How to Accept Payments from Indian Customers Without a Local Entity

Yes, foreign businesses can accept INR and UPI payments from Indian customers without opening a local company by using an RBI-authorized PA-CB (Payment Aggregator Cross-Border) payment provider like Cashfree. This allows international merchants to collect payments via UPI, RuPay, cards, and Net Banking while settling funds in USD, EUR, GBP, and other currencies.

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Losing customers from India even after good traffic, signups, and a strong purchase intent? Well, you are not alone in this.

Several businesses with a customer base from India find it the hard way, but their customers often abandon the checkout page, as when they try to make a payment, the transaction fails.

So even when there is demand, businesses cannot convert that demand and payment infrastructure mismatch is the biggest concern here.

With India on the way to becoming one of the fastest-growing digital consumer markets, your business needs an evolved payments ecosystem. After figuring out how to sell to Indian customers from abroad, you now need to know how to accept payments from Indian customers without a local entity.

Why is India’s Payment Ecosystem Unlike Any Other Market?

India’s digital payment system is built to handle the volume of transactions, which makes it fundamentally different from most global markets. Within this system, the most common failure point is not pricing or logistics, but payment compatibility. 

For a foreign merchant, enabling Visa and MasterCard is enough to accept payments from Indian customers. But that’s not the case. 

1. United Payment Interface (UPI)

UPI is not just another payment option in India. For many Indian consumers, it has become the default way to pay online, and it began in 2016 with the National Payments Corporation of India (NPCI). For Indians, UPI is not an alternative but the default payment method. It plays a role similar to cards in the US or iDEAL in the Netherlands. 

This payment method allows real-time bank-to-bank transfers through applications like;

1. GooglePay
2. PhonePe
3. Paytm

No card details, no OTP – users just need to enter the amount, authenticate the payment with UPI PIN and in some supported flows, biometric authentication is also available. 

So, one of the reasons why foreign businesses ask why my India payments are failing on my international website is that they have not enabled UPI. Therefore, if you want to accept UPI payments as a foreign company, your payment stack must connect to India’s domestic payments ecosystem rather than relying only on international card rails.

2. RuPay Card Network – Often Ignored by Global Merchants

Where Visa and MasterCard are foreign-born, RuPay is an Indian-made card payment network system. Launched in 2012 by the NPCI, RuPay is the local alternative to Visa and MasterCard. 

Today, RuPay has seen large-scale issuance in India, with public references citing over 750 million RuPay cards issued. Not adding RuPay to your payments infrastructure means missing out on a huge potential customer base. 

If your checkout only supports Visa or Mastercard, you are excluding a meaningful portion of Indian consumers before the transaction even begins.

3. RBI-Mandated OTP Transactions

The Reserve Bank of India (RBI) oversees all financial systems in India, and as per the central bank’s requirements, OTP is required for authentication. 

Indian digital payments are subject to RBI authentication requirements. For online card payments, this means Additional Factor of Authentication (AFA)/2FA, often implemented through OTP-based flows, though newer frameworks allow other approved authentication factors.

Some international websites see materially higher failure rates on Indian transactions when their checkout is not optimised for local payment methods and authentication flows.

These are some of the core payment behaviours foreign merchants need to account for. Along with this, there’s also Net Banking and EMI options, which customers also expect to see on the payments page.

What are the Key Entities Involved in India’s Payment Ecosystem?

Entity	Role in India’s Payments Ecosystem
RBI (Reserve Bank of India)	India’s central bank and payments regulator
NPCI (National Payments Corporation of India)	Operator of UPI and RuPay
UPI (Unified Payments Interface)	Real-time bank-to-bank payment network
RuPay	India’s domestic card network
PhonePe, Google Pay, Paytm	Major UPI payment applications
AFA / OTP	RBI-mandated additional authentication for card payments
Visa / Mastercard	International card networks with limited India-specific optimization

What are the Two Ways to Accept INR Payments as a Foreign Business?

1. Incorporation Route

Until recently, many foreign businesses looking to collect INR payments from Indian customers often considered local incorporation as the default route.

1. Incorporate an Indian Private Limited company under the Companies Act, 2013
2. Appoint local directors
3. Open an Indian bank account
4. Register for GST
5. Hire a Chartered Accountant (CA) for ongoing compliance
6. Apply to a domestic payment aggregator for merchant onboarding

Following this process, it can take 3 to 6 months before you can start collecting payments. But this method also creates operational overheads like GST filings, compliance reporting, accounting, and more. 

