant charged for the purchase you made. This is the basic amount on which foreign transaction fee will be charged.

To convert the foreign currency to INR, use the forex rate quoted by the card network (Visa, Mastercard rate). The card network uses its own settlement rate, which fluctuates day to day and does not always match the retail forex rate.

Your bank will charge a markup on the converted amount, usually disclosed as a percentage. It depends on the bank and type of card. Some issuers will list this as one number, others will show it as separate charges.

GST is charged at 18% on the markup amount and not on the total transaction value. Now calculate the GST on the forex markup amount you got in the previous step.

Certain cards and transaction types are subject to additional fees. Other fees may apply. Check with your issuer for such details.

Suppose you are making an international purchase of $200 with a credit card that charges a forex markup of 2.5% and a card network exchange rate of ₹83.20 per $1, the calculations are given below:

Total amount charged = ₹16,640 + ₹416 + ₹75 = ₹17,131

A $200 purchase has a converted value of ₹16,640 based on the exchange rate alone. The card issuer then applies a foreign transaction fee (forex markup) of ₹416, followed by GST of ₹75 on that fee. As a result, the total amount charged becomes ₹17,131, which is ₹491 higher than the converted transaction value alone.

Foreign Transaction Fees for Different Credit Card Issuers in India

Foreign transaction fees vary across credit card issuers and card variants in India. The table below shows the foreign transaction fees charged by some of the leading banks.

Note: The percentages listed above are the foreign transaction fees (forex markup fees) charged by the card issuer. In addition to this fee, you may also pay GST on the fee, and the final amount charged depends on the card network’s exchange rate and whether the merchant uses Dynamic Currency Conversion (DCC). Since charges may change, always verify the latest fee schedule on your card issuer’s official website.

How To Minimise Foreign Transaction Fees?

You can minimise foreign transaction fees by choosing the right credit card, paying in the local currency, avoiding unnecessary conversion charges, and planning your international payments carefully. Here are some practical ways to reduce these costs:

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<a></a>What Is Telegraphic Transfer (TT) Buying Rate?

The Telegraphic Transfer (TT) buying rate is the exchange rate banks use to convert incoming foreign currency into Indian Rupees (INR). It only applies when foreign currency enters India, and not when it leaves India.

You can understand it this way: imagine you’re an Indian exporter and your US-based client has transferred the payment for the recent order. The bank will buy US dollars at the TT buying rate and settle the payment into your bank account in INR.

When an Indian importer is making an international payment to a foreign vendor, the bank will use the TT selling rate to buy foreign currency for you and you will make the payment in INR. Because banks include a profit margin, the buying rate is always lower than the selling rate.

<a href="https://www.skydo.com/blog/telegraphic-transfer">Telegraphic transfer</a> is a blanket term for transferring money through banks globally in different currencies.

<a></a>What Is the Difference Between TT Buying and TT Selling Rate?

The difference comes down to direction: money entering India uses the TT buying rate, while money leaving India uses the <a href="https://www.skydo.com/blog/tt-selling-rate">TT selling rate</a>. From the bank's perspective, it is buying foreign currency from you when you receive an inward remittance, and selling it to you when you need to send a payment abroad.

Below is a quick-reference comparison to help you identify which rate applies to your transaction:

<a></a>What Factors Influence the telegraphic transfer (TT) Buying Rate?

There are two major factors that influence the TT buying rate: the spot rate, which translates whatever is happening in the global currency market, and your bank’s margin on the transaction.

Let’s understand these primary and allied factors in more detail:

<a></a>How Is TT Buying Rate Calculated by Banks?

The TT buying rate is calculated with a simple formula: TT Buying Rate = Spot Buying Rate − Exchange Margin. Understanding this math shows exactly why the amount that reaches your account is always less than the exchange rate you see on search engines, since the bank layers its own costs and risk management into that margin.

Here is what each part of the formula means:

Spot buying rate: The base interbank rate at which large financial institutions trade currencies globally. You can think of it as the true exchange rate, though it fluctuates second by second based on global demand.

Exchange margin: The bank's deduction to cover its operational costs, SWIFT messaging fees, compliance checks, and profit. It also includes a risk premium to protect the bank against currency movements during the settlement window.

For reference, the Union Bank of India sets its buying rate margin between 0.025% and 0.080%, and most Indian banks apply margins in the 0.025% to 0.15% range. However, the effective forex markup can be much higher, between 1.0% and 3.5% depending on the bank and your specific account profile.

<a></a>Worked Example: How Much INR Does the Margin Cost You?

To see how these margins affect your bottom line, let’s look at a practical scenario.  

Please note: These figures are illustrative; actual rates fluctuate daily and vary by bank. 

Assume the mid-market spot rate is ₹84.00 per USD and your bank applies an effective margin of 0.50% (a representative figure when all conversion markups are included).

