Third-party payments in export: FEMA 23(R) / 2026 compliance guide
Your invoice names ABC Technologies, London. The payment arrives from XYZ Global Holdings, Amsterdam. Your AD bank flags the mismatch. Your EDPMS entry stays open.
This is a situation Indian exporters face regularly. And yet most have never been clearly told what the rules say, what documents to maintain, and exactly what to tell their bank when it happens. Here is a clear, practical breakdown.
What is a third-party payment in an export transaction?
A third-party payment occurs when the entity that pays you is different from the entity named on your invoice. You invoiced one company. The money arrived from another.
This is not a legal irregularity. It is a commercially normal result of how multinational groups and global businesses operate. But it creates a payer-name mismatch that requires explanation and documentation under Indian foreign exchange law. The underlying trade is genuine, the goods left India, or the services were delivered, but the paying entity does not match the invoice party.
Why third-party payments happen
Group treasury centralisation
Many multinationals route all outgoing payments through a single treasury entity, often based in the Netherlands, Singapore, Ireland, or the UAE. Your client in the UK has awarded the contract. An Amsterdam-based group treasury company sends the wire. Both entities belong to the same corporate group but are legally distinct companies.
Parent or subsidiary relationships
A subsidiary in Australia signs your service agreement and raises a purchase order. The parent company in the United States processes and remits the payment. Your invoice names the subsidiary. The SWIFT message comes from the parent.
Platform and marketplace payments
If your client sources your services through a procurement platform or digital marketplace, the platform often collects from the end buyer and pays you directly. The platform becomes the third-party payer by design, even though your commercial relationship is with the buyer.
What FEMA 23(R) / 2026-RB says
The RBI notified FEMA 23(R) / 2026-RB — the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 — on January 13, 2026. These regulations come into force on October 1, 2026, superseding FEMA 23(R) / 2015-RB.
Regulation 8 addresses third-party payments directly. It states that an Authorised Dealer may permit third-party receipts and payments for export and import transactions, provided the Authorised Dealer is satisfied with the bona fides of the transactions.
That phrase, satisfied with the bona fides, carries the entire compliance burden.
The regulation does not prescribe a fixed document checklist. It gives the AD bank discretion to decide whether the payment arrangement makes commercial sense. The exporter must proactively explain the relationship between the invoice party and the actual payer. The burden of establishing bona fide intent rests with the exporter, not the bank.
Regulation 4(2) adds a further obligation. It requires that AD banks satisfy themselves of the genuineness of a transaction before crediting the exporter's account, and simultaneously close or update the corresponding EDPMS entry. A third-party payer name that does not match the invoice will prevent automatic entry closure without the right documentation from the exporter.
The AD bank's role in practice
When a payment arrives from a party not named on your invoice, your AD bank may accept it, query it, or hold the credit pending clarification. The outcome depends on what you have already communicated to the bank.
If you notify your bank before the payment is sent, or within a day or two of receipt, you are in a proactive position. If the bank discovers the mismatch on its own, you are reactive, and reactive situations take longer to resolve.
Your AD bank looks for three things: who the actual payer is and their relationship to your invoice party; that the export was genuine; and that the payment chain raises no AML or sanctions concern. Your role is to give the bank what it needs to make that assessment quickly.
Documentation to maintain
FEMA 23(R) / 2026-RB does not prescribe a specific document format for third-party payment situations. In practice, your AD bank will typically expect the following.
A relationship letter or declaration from your invoice party. This should confirm in writing that a named third party will make payment on their behalf, specifying the third party's full legal name, country, and the reason for the arrangement, and be signed on the company letterhead.
The original export invoice. This must name the actual buyer, not the third-party payer. Your invoice party and your actual payer should be clearly distinct across all your documents.
The underlying contract or purchase order. If your agreement mentions that payment will be routed through a group entity or treasury function, that clause is your strongest supporting evidence. Flag it clearly when sharing it with your bank.
The SWIFT confirmation of the inward remittance. This shows the sender's name, bank details, and transaction reference, which your bank needs to independently trace and verify the payment source.
Business relationship evidence. For first-time or high-value arrangements, some AD banks may request a corporate structure chart or a group entity declaration confirming the connection between the third party and your invoicing party.
Email communications. If your client confirmed the payment arrangement in writing before the wire was sent, save those emails. They provide independent evidence that the arrangement was agreed in advance, which significantly strengthens your position with the bank.
