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The RBI’s Liberalized Remittance Scheme (LRS) made cross-border payments quite easier. This has benefitted not only the citizens but businesses that process outward remittances including travel agencies (TAs) and destination management companies (DMCs).
In India, over the years there has been a spike in travel enthusiasts as that’s what the data suggests.
In the first nine months of the fiscal year 2022-23 itself, Indians have spent USD 10 billion on overseas travel.
This is the reason that the travel and hospitality sector is a booming industry. After witnessing a slump during COVID-19, is rising again, as often termed ‘revenge’ tourism.
While travel agencies (TAs) and destination management companies (DMCs) are benefitting the most, they want a payment gateway that can help them attract customers to international destinations.
Tourists look out for a seamless payment experience especially when they need to send foreign remittances for buying an overseas travel package.
With LRS (Liberalized Remittance Scheme), TAs & DMCs can make outward remittances of up to USD 250,000 for residents travelling abroad. This remittance can be made only via ADs (authorised dealers).
However, making remittances through a traditional approach, that is, directly through banks or ADs is quite hassle-some.
It is here where Cashfree Payments’s LRS-compliant solution can simplify cross-border payments for travel agencies, DMCs, and other travel & hospitality companies.
Let’s understand in detail!
Challenges Faced by TAs & DMCs with Traditional Approach to Outward Remittances
The RBI’s scheme of LRS (Liberalized Remittance Scheme) allows cross-border remittances for various purposes including medical, education, travel, investment, etc.
The TAs and DMCs when processing remittances via traditional ways, their customers often need to physically visit the bank branch. From KYC to all kinds of verification, it becomes time-consuming.
TAs or DMCs receive payments from customers, and then they need to provide one-time or transactional KYC to the AD bank or the AD2. Once approved, all necessary payments are to be done to the authorised bank.
AD banks usually take T+1 or T+2 days to settle the LRS amount as they do offline verification.
Also, customers face the issue of being UNABLE to pay via their choice of payment modes. Outward remittances when processed directly through ADs and banks usually restrict the UPI and net banking payments.
Moreover, manual calculation of Foreign-Exchange Rates (FX Rates) and TCS (Tax Collected at Source) makes it prone to errors.
There is NO digital process. Neither the destination management companies can integrate with the ADs which would take the customers to the payment gateway directly.
Travel & destination management companies as well as their customers look for an effortless process. So, Cashfree Payments is here to offer its paperless one-time as well as transactional KYCs for them.
Why Should DMCs & TAs Choose Cashfree Payments for Cross-Border Payments?
Well, we have mentioned the challenges that TAs and DMCs face when it comes to cross-border payments. To tackle these transactional issues related to LRS for travel and other purposes, Cashfree Payments came up with its outward remittance solution.
If you are wondering, why should you choose us, we will tell you why-
100% Digital
Cashfree Payments’s LRS flow is 100% digital. Thus, we save the time and efforts of DMCs/TAs as well as of their customers for offline verification and physical visits to the bank.
Multiple Modes of Payment
Our outward remittance solution enables payments through popular methods. Therefore, TAs and DMCs integrating with us can let their customers remit through their preferred mode of payment among multiple options. We process the industry-first UPI payments and net banking along with NEFT and RTGS.
Cashfree Payments We have 38+ bank partnerships for net-banking TPV (third-party verification) flow to verify the remitter’s bank account details.
To add to it, Cashfree Payments’s LRS solution enables payments through all banks, which means senders need not be account holders with an AD bank.
Easy Integration with One-time Set-up
TAs and DMCs can integrate with Cashfree Payments to use our LRS solution. Start with Cashfree’s No-code solution or integrate with our API.
Cashfree Payments supports a one-time setup for repeat payments of outward remittances via eNach and UPI Autopay.
Easy Tracking of Payments with Real-time Status
We don’t leave you clueless after the payment is done. Travel consultancy businesses and DMCs can get real-time status of LRS remittances. We provide instant confirmation of payment processing that can the travel agents can pass on to their customers.
Real-time Calculations of Currency Conversion and TCS
As mentioned above, the manual calculation of taxes or foreign exchanges in the traditional LRS approach leads to errors. But we calculate using the Smart FX calculator before the remittance is made.
We complete payment only after the currency conversion.
Likewise, we do the real-time calculation of TCS (Tax Collected at Source) before remittance. The TAs and DMCs must note that the TCS on LRS has undergone changes this year, that is, the FY 2023-24.
The Union Budget 2023 announced new updates on taxes wherein the taxes on travel-related outward remittances has been increased from 5% to 20% without any threshold limit.
Read more to know the updates!
Other than what was discussed above, the outward remittance solution by Cashfree Payments provides a seamless flow of money across borders in an RBI-compliant manner. Moreover, we are available 24×7, unlike the ADs and banks that have fixed timings.
Read here to know more about why the LRS solution by Cashfree Payments is a better alternative!
Wrapping Up
While the blog highlights how travel agencies, destination management companies, and other travel and hospitality service businesses can use our LRS solution, we are NOT limited to that.
You can expand any kind of business with our payment gateway and use our outward remittance solution for foreign remittances by collecting payments in INR via popular payment modes.
From trading and investment businesses to immigration consultants, all can use our platform. Needless to say, we have tailor-made solutions for education consultants as well.
