The blog highlights the various ways that Indian businesses can receive international payments!

Globalisation has revolutionised the business landscape across industries, eliminating international boundaries. It has created a level playing field for businesses to thrive in the international markets. Indian businesses have benefited greatly from factors such as modern trade arrangements and the growth of marketplaces. However, a key catalyst of this growth and success is technology.

Technology has played a pivotal role in facilitating effective communication, simplified logistics, and most importantly, seamless payment methods between Indian merchants and their global clients. With advanced technology, receiving digital payments in India has become remarkably simplified. However, there still exists a gap in understanding how to choose and utilise payment solutions that cater to specific business needs.

In this blog, we delve into various ways available to Indian businesses for receiving international payments. We will also dig into the crucial factors that businesses should consider while selecting an inward remittance partner. These insights will help businesses make informed decisions and maximise their potential in the global marketplace.

Top 3 Ways to Receive International Payments in India

As a business in India, there are several ways to receive international payments. These include multi-currency accounts, wire transfers, and payment gateways. The method you choose should depend on your specific business needs.

1. Multi-Currency Accounts

A multi-currency account is a type of bank account that allows businesses to perform financial transactions in several currencies. In India, opening a multi-currency account enables you to receive payments from international clients in different currencies. You can hold and manage these currencies within the same account. This helps to simplify the process of receiving international payments as it eliminates the need for separate bank accounts for each currency. This mode is especially popular among large and growing enterprises. Wondering why? Well, for its ability to mitigate currency exchange risks, providing them with more control over their foreign exchange transactions.

2. Wire Transfers

Wire transfers are electronic transfers of funds between two bank accounts, especially international transactions.

With wire transfers, the sender authorises their bank to transfer funds from their account to the recipient’s bank account. The international fund transfer goes electronically through a network of correspondent banks. It can take a few business days to process, depending on the banks involved and the destination. You can receive the wire transfers using your bank account. Hence, there is no requirement to sign up on any additional platform.  In India, wire transfers are a popular method for small and medium-sized businesses (SMEs) to receive international payments, although the processing fee can be on the higher side for certain banks and institutes. 

3. Payment Gateways

International payment gateways are a popular method for businesses of all sizes to receive international payments. An online payment gateway acts as a middleman between businesses and customers, ensuring that transactions are secure and efficient. In an e-commerce environment, especially in B2C scenarios involving online checkouts, a Payment Gateway is a necessary component to ensure secure and efficient transactions. A payment gateway is a necessary mode for merchants to employ if they want to receive cards and alternate modes of payment like Paypal. 

When a customer makes a payment, the payment gateway securely captures the payment information. It then transmits the information to the payment processor or acquiring bank. The payment processor then communicates with the customer’s issuing bank to validate and authorise the payment. Once the payment is approved, the payment gateway relays the information back to the merchant, indicating a successful transaction. 

Payment gateway platforms are fast, secure, and user-friendly for both the business and the customer. Using online payment gateways eliminates the need for complicated paperwork, making payment processing more efficient. Most importantly PGs are necessary for e-commerce stores that enable online checkout.

If you are an emerging SME in India engaged in exporting, freelancing, e-commerce, or digital services, wire transfer might prove to be the optimal choice for receiving international payments, given its favourable attributes in terms of cost, convenience, and settlement time.

A Comparision of 3 Ways to Receive International Business Payments

Here’s a quick comparison of three methods through which you can receive international payments in India. If you are an emerging SME in India engaged in exporting, freelancing, or digital services, wire transfer might prove to be the optimal choice for receiving international payments, given its favourable attributes in terms of cost, convenience, and settlement time.

The 3C Method of Evaluating Inward Remittance Platforms in India

Choosing the right inward remittance platform in India is of paramount importance. It can make all the difference when it comes to receiving international payments efficiently and cost-effectively. While individual business needs may vary, there are three critical factors to evaluate when assessing potential payment partners in India. We call this the 3C method. 

1. Coverage

Assess the remittance partner’s network to ensure that it covers a wide range of currencies and countries. A partner with a broader geographical reach will allow you to receive payments from a broader range of international customers and partners. The extent of coverage can directly impact the number and ultimately the overall value of international payments you can accept.

2. Compliance

Verify that the solution offered by your remittance partner adheres to all regulatory requirements. Ensure that it follows anti-money laundering (AML) and know-your-customer (KYC) regulations, along with providing necessary documentation and transparency. Your partner should also issue an e-FIRC no later than 1 working day after a payment is credited as it is important for regulatory compliance and tax purposes.  