EDPMS entries and why open entries create risk
Every export transaction generates an entry in EDPMS, the RBI's Export Data Processing and Monitoring System. Your AD bank must mark off each entry once payment is received and matched to the corresponding invoice.
If a payment arrives from an unrecognised party name and you have not explained the situation to your bank, the entry stays open. The money lands in your account. The EDPMS entry for that invoice remains unresolved.
An open EDPMS entry is not a paperwork delay. It is an active compliance obligation. Under Regulation 5 of FEMA 23(R) / 2026-RB, export proceeds are generally required to be realised within 15 months of the shipment date for goods or the invoice date for services. If an entry remains open beyond that window without a valid extension, it is treated as an unrealised export.
Unrealised export entries may invite regulatory action, including RBI notices, penalties under FEMA, and tighter scrutiny of future transactions.
For export invoices up to ₹10 lakh (goods or services), AD banks may close EDPMS entries upon the exporter's declaration confirming receipt of payment. Consolidated quarterly declarations are also accepted for multiple eligible invoices in this range. For larger transactions, proper invoice-level matching is required.
Understanding FEMA documentation obligations in full is critical for any Indian service exporter — our guide to FEMA documentation for Indian SaaS and recurring revenue businesses breaks down the recurring compliance requirements in detail.
What to do when a third-party payment arrives: Step by step
Step 1: Anticipate the situation before payment is sent
If you know your client pays through a group treasury or third party, contact your AD bank before the payment is initiated. Share the relationship letter and relevant contract clause at this stage. Banks handle proactive disclosures far more smoothly than reactive ones.
Step 2: Confirm the exact sender details with your client
Ask your client to provide the full legal name, country, and bank account details of the entity that will actually send the wire. Cross-check these against the incoming SWIFT message when the payment arrives.
Step 3: Notify your bank immediately on receipt
Contact your bank's trade finance or foreign exchange desk on the same day the payment arrives, or at the latest, the following business day. Provide the invoice, relationship letter, SWIFT confirmation, and a brief written explanation of the payer arrangement. Do not wait for the bank to come to you.
Step 4: Submit documentation for EDPMS closure
Your bank needs to link the inward remittance to a specific invoice in EDPMS. Provide the invoice number, export date, and any other reference that helps the bank complete the match. For service exports, the invoice reference is particularly important, as services do not carry a shipping bill number.
Step 5: Collect your e-FIRC
Once the bank processes the payment and closes the EDPMS entry, request a Foreign Inward Remittance Certificate (FIRC) or e-FIRC. This is your proof that the payment was received and regularised. File this alongside the relationship letter, contract clause, and SWIFT confirmation as a complete document set for that transaction.
If you collect international payments through Winvesta's Global Currency Account, your e-FIRC is issued digitally for every inward remittance, with no need to visit a bank. Your payment records, SWIFT references, and remittance details are available in one place, making it significantly faster to assemble the document set your AD bank needs.
Step 6: Formalise recurring arrangements
If your client will continue paying through the same third-party entity, ask for a standing relationship letter covering future payments and agree on a standard documentation process with your AD bank upfront. This removes the need to explain the same arrangement from scratch every time a payment arrives.
The payment structure you agree with your overseas client at the outset directly affects how smoothly you can manage these compliance situations later — read our post on choosing the right export payment terms for your Indian business for a practical decision framework.
What happens when things go wrong
Leaving a third-party payment unresolved creates a predictable chain of problems. The EDPMS entry stays open. As the 15-month realisation deadline approaches, your AD bank is required to follow up. If the entry ages beyond the deadline without resolution, it moves into the unrealised export category and may invite regulatory action.
Your response must be supported by documentation. If you cannot demonstrate the bona fide nature of the transaction, penalties may apply under FEMA. Where the third-party payer is from a jurisdiction your bank flags for AML or sanctions concerns, the remittance may also be held pending verification, and delayed responses make resolution harder.
Managing third-party payments is easier with the right collections account
The documentation process described in this guide is straightforward once your records are in order. Winvesta's Global Currency Account provides Indian exporters with dedicated USD, GBP, and EUR account details, digital e-FIRC issuance, and a payment history that maps directly to the documentation your AD bank requires for third-party payment situations.
