What is an Outward Remittance & How do You Send One?

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As the global marketplace expands, cross-border payment systems will continue to evolve. As it becomes increasingly common for people to work overseas, bank remittances ensure payments make it home. In 2020, the top three countries for remittance outflows in USD were the United States (68 billion), the United Arab Emirates (43 billion), and Saudi Arabia (35 billion). 

Expats and businesses must have a safe and efficient means to send money across the world. One way is through an outward remittance (often referred to as outwards remittance). If you need to remit a cross-border money transfer, it’s important to know what an outward remittance is, how to send one, and the different costs involved.  

What is an Outward Remittance?

An outward remittance (aka wire transfer outward remittance) is the process of transferring money (in the form of foreign exchange) from a worker or business, to another country. Incredibly, money transferred this way is now on par with the amount given in financial aid to some countries. 

An outward remittance shouldn’t be confused with other financial terms like “remittance advice” which is the document that a customer sends to a supplier to notify them of payment on an invoice. There are many reasons why someone would want to make an outward remittance. This can include ongoing financial commitments in their home country, like bills or the support of family members. 

The process typically consists of making an international money transfer through a traditional bank. Banks handle the majority of outward remittances, but there are three main money transfer operators that dominate the non-bank market: Western Union, MoneyGram, and Ria. Between those three conglomerates, they operate 1.1 million retail locations, across 200 countries.

All of these choices come with different charges and fees.

The Cost of Outward Remittance

Remittance prices are high for a variety of reasons, including underdeveloped financial infrastructures, regulatory obstacles, limited competition, lack of access to the banking sector, and difficulties obtaining the necessary identification to enter the financial mainstream.

The bottom line is that whenever you send money across the globe, it’s going to cost you.  

Sending outward remittances can be highly confusing and as a result, people are often overcharged. Recent research has shown that while 55% of American consumers said they understood the price of sending money abroad, only 18% were able to correctly identify exchange rates as one of the costs. 

Despite improvements over the last decade, companies largely misunderstand how much it costs to send money abroad. That’s because there are several factors responsible for price fluctuations, including (but not limited to):

  • Type of bank account of sender and recipient
  • Details of the transaction
  • Regulations in the sending and receiving country
  • Foreign exchange (Forex) margins
  • Upfront bank fees

FX margins are one-third of the price of 200 USD remittances and more than half the cost on the broader, cross-border payments market. 

In 2020, the average cost of sending $200 to LMICs (low and middle-income countries) remained high at 6.58%. This is more than double the target 3% identified as the “Sustainable Development Goal” by the United Nations. An inward remittance is also costly for businesses.

The average remittance costs for other regions depend on the competitive exchange rates. These include:

  • 8.2% for Sub-Saharan Africa
  • 6.9% for East Asia and Pacific
  • 6.6% for the Middle East and North Africa
  • 6.4% for Europe and Central Asia
  • 5.6% for Latin America and the Caribbean
  • 4.9% for Southeast Asia

Remittance costs will vary by bank. Fees can include things like handling commission and exchange rate markups. Intermediary and recipient banks may also take a cut of the outward remittance. 

A major player in the market, the United Overseas Bank Limited (commonly known as UOB) has fees that range from $10-$300 plus an exchange rate markup and charges from intermediary and/or recipient banks. The Oversea-Chinese Banking Corporation Limited (aka OCBC Bank) has lower fees that range from $25-$55. 

As the World Bank has stated on the price of remittances:

“The single most important factor leading to high remittance prices is a lack of transparency in the market.”

If you’re not sure, it’s best to start by asking your own bank.

The SWIFT Network

It is possible that several banks are involved in a single outward remittance. Wire transfers placed by a traditional bank will be processed using the SWIFT network. This international network of financial institutions works together to ensure all global transactions run smoothly. Although it’s a safe way to move money, it’s neither fast nor cheap.

Since several banks are involved, a sender may be liable to pay each one along the way. Any of the 2 or 3 other banks will want a slice of the pie. The recipient may also have to pay their own bank charges. If a worker has to pay to receive their money, they may raise their prices. This can affect the rate a company has to pay its contractors and decisions on where to do business. 

An organization can avoid using the SWIFT network by choosing an alternative provider for its outward remittances. Payment platforms use a network of local banks accounts to move money safely and quickly across borders. This is without incurring the hefty fees through SWIFT banking structures. 