Related Read: Know more about e-FIRC (Electronic Foreign Inward Remittance Certificate)

3. Cost

Do consider the processing fees that the remittance partner charges for transactions/receiving international payments. In some cases, it can be as high as 3-4%. Also, watch out for hidden charges and forex markups. It is critical to balance the cost with the quality of service provided. This ensures that your business receives complete value for money.

By following the 3C approach, businesses can evaluate their remittance partner. They can choose the one that meets their unique requirements effectively and efficiently, enabling successful cross-border payment collections.

Popular Platforms for Collecting International Payments in India

If you are an Indian freelancer, an exporter, or a service provider conducting business with clients abroad, you may have interacted with at least one of the platforms listed below while receiving payments through international wire transfers in India. But how does one differ from the other and which one suits best for your business? Let’s deep dive. 

SWIFT

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is a cooperative messaging system that connects financial institutions worldwide, allowing them to exchange standardized financial messages securely. It is the most common way to receive an international wire transfer while receiving payments.

SWIFT payments, often referred to as SWIFT transfers or SWIFT remittances, are a type of bank transfer. They are a popular method for conducting cross-border money transfers between banks. It operates as a messaging system that follows a series of steps to complete a payment transfer. When a bank initiates a SWIFT transfer, it sends a secure message containing the payment details. It contains details such as the recipient’s account information and the transfer amount. The message is relayed through the SWIFT network to the recipient’s bank, ensuring the information remains confidential and tamper-proof. The recipient bank processes the payment and notifies the beneficiary, completing the transaction.

Being a widely-used system, it may involve higher fees and longer processing times compared to newer fintech-based money transfer services.

Related Read: Everything You Need to Know About SWIFT Payments

Transaction Fees:

The individual bank that you are using determines the SWIFT fees. It may be referred to as transaction fees or wire transfer fees, specifically for utilizing the SWIFT system.

Transfer fees for SWIFT can vary between banks and destinations as each bank sets its own fee for the service. Typically large banks and institutions charge 3-5% on the exchange rate for each transfer.

Settlement Time:

In most instances, a SWIFT transfer typically requires 2-5 business days to complete. The duration may vary depending on the origin and destination of the funds and the involvement of intermediary banks. Moreover, if there are any errors in the transfer details, the transaction may be canceled.

Paypal

Popular among freelancers and small businesses, Paypal is a widely recognized online payment platform. It enables them to send and receive money from foreign clients securely.

This platform requires you to set up a business account. You have to submit the necessary personal and bank details with proof to accept merchant payments, and you’re all set. To make a payment, your payers will also need a PayPal account. They will incur some charges for loading their wallets. It adds the international payments/fund transfers you receive from your clients abroad to your PayPal digital wallet. Then, it automatically transfers them to your bank account in 2-3 days. 

As a PayPal merchant, you can download a Monthly Digital FIRA from your PayPal Business account every month at no cost. 

Transaction Fees:

PayPal charges fees ranging from 1.90% to 3.49% plus a fixed fee per transaction. Additionally, they charge up to 4% markup on the wholesale exchange rate, summing up to 7% transaction fees depending on the transaction amount for transaction processing and currency conversion. 

Settlement Time:

After linking your bank account to PayPal, you can opt for a standard transfer of your balance. It typically takes 2-3 days to get debited to your bank account.

For quicker access to your funds, you have the option to move money from your PayPal account to a card or your linked bank account within minutes. However, this service incurs a fee of 1.5% of the transfer amount.

If you choose to transfer funds from PayPal using a check, there will be a fee of 1.50 USD. However, if you are in India, it may take significantly longer to receive the check in the mail, up to 45 days.

Payoneer

Payoneer is a payment platform that businesses use to request payment from their overseas customers. It is also quite a popular option among freelancers, international businesses and users of e-commerce marketplaces. Payoneer supports USD, EUR, GBP, CAD, AUD, JPY and CNH. In addition, conversion to CZK, PLN, RUB and VND is available for tax payment purposes (subject to availability).

They provide Global Payment Service (GPS) by assigning users a virtual bank account in multiple countries. Users can pay and receive money as if the transactions occur in local banks. In countries where users cannot establish local accounts, Payoneer can facilitate payments via wire transfer.

Payoneer issues Digital FIRCs to their users in India at the completion of every transaction, at no additional cost. (FIRC = Foreign Inward Remittance Certificate)

Transaction Fees:

 When using Payoneer’s platform to transfer funds to your bank account, there is a $1.50 fee per transaction. For transfers involving non-local currencies, a fee of 2% plus a currency conversion fee applies.

If you decide to utilise the Payoneer MasterCard for currency conversions, a charge of 3.5% will be applied. However, transferring funds between Payoneer accounts incurs a lower fee of 0.5%.