For international brands that are only testing the Indian market, this method drains resources, time, and effort without any ROI guarantee. 

2. Payment Aggregator-Cross Border (PA-CB) Route – Recommended

Since 2023, the Reserve Bank of India has formally enabled the PA-CB (Payment Aggregator Cross-Border) framework under FEMA (Foreign Exchange Management Act). 

This framework allows RBI-licensed PA-CB providers to onboard foreign merchants directly, without requiring local incorporation. 

Under this model, businesses selling to Indian customers can;

• Accept INR payments through UPI, RuPay, Mastercard, and Net banking. 
• Receive and settle payments in USD, EUR, GBP and other foreign currencies. 
• Get FEMA compliance. 

Consolidated under the RBI (Regulation of Payment Aggregators) Directions, 2025, this framework governs all cross-border digital payments between Indian customers and international merchants. 

Here’s how it works:

1. An Indian customer pays a foreign merchant in INR.
2. The payment is processed by an RBI-licensed PA-CB provider.
3. The INR funds move into an InCA (Inward Collection Account).
4. The InCA is maintained with an Authorized Dealer Category-I (AD-I) bank.
5. The AD bank performs foreign exchange conversion.
6. The converted amount is remitted to the foreign merchant’s overseas bank account in USD, EUR, GBP, or another supported currency.

Under RBI’s 2025 PA Directions, PA-CB transactions are capped at ₹25 lakh per transaction. 

Cashfree is a PA-CB provider, which means when you partner with us, you don’t need to be an Indian company, have an Indian bank account, or have GST registration. 

The PA-CB provider handles the regulation part and provides the payment infrastructure layer, which includes;

• Merchant KYC (Know Your Customer) and CDD (Customer Due Diligence)
• FEMA compliance workflows
• Purpose-code tagging for remittances
• FX conversion through AD banks
• e-FIRC (Foreign Inward Remittance Certificate) generation for transaction records

Local Entity vs PA-CB Comparison

Feature	Local Entity Route	PA-CB Route
Indian Company Required	Yes	No
Indian Bank Account	Required	Not required
GST Registration	Usually required	Depends on business model
Time to Go Live	3–6 months	As fast as 48 hours
UPI Support	Yes	Yes
Compliance Burden	High	Lower
FX Settlement	Manual setup	Managed by provider

Role of Each Entity in Building Your Payment Infrastructure

Entity	Role
RBI (Reserve Bank of India)	India’s payments regulator
PA-CB	Framework governing cross-border payment aggregation
FEMA	India’s foreign exchange regulatory law
InCA (Inward Collection Account)	Account where INR funds are collected before FX conversion
AD Bank (Authorized Dealer Bank)	RBI-authorized bank handling foreign exchange conversion
e-FIRC	Proof of inward foreign remittance
KYC / CDD	Merchant identity verification and compliance checks
Cashfree Payments	RBI-licensed PA-CB provider

How Money Flows from the Customer’s Account to your Bank Account?

Foreign merchants often hesitate to enter India because they cannot clearly see how funds move across borders compliantly. The PA-CB model solves this by creating a regulated settlement chain from the Indian customer to your overseas account. Here’s how the process works;

1. Payment Initiation: An Indian customer makes the payment using UPI, RuPay, Visa, Mastercard, or Net Banking, and this transaction is processed in INR.
   
2. Cashfree Captures the Transaction: Cashfree, working as an RBI-licensed PA-CB provider, processes the payment and routes the funds into an Inward Collection Account (InCA). This account is maintained with an Authorized Dealer Category-I (AD-I) bank in India. 

3. FX Conversion: Once funds are added to the InCA, the bank will convert INR into your preferred settlement currency, and here, Cashfree does not take any FX Markup fees from overseas businesses on the conversion process.
   
4. Overseas Settlement Completes: The converted funds are remitted to your overseas bank account through SWIFT/wire transfer infrastructure. Most eligible merchants receive settlement on a T+1 business day basis.
   
5. Documentation: Every settlement includes an e-FIRC (electronic Foreign Inward Remittance Certificate), which is the official proof of inward foreign remittance and is needed for compliance and accounting purposes under FEMA. 

How to Sell to Indian Customers from Abroad with Cashfree?

Cashfree has made an easy and business-friendly onboarding process for foreign merchants. Within 48 hours of onboarding, you can start accepting payments from Indian customers. 

