How to receive money from the USA to India?
Are you an Indian freelancer, exporter, or business owner working with US clients? If so, one of the most important questions you’ve likely asked is: How to receive money from the USA to India?
Getting paid by US companies or individuals comes with its own set of challenges—be it fees, delays, or the right payment method. In this blog, we’ll dive into all the ways you can receive money from USA efficiently, securely, and at the best rates. Let’s help you find the option that works best for you!
How to Receive Payments from USA to India?
When it comes to getting paid by US clients, you have a few key options:
Banks: The traditional route for receiving payments via wire transfers from USA to India.
PayPal and other payment gateways: A popular choice for freelancers and small businesses.
International Virtual Accounts: Offered by platforms like Skydo, Wise and Payoneer
Remittance Platforms Like Wise P2P and Western Union
But before you pick a method, it’s important to weigh a few critical factors—like fees, speed, and ease of use. Choosing the right option can help you keep more of your hard-earned money while avoiding unnecessary hassle. Let’s break down what you need to consider!
What to Know Before Receiving Payments from the USA to India?
Getting paid by US clients might sound simple, but it’s not as seamless as local UPI transfers or NEFT. From longer timelines to compliance requirements and hidden fees, there are a few things you need to keep in mind to make the process smooth and cost-effective. Let’s break it down:
Timelines
Unlike instant domestic payments, international transfers can take anywhere from 1 to 7 business days to reflect in your account depending on the method of transfer. For example, wire transfers from USA to India can take upto 5 business days because the SWIFT network involves multiple intermediary banks, and delays can occur due to bank holidays, incorrect details, or currency conversions. Patience is key when dealing with cross-border transactions.
Compliance Requirements
Handling international payments comes with strict compliance rules to prevent issues like money laundering. Here’s what you should know:
- Purpose Codes: Each international payment must include a purpose code that specifies the reason for the transaction. Quoting the correct code on your invoice ensures smooth processing and avoids unnecessary delays.
- FIRA (Foreign Inward Remittance Advice): This document proves you’ve received funds from abroad. It’s essential for freelancers, service providers, and exporters for tax filings and compliance.
- BRC (Bank Realization Certificate): If you’re exporting goods or software that come under SOFTEX, you may need a BRC to validate that payments align with exports. However, freelancers and general service providers including many software exporters outside this category typically don’t require it.
- Form W8BEN and W8BEN E: Form W8 BEN and Form W8 BEN-E are crucial for Indian residents and businesses earning income from U.S. clients. These IRS forms ensure you don’t pay more tax than necessary by letting you claim reduced withholding rates under U.S. tax treaties. Here’s a detailed guideand a on how to fill Form W8BEN and W8BEN E as an Indian individual or business.
Tax Considerations
Taxes are a critical part of receiving international payments. Here’s what you need to keep in mind:
- GST: Exports are zero-rated under GST, meaning no GST applies. If GST is mistakenly deducted, you can claim a refund with the help of your FIRA.
- Income Tax: Foreign earnings are taxable in India based on your income slab. Make sure to account for this when calculating your overall tax liability.
Charges and Fees
Hidden charges can eat into your earnings if you’re not careful. Here are some common fees to watch out for:
- Exchange Rate Markups: Banks often provide less favourable exchange rates compared to the market rate. For instance, if the real rate is 1 USD = ₹84, banks might offer ₹82, leaving you with less money per transaction.
- SWIFT Fees: Banks charge fees for processing international payments, often ranging from ₹500 to ₹1,000 per transaction.
- Payment Gateway Fees: Platforms like PayPal charge up to 8.4% in combined fees, including transaction fees and currency conversion costs.
These fees can quickly add up, so choosing a payment method with lower costs—like international virtual accounts—can help you keep more of your earnings.
Choosing the Best Way to Receive Money from the USA to India
There’s no one-size-fits-all answer to the question of how to receive payments from the USA to India. The best method depends on what matters most to you—whether it’s faster transfers, lower fees, better exchange rates, or simplified compliance. Let’s take a closer look at your options to help you make an informed choice.
Banks: The Traditional Route:
Banks are the go-to option for many when it comes to receiving money from USA to India. However, they come with their own set of pros and cons:
Transfers via the SWIFT network can take anywhere from 2 to 7 business days, often delayed by intermediary banks, incorrect details, or currency conversion issues.