While Payoneer doesn’t have a monthly subscription fee, it’s essential to be aware that there’s a $29.95 fee for every 12 months of account inactivity.

Settlement Time:

Once you initiate a deposit to your bank account in India through Payoneer, the process typically takes 2 to 5 business days for the funds to arrive after you receive the confirmation email.

Wise (Formerly, Transferwise)

Wise⁴ is a rapidly growing global payments platform available in over 40 countries. Unlike traditional banks, Wise utilizes its own payment network to enhance efficiency, reduce expenses, and expedite money transfers. One of its key features is the use of the real mid-market exchange rate for all currency conversions, ensuring no markups and offering transparent, low fees. Additionally, Wise is fully regulated and authorized by the respective regulatory bodies in all the regions it operates.

For users in India, you require a PAN card and proof of address. Once registered, individuals can conveniently send money online through the Wise app, making international transactions more accessible and hassle-free.

Transaction Fees:

Wise applies a conversion fee that varies depending on the currency pair involved in the transaction.

For Indian users who receive US dollars through domestic or SWIFT wires, a fee of $4.14 is applicable per transaction.

When receiving payments, Wise charges 1.94 GBP and provides an eFIRC for each transfer, which will be available in your inbox.

Regarding taxes, Wise only applies GST on the Wise fees. It amounts to 18% of the total conversion fee and eFIRC fee combined. This ensures transparency in the fee structure for Indian users.

Settlement Time:

On the Wise platform, the speed of money transfers varies based on the payment method chosen. Card payments are usually instant, whereas bank transfers, especially SWIFT transfers, can take longer. When setting up a transfer on the Wise platform, it informs you of the estimated duration for each payment method.

With Wise transfers, the time it takes to receive money ranges from a few seconds to up to 5 business days. It depends on the specific currency involved in the transfer.

Cashfree Payments

Global Collection by Cashfree Payments stands as one of India’s leading payment platforms. It boasts a user base of 30000+, encompassing freelancers, exporters, e-commerce merchants, and service providers across the country. By leveraging Cashfree, users gain access to dedicated local accounts in major currencies such as USD, GBP, EUR, AUD, and CAD. This allows clients to make payments through local transfers, resulting in cost and time savings.

Even if your clients wish to pay you in currencies not covered by the mentioned ones, Cashfree offers a solution in the form of a Global SWIFT Account. With this, you can accept payments in over 30 additional currencies.

Once an international payment is received, Cashfree promptly converts the funds into INR and debits your bank account accordingly. Furthermore, they assign a dedicated account manager to each user and ensure a hassle-free process. They also issue an e-FIRA to you within one working day of the payment being credited. The best part is, that there are no additional costs or the need for follow-ups at your end.

Processing Fees:

Cashfree provides a transparent and cost-effective solution for receiving cross-border payments, free from any hidden fees. The charges for receiving payments are based on the currency in which you receive them. For major currencies like USD, CAD, EUR, AUD, and GBP, Cashfree enables clients to pay through local payment rails. This not only expedites the process but also keeps the transaction costs within the range of 1% to 1.5% based on the volume of transactions. This local payment approach significantly benefits users by providing faster transfers and reducing fees when compared to traditional SWIFT transfers.

Even for currencies beyond the mentioned major ones, Cashfree remains an economical solution. The transaction fees for these other currencies are considerably lower than what you might encounter with conventional SWIFT transfers. This further contributes to a seamless and cost-efficient experience for users.

By offering competitive prices and leveraging local payment networks, Cashfree aims to enhance the overall cross-border payment process. International payments become easier and more accessible for businesses in India to receive funds from clients all around the world.

Settlement Time:

The speed at which transactions are settled, typically within 2 days or even less, depends on two main factors: the currency involved in the transaction and the payment method used by the sender.

Conclusion

Selecting the right method to receive international wire transfers in India holds significant importance for your business. When making this decision, several crucial factors should be taken into account to ensure a seamless experience. These factors include the ability to accept multiple currencies in your local account, faster transaction processing times, competitive pricing devoid of hidden costs, and adherence to relevant regulations.

For emerging SMEs in India, it becomes particularly crucial that the chosen payment platform not only fulfills their current business needs but also has the potential to support their long-term growth. Additionally, the platform should facilitate business expansion beyond borders while ensuring compliance with Indian regulations.

Cashfree Global Collections is one such platform on which businesses can confidently expand their operations globally. At the same time, they can benefit from competitive pricing, smooth transaction processing, and compliance with Indian regulatory requirements. With dedicated global collections accounts, businesses can receive payments in different currencies, resulting in up to 50% savings on international wire transfers compared to other platforms.