Beyond the exchange rate margin, there are two more sources not explicitly shared with Indian traders:

<a></a>What Are Today's TT Buying Rates at SBI, ICICI, HDFC, and Axis Bank?

Margins on exchange rates vary from one bank to another, having a direct impact on your earnings. As market volatility plays a key role in deciding the rates, it makes sense to check the TT buying and the TT selling rates of major banks before allowing a payment transaction.

To help you get started, we have compiled a table containing the USD/INR telegraphic transfer rates for SBI, ICICI, Axis, HDFC, Bank of Baroda, and Union Bank of India .

Note: Please check the official sites for the latest rates as these are subject to changes.

<a></a>How to Get Better International Transfer Rates?

While you cannot control ‌international currency rate movements, you can certainly use these strategies to keep the exchange margins low and your earnings high:

<a></a>TT Rate vs. Bills Rate vs. Card Rate: What are the differences?

When you send or receive international payments, banks offer you rates based on how the money will move and how much handling is required. These are the three types of rates banks offer: TT rate, Bills rate, and Card rate.

Let’s understand them in more detail in the next part:

The Rule of Thumb: Clean inward SWIFT payments from your clients land at the TT buying rate; document-backed export collections land at the bills buying rate; and currency cards are a separate category with the highest costs.

<a></a>How Does Skydo Help You Beat Bank TT Buying Rates?

Despite knowing about the TT buying rate margin, most freelancers and exporters settle for banks to receive international payments. However, Skydo lets you receive payments at a lower margin. Skydo is an RBI-recognized PA-CB payment platform for Indian exporters and freelancers to receive international payments.

With Skydo, you can create a virtual account in USD, SGD, GBP, AUD, CAD, EUR, and international SWIFT in less than 15 minutes. There is no margin or hidden currency conversion markup; you get the same exchange rate you see online.

You only pay a flat fee: under $2,000 = $19 flat | $2,000–$10,000 = $29 flat | over $10,000 = 0.3% of the amount. Also, there is no subscription or minimum payment barrier.

After you receive a cross-border payment, you get a free FIRA automatically on your dashboard. A FIRA is critical to prove you received foreign payment in India and claim export incentives.

The distinct advantage Skydo offers over TT buying rate is that you always know the total cost before you receive the payment and not after.

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A vostro account is an account that a domestic bank holds on behalf of a foreign bank, usually in the domestic currency. The term “vostro” comes from the Latin word for “yours,” referring to the foreign bank's funds held with the domestic bank.

For example, if JPMorgan Chase in the US opens an account with SBI and holds Indian rupees in it, SBI considers that a vostro account. The account allows JPMorgan Chase to access India's banking system without needing to maintain its own physical branch in the country.

Vostro accounts can be used to facilitate local transactions, settle trade payments, and process remittances on behalf of the foreign bank. They are a key part of correspondent banking, where banks in different countries use one another's infrastructure to move and settle funds. This also has another side of the same banking relationship, i.e., <a href="https://www.skydo.com/blog/nostro-account-international-transactions">a nostro account</a>.

A vostro account gives a foreign bank access to the domestic banking system by holding its funds with a bank in another country. In an INR vostro arrangement, the funds are held in Indian rupees, and the Indian bank can process payments from that balance on the foreign bank's instructions.

For an INR payment, the process can work like this:

The Indian bank acts as the local banking partner, processing payments and handling settlements on behalf of the foreign bank. Keeping funds in local currency can also reduce the need for currency conversion each time a payment is made. More broadly, vostro accounts support correspondent banking by allowing banks to provide services in countries where they do not maintain their own branches. Note that this is entirely different from the concept of <a href="https://www.skydo.com/blog/virtual-accounts-vs-local-banks">virtual accounts vs local banks</a>.

Why Do Vostro Accounts Matter for Indian Exporters and Freelancers?

Vostro accounts provide the banking infrastructure that allows foreign banks to hold funds and make payments through Indian banks. Indian exporters and freelancers generally do not manage these accounts themselves, but they can benefit from the payment routes these arrangements make possible. With Vostro accounts, you get:

Nostro and vostro are two names for the same correspondent-banking account relationship, viewed from opposite sides. “Nostro” means “ours,” referring to a bank's money held with another bank. “Vostro” means “yours,” referring to that same balance from the perspective of the bank holding the money.

They are not two separate pots of money. The <a href="https://www.skydo.com/blog/nostro-and-vostro-account">nostro and vostro</a> labels describe the same underlying correspondent relationship from different perspectives. When one bank records a balance as its nostro, the bank holding that balance records the corresponding account as a vostro.

In India, RBI also permits Special Rupee Vostro Accounts (SRVA) for eligible international trade settlement. Under this mechanism, Indian exporters can receive export proceeds in INR from balances held in the designated vostro account, subject to the applicable RBI conditions.