1. Prepare Documentation

Collect all documents, including;

• Business registration certificate from your home country
• Proof of business address
• Director or authorized signatory ID (passport or national ID)
• Overseas bank account details for settlements
• Website or app URL with a clear product or service description

2. Complete Merchant Onboarding

Sign up through Cashfree’s international merchant onboarding flow as we directly onboard foreign entities under the RBI PA-CB framework. For this process, you don’t need to be an Indian co-founder, local director, or even an Indian entity. Cashfree conducts merchant KYC (Know Your Customer) and CDD (Customer Due Diligence) as required under RBI regulations.

3. Choose your Integration Method

Integration method depends on your technical setup, including;

1. No-Code: Payment links and payment pages are added for instant INR collection. 
2. E-Commerce Plugins: Integrate your Shopify and Magento store with Cashfree. 
3. REST APIs: Completely customized checkout integration supporting all payment methods, including UPI app launch, payment links and UPI mandates. 

4. Testing and Go-Live

We allow businesses to test transactions inside a Sandbox environment before full-scale production deployment. We deliver a robust payments system allowing businesses and merchants to go live within 48 hours using a 99.99% uptime SLA backed infrastructure. 

5. Operations Management

With Cashfree, you get an operations dashboard where you can track payments, see settlement visibility, manage refunds, reconcile exports, and download e-FIRC documentation. 

What Does it Cost to Accept Payments from Indian Customers Without a Local Entity?

Transparency in pricing matters because cross-border payments have several hidden costs inside FX spreads and settlement delays. Payment system providers charge businesses based on business category, payment method mix, and processing volume. 

Out of all, FX conversion is the most important cost. Payment providers like Cashfree offer transparent FX on settlement, and the conversion is handled at the prevailing interbank market rate through RBI-authorized AD-I banking partners. This is significant for an international business because many cross-border payment providers quietly add 1–4% FX markup inside the conversion rate itself.

Hidden Cost Checklist: Questions to Ask Any Provider:

• Is there an FX markup beyond the published transaction fee?
• Are settlement delays contractually built into payouts?
• Is e-FIRC documentation included or billed separately?
• Are refunds charged as additional transactions?
• Are there minimum processing commitments or monthly platform fees?

Conclusion

The modern era of India’s payment ecosystem does not require foreign businesses to choose between compliance and speed. 

With zero local incorporation, without opening a bank account, or without building a separate entity, overseas businesses can start accepting payments from Indian customers. 

The RBI’s PA-CB framework and the payment providers authorized to use this framework allow cross-border transactions while staying compliant. 

Now, your customers can pay without any issues because they can pay through UPI, the most common digital payment method used in India today. 

Get started with Cashfree’s international merchant onboarding today and start accepting payments within the next 48 hours. 

FAQs

Can a foreign company accept UPI payments without a local entity in India?

Yes, foreign companies can accept UPI payments by either registering as a local entity or by partnering with an RBI-authorized PA-CB compliant provider like Cashfree. The PA-CB route allows international businesses to accept payments in their local currency without registering their firm in India. 

What is the RBI PA-CB framework?

The PA-CB (Payment Aggregator Cross-Border) framework allows licensed payment providers to process cross-border transactions between Indian customers and overseas businesses compliantly.

Do I need to register for GST in India to sell to Indian customers?

PA-CB does not require you to incorporate locally just to collect payments. However, GST or other tax obligations may still apply depending on what you sell, your operating model, and applicable Indian tax rules. Businesses should consult a tax advisor.

Do I need an Indian bank account to collect payments from India?

No. With a PA-CB provider, payments are collected in INR and settled directly into your overseas bank account in your preferred currency.

Which Indian payment methods should international businesses support?

International businesses should support:

• UPI
• RuPay
• Visa
• Mastercard
• Net Banking
• EMI options

What currencies can foreign businesses settle in?
Most PA-CB providers support settlements in:

• USD
• EUR
• GBP
• SGD
• AED

and other major currencies.

How long does it take to start accepting Indian payments as a foreign company?

Taking the old route, where you must first incorporate your company in India, get a GST number, get all permissions, and get FEMA compliance, means spending at least 15 to 20 days. With Cashfree, eligible merchants can go live quickly, subject to documentation, KYC/risk checks, integration readiness, and approval. 

Is there a transaction limit for cross-border payments in India?

Under the Regulation of Payment Aggregators) Directions, 2025, the maximum transaction value permitted for inward cross-border payments is ₹25,00,000 per transaction. Any amount above this will require alternative methods as stated under the FEMA regulations.