Go to any "desi" website and you are bombarded with flashing ads touting FREE money transfer to India, and chances are, if you are a desi you are using such a service. Flash news: You are being duped! Of course, you knew that already, but it won't hurt to read about it again.

Don't expect to get anything for free from corporations that exist solely for commercial purposes. Money transfer services depend on the foreign exchange rate to generate a substantial part or all of the profit they expect to make on the service.

Most free services, including some of the top banks, won't tell you upfront, at what rate your money is going to be converted. This is what Citibank says about the exchange rate it uses. ICICI does a better job and has the guts to quote their daily rate (incidentally, I've used both and Citibank's USD to INR rate is about 1 rupee less than ICICI's). Nevertheless, the cost of the service and expected profit are built into the rate. A quoted rate only helps you in deciding the best deal.

Paid services, such as Western Union, also depend on the exchange rate uncertainty to subsidise their quoted fees. Your true cost is the sum of the fee paid and the loss due to an unfavourable exchange rate.