Consider Alpha Tech Solutions Pvt Ltd, a Bengaluru-based IT consulting firm that has completed a software project for Texas Retail Corp, its US client. Alpha Tech raises a USD invoice and uses <a href="https://www.skydo.com/">Skydo</a> to collect the payment. Behind the scenes, Skydo's payment infrastructure uses Vostro relationships with banking partners to receive the payment locally and settle it in India. Here:

What Is a Special Rupee Vostro Account (SRVA)?

A Special Rupee Vostro Account (SRVA) is a rupee-denominated account that an Indian Authorised Dealer (AD) bank maintains for an overseas bank to facilitate eligible cross-border transactions in Indian rupees. It allows trade partners to invoice, pay, and settle eligible exports and imports in INR instead of relying entirely on a freely convertible currency such as the US dollar or euro.

RBI introduced the SRVA mechanism through A.P. (DIR Series) Circular No. 10 dated July 11, 2022, allowing Indian AD banks to open Special Rupee Vostro Accounts for correspondent banks of partner trading countries. The arrangement was introduced as an additional option for international trade settlement in INR, alongside existing settlement methods.

RBI issued A.P. (DIR Series) Circular No. 19, consolidating instructions from 5 earlier circulars issued between July 2022 and October 2025. The revised framework allows AD banks in India to open SRVAs for their overseas branches as well as banks resident outside India. It also permits SRVAs to be used for other permissible current and capital account transactions under FEMA.

The network has expanded significantly. Reports in early 2026 put the SRVA network at more than 80 accounts across more than 30 trading-partner countries. The current FEDAI directory confirms that the network spans countries including Russia, Germany, Bangladesh, Sri Lanka, Singapore, the UAE, the UK, Australia, New Zealand, Armenia, Belarus, Tanzania and others.

Russia remains a prominent example. The current FEDAI directory lists SRVA arrangements with Russian banks across multiple Indian AD banks, including Canara Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Bank of Baroda, UCO Bank, Axis Bank and others. India and Russia have continued exploring INR-based settlement to reduce dependence on the US dollar, although actual payment routes can vary by transaction and regulatory conditions.

Indian banks maintain SRVAs for overseas correspondent banks. For example, Punjab National Bank's International Service Branch in New Delhi currently lists 10 SRVAs, covering banks from Myanmar and Bangladesh. FEDAI also maintains the broader country-wise SRVA Directory, which is the best place to check the current list of Indian AD banks and their overseas banking counterparts.

How Skydo Helps Indian Businesses Receive Money Using Vostro Accounts?

Skydo uses global banking infrastructure, including Vostro relationships with banking partners, to handle the banking layer behind international payments. For Indian freelancers and exporters, that means they can receive payments through local-style international accounts while Skydo handles the cross-border settlement, INR credit, and remittance documentation.

<a href="https://www.skydo.com/">Skydo</a> provides free virtual accounts in USD, EUR, GBP, SGD, AUD, CAD and other supported currencies. Account setup takes about 5 minutes, and overseas clients can pay through local methods such as ACH, Fedwire, or SEPA where available. Additionally, Skydo charges:

It also uses the live mid-market exchange rate with 0% FX markup, rather than adding a percentage margin to the conversion. Once the payment reaches the virtual account, Skydo transfers the funds to the Indian bank account within 1 business day. Payment tracking is available digitally, so there is no need to rely on repeated bank follow-ups.

Skydo also generates a free FIRA instantly for every payment, which can be downloaded from the dashboard or received in the user's inbox. This provides proof of the inward remittance and supports the documentation required for tax, GST, and export-related record-keeping.

For eligible goods exporters, Skydo supports the eBRC closure process, including linking the DGFT account and working with shipping bills and IRMs. EDPMS closure assistance is also available. The FIRA does not replace these export-realisation processes, but it forms part of the payment documentation.

Additionally, Skydo has no maintenance or monthly fee for its global accounts. The applicable transaction fee is charged when you receive a payment. Skydo also offers support through WhatsApp, phone, and email.&nbsp;

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What Is an Exchange Earners Foreign Currency Account (EEFC)?

An EEFC account is a current account you hold in foreign currency, offered by Authorized Dealer Category-I banks in India. It lets a resident Indian who earns foreign exchange, whether that's an individual, a firm, or a company, keep 100% of those foreign currency earnings in the account instead of converting them to rupees the moment they arrive.

That second part is really the whole point. Normally, when foreign currency is credited to an Indian account, the bank converts it to INR immediately. With an EEFC account, your USD stays in USD and your EUR stays in EUR until you decide what to do with them.

The account falls under the <a href="https://www.skydo.com/blog/fema-foreign-exchange-management-act">Foreign Exchange Management Act (FEMA)</a> and is designed for genuine foreign exchange earnings. Export proceeds, professional fees, consultancy income, that kind of thing. Personal remittances and gifts from abroad don't qualify, and the account isn't meant for them.