Open your Winvesta account->
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.
Table of Contents
Your invoice names ABC Technologies, London. The payment arrives from XYZ Global Holdings, Amsterdam. Your AD bank flags the mismatch. Your EDPMS entry stays open.
This is a situation Indian exporters face regularly. And yet most have never been clearly told what the rules say, what documents to maintain, and exactly what to tell their bank when it happens. Here is a clear, practical breakdown.
What is a third-party payment in an export transaction?
A third-party payment occurs when the entity that pays you is different from the entity named on your invoice. You invoiced one company. The money arrived from another.
This is not a legal irregularity. It is a commercially normal result of how multinational groups and global businesses operate. But it creates a payer-name mismatch that requires explanation and documentation under Indian foreign exchange law. The underlying trade is genuine, the goods left India, or the services were delivered, but the paying entity does not match the invoice party.
Why third-party payments happen
Group treasury centralisation
Many multinationals route all outgoing payments through a single treasury entity, often based in the Netherlands, Singapore, Ireland, or the UAE. Your client in the UK has awarded the contract. An Amsterdam-based group treasury company sends the wire. Both entities belong to the same corporate group but are legally distinct companies.
Parent or subsidiary relationships
A subsidiary in Australia signs your service agreement and raises a purchase order. The parent company in the United States processes and remits the payment. Your invoice names the subsidiary. The SWIFT message comes from the parent.
Platform and marketplace payments
If your client sources your services through a procurement platform or digital marketplace, the platform often collects from the end buyer and pays you directly. The platform becomes the third-party payer by design, even though your commercial relationship is with the buyer.
What FEMA 23(R) / 2026-RB says
The RBI notified FEMA 23(R) / 2026-RB — the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 — on January 13, 2026. These regulations come into force on October 1, 2026, superseding FEMA 23(R) / 2015-RB.
Regulation 8 addresses third-party payments directly. It states that an Authorised Dealer may permit third-party receipts and payments for export and import transactions, provided the Authorised Dealer is satisfied with the bona fides of the transactions.
That phrase, satisfied with the bona fides, carries the entire compliance burden.
The regulation does not prescribe a fixed document checklist. It gives the AD bank discretion to decide whether the payment arrangement makes commercial sense. The exporter must proactively explain the relationship between the invoice party and the actual payer. The burden of establishing bona fide intent rests with the exporter, not the bank.
Regulation 4(2) adds a further obligation. It requires that AD banks satisfy themselves of the genuineness of a transaction before crediting the exporter's account, and simultaneously close or update the corresponding EDPMS entry. A third-party payer name that does not match the invoice will prevent automatic entry closure without the right documentation from the exporter.
The AD bank's role in practice
When a payment arrives from a party not named on your invoice, your AD bank may accept it, query it, or hold the credit pending clarification. The outcome depends on what you have already communicated to the bank.
If you notify your bank before the payment is sent, or within a day or two of receipt, you are in a proactive position. If the bank discovers the mismatch on its own, you are reactive, and reactive situations take longer to resolve.
Your AD bank looks for three things: who the actual payer is and their relationship to your invoice party; that the export was genuine; and that the payment chain raises no AML or sanctions concern. Your role is to give the bank what it needs to make that assessment quickly.
Documentation to maintain
FEMA 23(R) / 2026-RB does not prescribe a specific document format for third-party payment situations. In practice, your AD bank will typically expect the following.
A relationship letter or declaration from your invoice party. This should confirm in writing that a named third party will make payment on their behalf, specifying the third party's full legal name, country, and the reason for the arrangement, and be signed on the company letterhead.
The original export invoice. This must name the actual buyer, not the third-party payer. Your invoice party and your actual payer should be clearly distinct across all your documents.
The underlying contract or purchase order. If your agreement mentions that payment will be routed through a group entity or treasury function, that clause is your strongest supporting evidence. Flag it clearly when sharing it with your bank.
The SWIFT confirmation of the inward remittance. This shows the sender's name, bank details, and transaction reference, which your bank needs to independently trace and verify the payment source.
Business relationship evidence. For first-time or high-value arrangements, some AD banks may request a corporate structure chart or a group entity declaration confirming the connection between the third party and your invoicing party.
Email communications. If your client confirmed the payment arrangement in writing before the wire was sent, save those emails. They provide independent evidence that the arrangement was agreed in advance, which significantly strengthens your position with the bank.
