When sending money overseas, paying attention to the hidden charges could reap some rewards.

Many expatriates who regularly transfer funds abroad are concerned mostly about the transaction fees and have very little regard for the hidden costs.

When making a remittance, it is important to find out if there are “little extras” that the service provider is tacking into the bill. These not so obvious add-ons can be in the form of poor exchange rates, and the so-called “back-end fees” that apply to money transfers in certain markets.

In the remittance business, transfer agents, currency brokers and banks make money not just from the transaction fees, but also from the exchange rate margins, the amount added onto the interbank exchange rate. For instance, if the interbank exchange rate between UAE dirham and Indian rupee is 16.68 rupees to every dirham and the money transfer agent uses 16.80 instead, the provider takes a margin equivalent to 0.12 rupees on every dirham.

“Transfer fee and the exchange rate are the two most important factors in remitting money. Remittance fee usually varies between Dh15 and 25, but the more important factor in getting a good deal is the exchange rate,” said Preeti Bhambri, managing director and founder of MoneyCamel.com.

Another source of profit is “back-end“ fee, which, depending on where the money is being sent to, can cost 40 per cent of the transaction charge. A Filipino expatriate sending money home, for example, may be asked to pay Dh15 for the transaction in the UAE, but once the money is delivered, an additional Dh10 is collected.

“The sender does not realize it since it is broken up into two parts— fees charged in dirham and back-end fees charges in pesos in the Philippines,” said Sudhesh Giriyan, vice president and business head of Xpress Money.

Among the popular recipient countries of remittances from the UAE, however, only the Philippines is known to charge back-end fees and the rate is usually applicable to funds transferred to a bank account.

If all of these hidden fees are put together, they can eat significantly into the final payout of the intended beneficiary. Girivan said back-end fees alone can affect the actual remitted funds. “The beneficiary receives lesser amount than what is intended,” he said.

Xpress Money has recently announced it does not levy any back-end charge on customers transferring money from the UAE to the Philippines. “We are keenly aware of how much struggle each of our consumer goes through to send money back home. We believe that the [beneficiaries] should receive in full what their loved ones send to them from abroad,” said Giriyan.

Charging a “back-end fee” on remittances to the Philippines, usually up to Dh10 on every transaction, is a common practice among currency exchange houses in the UAE, except a few ones like Western Union. Sobia Rahman, Western Union regional vice president for Gulf, Pakistan and

Afghanistan, said they only charge money transfer fee to the sender, considering that the retail to account service (R2A), or sending money to a bank account from the UAE, is not widely available yet. “[It] is only available for our customers who want to send money to a bank account in Pakistan. Receiving banks in Pakistan also do not charge any fees,” said Rahman.