So what can you actually do with the money once it's in there?

You can hold the foreign currency for a while, pay eligible foreign-currency expenses straight from the balance, and convert whatever's left to INR when the timing works for you instead of on the day it arrives.

Any resident of India who earns foreign exchange can open one. If foreign currency is coming in through your work, you're most likely eligible.

Further Read: NRE and NRO accounts for non-residents →<a href="https://www.skydo.com/blog/nre-and-nro-account"> https://www.skydo.com/blog/nre-and-nro-account</a>

What are the Key Features of an EEFC Account?

The features that define an EEFC account come down to how it holds money, how long you can hold it, and what it deliberately doesn't do.

Further Read: Currency conversion fees explained → <a href="https://www.skydo.com/blog/currency-conversion-fees">https://www.skydo.com/blog/currency-conversion-fees</a>

What Are the Benefits of an EEFC Account?

The real payoff of an EEFC account is control: over conversion costs, over timing, and over when you lock in a rate. If your business earns and spends in the same foreign currency, that control turns into money saved.

All of this works best when money moves both ways. If you only receive foreign income and convert everything to INR, you gain little. The account earns no interest while the balance sits, yet it still forces a month-end conversion, so you carry the downside without much of the upside.

An IT or SaaS exporter paying overseas cloud and contractor bills in USD gets the full benefit. A freelancer who just receives dollars and converts the lot, less so.

An EEFC account works by receiving foreign currency after it has already entered the Indian banking system, usually through SWIFT or another payment channel. Your foreign client never pays directly into the EEFC account. The money reaches India first, and only then does it land in your account.

Once it's there, the foreign currency remains unconverted. From that point you've got two options: pay an eligible foreign-currency expense straight from the balance, or convert some or all of it to INR at the bank's rate whenever the timing suits you.

Here's how it applies to a $5,000 invoice:

What Are the RBI Rules Governing an EEFC Account?

The rules for EEFC accounts are set out in FED Master Direction No. 14/2015-16 (re-issued 29 June 2026) and the RBI's own EEFC FAQ. Three of them matter most.

One more restriction sits alongside these: no fund-based or non-fund-based credit facilities, so no loans or overdrafts against an EEFC balance.

Further Read: RBI's role in the foreign exchange market →<a href="https://www.skydo.com/blog/rbi-role-in-foreign-exchange-market"> https://www.skydo.com/blog/rbi-role-in-foreign-exchange-market</a>

What are the RBI-permitted credits and debits in an EEFC account?

RBI spells out exactly what can go into an EEFC account and what can come out, under <a href="https://www.skydo.com/blog/fema-foreign-exchange-management-act">FEMA</a>. Here's the shape of both lists.

One thing that does not qualify: claims settled in rupees by ECGC or an insurer. Those aren't treated as foreign exchange realization, so they can't be credited.

EEFC vs a regular current account: Key Differences

The three things that separate them are the currency you hold, the conversion rules, and whether you can pay foreign-currency bills directly.

Where that difference matters is double conversion. An exporter earning USD who also pays USD vendor bills through a regular current account converts USD to INR on receipt, then buys USD again to pay the bill, eating the spread twice. Run the same flow through an EEFC account and both conversion legs disappear.

Further Read: Virtual USD accounts, pros and cons →<a href="https://www.skydo.com/blog/virtual-usd-accounts-pros-cons"> https://www.skydo.com/blog/virtual-usd-accounts-pros-cons</a>

EEFC vs NRO and NRE accounts: Key Differences

The three things that separate them are residency status, the currency you hold, and how they're taxed.

An exporter who's a resident in India can't park export proceeds in an <a href="https://www.skydo.com/blog/nre-and-nro-account">NRE or NRO account</a>. Those are strictly for non-residents. For a resident foreign exchange earner, the EEFC account is the right instrument.

How Does Skydo Help Receive International Payments?

Before any of this reaches an EEFC account, the foreign currency has to land in India first. That's the step Skydo handles.

You get free virtual accounts in USD, EUR, GBP, SGD, AUD, and CAD, and you share those details with your clients exactly like a local bank account. Setup takes 5 minutes, fully digital, no relationship manager calls. Pricing is flat with no hidden forex markup: $19 under $2,000, $29 up to $10,000, and 0.3% above that. No monthly fees, so you pay only when you transact.

Every payment comes with a free FIRA certificate for your GST refund claims, plus eBRC closure support once you link your DGFT account. Settlements land within one working day, and support is India-based over WhatsApp, call, and text.

Built for exporters, freelancers with proper documentation, and marketplace sellers receiving international payments.Explore now: <a href="https://www.skydo.com/">https://www.skydo.com/</a>