Accepting International Payments in India for Indian Exporters
3 minutes read
As the world watches in awe at the Indian economy’s steady rise, it’s no surprise that businesses are cashing in on the gains. But what happens when the money you’ve earned is trapped in another country? Fear not, for the heroes of the international finance world have arrived to save the day. So, if you’re an Indian exporter looking to get paid by overseas clients, you’re in luck! In this article, we’ll take you through the most popular international payment methods to bring home the bacon, along with their pros and cons.
Credit cards
Credit cards are undoubtedly a popular payment method among Indian exporters for receiving international payments. They are not only fast but also offer convenience to both parties.
However, this method also has its drawbacks. First, the transaction fees associated with credit card payments can run as high as 2-4%, significantly impacting the exporters’ profit margins. The payment processing time may also take several days, potentially disrupting the exporting business’s cash flow.
Credit card companies also have strict security protocols and fraud detection measures to prevent unauthorised transactions. While this grants added security, credit card transactions are often subject to high failure rates (~20%), resulting in a loss of customer trust.
PayPal
Indian exporters increasingly rely on online platforms such as PayPal for international payments. They can send and receive money across borders in just a few clicks.
One of the significant advantages of using PayPal is the convenience it offers. The exporter need not worry about the hassle of visiting a bank or dealing with complex paperwork.
It is crucial to remember compatibility with different currencies may vary, which may pose a challenge for those handling less prevalent currencies. Moreover, similar to credit cards, PayPal often imposes steep transaction fees (typically 3-5% for PayPal), which may impact the exporter’s earnings.
Therefore, while PayPal is an excellent option, comparing the fees and currencies it supports is essential.
Payment gateways
Among the many ways to transfer funds internationally, one of the more popular methods is payment gateways like Skrill and Stripe. As an added convenience, these gateways are integrated by e-commerce platforms like Amazon, eBay, and Alibaba, which already have millions of users. Payment gateways allow sellers to receive payments from buyers across the globe and transfer funds across borders with ease.
The funds are usually deposited into the seller’s account within a few days, which is a significant advantage.
However, payment gateways may have limitations regarding the international payment methods they support, and currency conversion fees can add up quickly (~2%), which may be a disadvantage for some.
Wire transfer – SWIFT
Wire transfer via the SWIFT network is a tried and tested method that’s been around for decades. It’s a popular choice for Indian exporters who must receive international payments from overseas buyers.
One of the advantages of a wire transfer is that it’s a reliable and secure way to transfer funds.
It is important to note that it can be an expensive option for both the sender and receiver. In addition to a transaction fee of 1-2%, there is also an additional fixed fee that can add up to thousands of rupees per transaction, depending on the bank.
Moreover, there may be hidden banking fees that can further increase the cost. The transfer process can also be lengthy, taking several days to complete.
Despite the high cost and hidden fees, wire transfer via SWIFT remains a popular choice for Indian exporters who prioritise security and reliability over speed and cost.
Virtual multi-currency accounts
Increasingly, Indian exporters are turning to multi-currency accounts to receive international payments from multiple countries. These virtual accounts enable exporters to hold and manage funds in different currencies, which can prove helpful for businesses that operate globally.
Traditional banks usually charge high transaction fees and take several days to process international payments.
In contrast, virtual multi-currency accounts provide a faster and more cost-effective alternative.
Virtual account providers can also double up as OPGSP or Online Payment Gateway Service Providers. This enables them to collect international payments and convert them to INR through a seamless, integrated process. These accounts, therefore, offer better exchange rates, resulting in significant savings for the exporting business.
With Winvesta, businesses and individuals can open multi-currency accounts with a local US, UK, Canada and SEPA IBAN. Receive payments from 180 countries in 34+ currencies faster and cheaper.
Withdraw to INR is as less as 1 day at rates starting at 0.99%
Comparison at a glance
| Winvesta MCA | Credit Card | PayPal | Payment Gateway | SWIFT | |
|---|---|---|---|---|---|
| Payer Fee | 0% | 3% | 0% | 0% | $30-$50 |
| Receipt Fee | 0.99% | 1.5%-3% | 4.4% + $30 | 3%-4.5% | $20-$40 |
| FX spread | 0% | 3%-5% | 3% | 2% | 3%-5% |
| Withdrawal to India | $0 | $0 | $0 | $0 | $0 |
| Total | 0.99% | 7.5%-11% | 7.4% + $30 | 5%-6.5% | upto 5% + $90 |
Conclusion
In today’s globalised economy, receiving international payments is integral to doing business. As this article highlights, Indian exporters have a range of payment methods available to them, each with its pros and cons.
It’s increasingly essential to consider factors like speed, cost, security, and convenience before choosing the most suitable option.
However, with the emergence of multi-currency accounts like Winvesta, businesses can receive payments from around the world faster and at a lower cost, allowing them to focus on what they do best – driving business growth and success.
Open your Winvesta account today!