Banks charge SWIFT fees (₹500–₹1,000 per transaction) and impose forex markups. For instance, if the market rate is 1 USD = ₹84, you might only get ₹82, losing ₹10,000 on a $5,000 payment. They also charge additional fees, like ₹250 for a FIRA or ₹500 for tracking a payment. While banks are reliable and secure, obtaining compliance documents like FIRA can be a hassle, often requiring follow-ups and additional charges. If you prioritize security and have time to spare, banks may be a reasonable option.
Banks are also a preferable choice for big businesses handling high volumes of cross-border payments, as they often offer competitive exchange rates and personalized services that smaller clients might not receive.
PayPal and other Payment Gateways: Convenient But Pricey
PayPal is popular for its global reach and ease of use, especially for freelancers and small businesses. Beyond PayPal, there are other payment gateways as well that are opted by freelancers to receive payments from the US.
If your payment amount is small, say under USD 1000, and your clients prefer using a credit card, this could be a suitable option for you.
Payments may reflect quickly in your PayPal account however, it can take upto 5 business days to reflect in your bank account.PayPal’s fees add up quickly.
They charge a 4.4% transaction fee, a fixed fee based on currency, and a 4% forex markup. For example, if the market rate is ₹84 per USD, PayPal’s rate would be ₹80.64, resulting in significant losses on larger payments. PayPal provides a monthly digital FIRA, covering all transactions from the previous month. However, it’s only available by the 15th of the following month, which may not work for those needing immediate documentation. PayPal is ideal for quick payments but less suitable if you’re looking to maximize your earnings due to its high fees.
Online Remittance Platforms
Online remittance platforms like Western Union and Wise P2P provide an option to receive money from the USA to India. While they work well for personal transfers, they may not be ideal for business payments as they don’t issue FIRAs, which are essential for compliance.
Virtual International Bank Accounts: A Modern Solution
Platforms like Skydo, Wise, and Payoneer, offer virtual bank accounts in countries like the US, allowing clients to send payments as local transfers. This eliminates the complexities and costs of traditional international transactions. Payments are typically settled within 0–2 business days. For example, Wise transfers funds within 48 hours, while Skydo and Payoneer process payments within 24 hours.
While international virtual bank accounts don’t encompass SWIFT fees, platforms levy their respective fee.
Payoneer charges a 1% fee if you receive USD payments via virtual accounts. Further, there’s a 3% forex markup on withdrawals, a 3.2%+ $0.49 fee on credit card payments, and 1% for ACH transfers if your US clients pay you via ACH.
Wise charges a 1.6–1.8% Wise fee but using the mid-market exchange rate with no hidden markups. Skydo offers a simple pricing model—USD 19 for payments under $2,000 and USD 29 for payments between USD 2,001 and USD 10,000, with live exchange rates and no markups.
These platforms provide FIRA for regulatory purposes, with Skydo and Payoneer offering it instantly and free of charge, while Wise charges a fee for the same.
How Skydo Makes Receiving Money from the USA to India Effortless
For freelancers and businesses working with US clients, navigating international payments can often feel like a hassle. That’s where Skydo steps in, making the process simple, cost-effective, and seamless. Setting up an international virtual account with Skydo takes just five minutes, giving you access to markets like the US, Europe, Singapore, and Australia without the complexities of traditional banking.
Skydo eliminates hidden fees and currency markups by offering live Forex rates, ensuring you get the best value for your hard-earned money. Compliance is a breeze too—you’ll receive instant FIRA downloads after every transaction, keeping you aligned with RBI regulations without any extra effort. And to make things even better, you’ll have a dedicated representative ready to assist whenever you need support.
If you’re tired of high fees, slow settlements, and complicated processes, Skydo is the smarter choice for receiving international payments. Focus on growing your business while Skydo handles the rest!
What is the best way to receive money from the USA to India for freelancers and businesses?
There's no one-size-fits-all way to receive money from the USA to India for freelancers and businesses. For enterprise bank might be a suitable option as they can negotiate exchange rates and get personalized services. For freelancers and small to medium businesses virtual accounts by platforms like Skydo might be a better fit due to their fast settlement times and reasonable pricing
How long does it take to receive payments from the USA in India?
Are there faster and cheaper alternatives to banks for receiving payments from the USA?