EDPMS entries and why open entries create risk
Every export transaction generates an entry in EDPMS, the RBI's Export Data Processing and Monitoring System. Your AD bank must mark off each entry once payment is received and matched to the corresponding invoice.
If a payment arrives from an unrecognised party name and you have not explained the situation to your bank, the entry stays open. The money lands in your account. The EDPMS entry for that invoice remains unresolved.
An open EDPMS entry is not a paperwork delay. It is an active compliance obligation. Under Regulation 5 of FEMA 23(R) / 2026-RB, export proceeds are generally required to be realised within 15 months of the shipment date for goods or the invoice date for services. If an entry remains open beyond that window without a valid extension, it is treated as an unrealised export.
Unrealised export entries may invite regulatory action, including RBI notices, penalties under FEMA, and tighter scrutiny of future transactions.
For export invoices up to ₹10 lakh (goods or services), AD banks may close EDPMS entries upon the exporter's declaration confirming receipt of payment. Consolidated quarterly declarations are also accepted for multiple eligible invoices in this range. For larger transactions, proper invoice-level matching is required.
Understanding FEMA documentation obligations in full is critical for any Indian service exporter — our guide to FEMA documentation for Indian SaaS and recurring revenue businesses breaks down the recurring compliance requirements in detail.
What to do when a third-party payment arrives: Step by step
Step 1: Anticipate the situation before payment is sent
If you know your client pays through a group treasury or third party, contact your AD bank before the payment is initiated. Share the relationship letter and relevant contract clause at this stage. Banks handle proactive disclosures far more smoothly than reactive ones.
Step 2: Confirm the exact sender details with your client
Ask your client to provide the full legal name, country, and bank account details of the entity that will actually send the wire. Cross-check these against the incoming SWIFT message when the payment arrives.
Step 3: Notify your bank immediately on receipt
Contact your bank's trade finance or foreign exchange desk on the same day the payment arrives, or at the latest, the following business day. Provide the invoice, relationship letter, SWIFT confirmation, and a brief written explanation of the payer arrangement. Do not wait for the bank to come to you.
Step 4: Submit documentation for EDPMS closure
Your bank needs to link the inward remittance to a specific invoice in EDPMS. Provide the invoice number, export date, and any other reference that helps the bank complete the match. For service exports, the invoice reference is particularly important, as services do not carry a shipping bill number.
Step 5: Collect your e-FIRC
Once the bank processes the payment and closes the EDPMS entry, request a Foreign Inward Remittance Certificate (FIRC) or e-FIRC. This is your proof that the payment was received and regularised. File this alongside the relationship letter, contract clause, and SWIFT confirmation as a complete document set for that transaction.
If you collect international payments through Winvesta's Global Currency Account, your e-FIRC is issued digitally for every inward remittance, with no need to visit a bank. Your payment records, SWIFT references, and remittance details are available in one place, making it significantly faster to assemble the document set your AD bank needs.
Step 6: Formalise recurring arrangements
If your client will continue paying through the same third-party entity, ask for a standing relationship letter covering future payments and agree on a standard documentation process with your AD bank upfront. This removes the need to explain the same arrangement from scratch every time a payment arrives.
The payment structure you agree with your overseas client at the outset directly affects how smoothly you can manage these compliance situations later — read our post on choosing the right export payment terms for your Indian business for a practical decision framework.
What happens when things go wrong
Leaving a third-party payment unresolved creates a predictable chain of problems. The EDPMS entry stays open. As the 15-month realisation deadline approaches, your AD bank is required to follow up. If the entry ages beyond the deadline without resolution, it moves into the unrealised export category and may invite regulatory action.
Your response must be supported by documentation. If you cannot demonstrate the bona fide nature of the transaction, penalties may apply under FEMA. Where the third-party payer is from a jurisdiction your bank flags for AML or sanctions concerns, the remittance may also be held pending verification, and delayed responses make resolution harder.
Managing third-party payments is easier with the right collections account
The documentation process described in this guide is straightforward once your records are in order. Winvesta's Global Currency Account provides Indian exporters with dedicated USD, GBP, and EUR account details, digital e-FIRC issuance, and a payment history that maps directly to the documentation your AD bank requires for third-party payment situations.
Open your Winvesta account->
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.
