I run a small export business. I receive payments from buyers in America and Europe. For two years, I simply accepted whatever my bank gave me. Then I learned about telegraphic transfer and how the US dollar price in Pakistan affects every transaction. Understanding these two things has saved my business almost five hundred thousand rupees in the last year alone.
What Is a Telegraphic Transfer in Simple Words
When someone sends money from another country to Pakistan, the money does not travel in a car or a plane. It travels electronically through a system of banks. This electronic transfer is called a telegraphic transfer. The word telegraphic comes from old times when messages were sent by telegraph wires. Today, a telegraphic transfer happens in seconds, but the money can take one to three days to clear. When a customer asks me for telegraphic transfer details, I give them my bank’s SWIFT code, my account number, and my name exactly as it appears on my bank statement.
How US Dollar Price in Pakistan Affects a Telegraphic Transfer
Here is the most important thing I learned. When a customer sends me one thousand US dollars through a telegraphic transfer, I do not receive one thousand dollars in my account. I receive Pakistani rupees converted at the US dollar price in Pakistan on that day. If the US dollar price in Pakistan is two hundred eighty rupees, I receive two hundred eighty thousand rupees. If the US dollar price in Pakistan drops to two hundred seventy rupees, I receive only two hundred seventy thousand rupees for the same one thousand dollars. That difference of ten rupees per dollar on ten thousand dollars is one lakh rupees. That is real money.
Why Different Banks Give Different US Dollar Price in Pakistan for Telegraphic Transfer
Not every bank offers the same US dollar price in Pakistan for a telegraphic transfer. Some banks add a markup of two to five rupees per dollar. Others offer a rate very close to the market US dollar price in Pakistan. I opened accounts in three different banks. I asked each one to tell me their US dollar price in Pakistan on the same day at the same time. The difference was three rupees per dollar. On a twenty thousand dollar telegraphic transfer, that difference is sixty thousand rupees. Now I always ask my customer to send the telegraphic transfer to the bank that offers the best US dollar price in Pakistan that week.
The Hidden Fees in a Telegraphic Transfer
The US dollar price in Pakistan is not the only cost. A telegraphic transfer also has fees. The sending bank charges a fee. The receiving bank charges a fee. Sometimes there are intermediary banks that also take a small cut. I once received a telegraphic transfer of five thousand dollars, but after all fees, only four thousand nine hundred thirty dollars arrived. Then that amount was converted at the US dollar price in Pakistan. I lost almost seventy dollars in fees alone. Now I ask my customers to share the fees with me or to use a telegraphic transfer method that has a fixed fee instead of a percentage.
How I Track US Dollar Price in Pakistan Before Requesting a Telegraphic Transfer
I check the US dollar price in Pakistan every morning on my phone. I have learned that the US dollar price in Pakistan is usually lower on Mondays and higher on Fridays. I also know that when political news is bad, the US dollar price in Pakistan goes up. When political news is stable, the US dollar price in Pakistan goes down. If I am expecting a telegraphic transfer, I ask my customer to wait if I see that the US dollar price in Pakistan is very low. I explain honestly that I will lose money. Most customers understand and wait two or three days.
Final Advice for Other Small Business Owners
Do not ignore the telegraphic transfer process. Do not accept whatever US dollar price in Pakistan your bank gives you. Call three banks and ask for their buying rate for telegraphic transfer. Open accounts in at least two banks. When you receive a telegraphic transfer, ask the bank to hold the dollars in a foreign currency account if they offer one. Then convert to rupees only when the US dollar price in Pakistan is favorable. A few rupees difference per dollar may not seem like much, but over a year of telegraphic transfers, it becomes your profit or your loss. My business survived because I stopped being lazy about telegraphic transfer and started paying attention to US dollar price in Pakistan every single day.