Protocols of Outward Remittance

Specific countries have guidelines and protocols for sending an outward remittance and India is one of them. The Reserve Bank of India (RBI) regulates foreign currency transfers under the Foreign Exchange Management Act (FEMA). The guidelines established for sending money out of the country fall under the Liberalized Remittance Scheme (LRS) of the FEMA. For a remitter to avoid any hassles, they must follow these Indian guidelines:

  • Foreign outward remittances cannot exceed $250,000 in a financial year (no limit on the number of transactions)
  • Only financial institutions with an Authorized Dealer License (Category II) facilitate foreign outward remittance
  • The sender must submit details of their PAN card and the reason why they wish to transfer funds
  • Certain KYC (and other documents) might need to be submitted like a university letter for the tuition of a loved one

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How to Use an Outward Remittance

How you send an outward remittance all depends on the bank and service used, as well as how the recipient collects their money. Here are the general steps to setting up and remitting an international payment:

Step 1 – Establish Compliance

If you live in a country that has specific guidelines for an outward remittance, it’s best to first check and see whether you are sending money for approved use. Make sure you have all the relevant documents necessary to prove the worthiness of your transfer. Remember, certain countries also have a cap on the total amount you can send per fiscal year.

Step 2 – Choose the Service 

Choose the service that works best for your business. The first step here is to contact your bank. If the remittance is going to someone with a current account (like a checking or savings account) then it may be a good idea to check with the recipient’s bank branch too. This will ensure all fees are transparent and understood prior to the transfer taking place. This includes charges from using the SWIFT network (like intermediary banks) and the cost of the exchange rate used (which may not always be current). 

To double-check if you’re paying a fair price, check the exchange rate offered against an online currency converter. Familiar banks that specialize in global transfers include DBS, UOB, and OCBC (to name a few). 

Additionally, you can seek out software platforms that feature tools for outward remittances. This can keep astronomical transfer costs at an all-time low.

If the recipient does not have a bank account, a business can use a brand like Western Union. In this instance, the money transferred is an instant debit to the business account. It is then processed in the provider’s system and sent to the recipient as cash—where they can pick it up at a location of their choice. 

Services like Western Union are not a good habit to get into if you’re trying to run a business. The fees are relatively high and the exchange rate can be inflated.

Step 3 – Gather the Data 

Every international payment requires some form of documentation for it to be processed. What you need all depends on factors like the amount being sent, the country it’s being sent to, and the purpose of the transfer. To ensure the transaction runs smoothly and reaches the recipients safely, the correct information should be provided—the first time around. The more attempts to process a global wire without the right paperwork, the more costly it will be. 

The first step is to check with your bank or international transfer provider to determine the exact documents needed. At this time, the bank should also be able to notify the sender of any hidden fees and discuss the exchange rate. 

Some common types of data needed to process an outward remittance include:

• Sender bank account number
• Name, address, and contact information
Currency and amount of remittance
• Purpose of the remittance
• Who is responsible for fees and charges

• Recipient bank account number
• Bank name and branch
• Name, address, and contact information
• SWIFT code and address
• IFSC code (for transfers to India)

Step 4 – Arrange the Outward Remittance 

This can be done online, in person, or by phone. Some traditional banks will require customers to enter the branch and conduct business face-to-face. This is necessary to complete the paperwork associated with an international transfer. 

In other cases, the entire transaction is carried out online. A business simply logs into its bank portal and follows the steps for an overseas transfer. From there, the sender fills in all the relevant information and supplies the necessary documents. The system should then tell you exactly when the funds will arrive in the recipient’s account. 

Examples of Outward Remittance

When sending an outward remittance, a business is obligated to state the purpose of the transaction. In most cases, you’ll need to submit relevant documents to back up the reason for the transfer. Here are some examples of when an outward remittance is approved:


  • Employee compensation – income earned by temp workers in a host country, residents employed by non-resident entities
  • Investing – putting money in stocks, bonds, housing, and other properties
  • Buying abroad – purchasing assets or donating to an organization


  • Overseas education – the cost of tuition and the need for a university letter
  • Travel – defraying the cost of travel and paying for trips taken
  • Medical – obtaining medical treatment, especially when unavailable anywhere else
  • Living expenses – to cover costs of living for a family member or loved one

All transfers made or received by residents from or to non-resident individuals are considered outward remittances.

What are the Benefits of Using Outward Remittance?‌

One of the top advantages of using outward remittances is that they are safe, fast, and reliable. Transactions are processed on a secure banking network, which means there is very little chance of fraud or theft. It’s a low-risk means of doing international business and sending money to friends and family. 

An outward remittance is also a good method for sending cash in the event of an emergency. For example, if someone has an accident while traveling or runs out of money while studying abroad. Funds can be transferred almost immediately (for the right price, of course). 

Why is Outward Remittance Important in Business?

Today, virtually every company operates as a part of the global economy. To compete on this grand scale, a company must deal with competition everywhere. An outward remittance facilitates transactions all over the world and leverages business opportunities that may have never existed. Funds can be safely transferred to partners, no matter where they are located overseas. It also makes it much easier for an organization to purchase goods and services from a foreign entity. 

If you conduct global business, an outward remittance is a great way to ensure all the bills get paid back home. It can also help an individual further their education or receive medical treatment in a foreign country.

Among the key drivers for the steady outflow of remittances are the expansion of global business, the continuous shift from cash to digital, and the cyclical movements of currency exchange rates. The more informed a company has on how to send an outward remittance, the easier it will be to finance tasks in other regions. And that is truly the core of an expansion strategy.

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