What Are Cross Border Payments and How Skydo Can Help You Receive Them
Indian exports have shown remarkable resilience, achieving an impressive USD 778 billion in 2023 despite global economic uncertainties. However, as exports grow, one critical challenge continues to hold exporters back—cross-border payments.
Managing B2B cross-border payments in India can be complex, with high fees, delayed settlements, and compliance hurdles making life harder for exporters. But it doesn’t have to be this way.
In this blog, we’ll explore what cross-border payments are, the key challenges exporters face, and how Skydo is simplifying cross-border payments in India, helping businesses save time, money, and stress.
What are Cross Border Payments?
Cross-border payments are transactions where the payer and the recipient are located in different countries. For example, if an Indian exporter receives a payment from a French client or you purchase an item from an international seller, these are considered cross-border payments.
Cross-border payments can be broadly classified into two categories:
1. B2B Cross Border Payments
These occur when a business in one country makes a payment to a business or service provider in another country. For instance, if you’re an Indian freelancer receiving payment from a US client for graphic design services, that’s a B2B cross border payment.
2. Retail Cross Border Payments
These refer to B2C transactions, where an individual consumer buys a product or service from an overseas seller. For example, purchasing electronics or apparel from an international e-commerce store falls under this category.
Despite the growing exchange of goods and services globally, cross border payments remain riddled with challenges. Long delays, high costs, and regulatory complexities often make these transactions frustrating and inefficient. In the following sections, we’ll dive into the key challenges exporters face and how they can be addressed.
What Are the Challenges of Cross Border Payments in India?
While domestic payments in India are now as simple as a quick UPI scan, cross border payments tell a completely different story. For exporters and freelancers, these transactions come with significant hurdles that can complicate cash flow and eat into earnings. Let’s dive into the main challenges:
- Long Timelines: Unlike domestic transfers that happen instantly, cross-border payments, especially through banks, can take up to 7 business days to process. These delays occur because most payments rely on the SWIFT network and often involve intermediary banks. For small to medium businesses, these long wait times can disrupt cash flow and operational efficiency.
- High Fees: Receiving international payments through banks or platforms like PayPal can be expensive.
SWIFT Fees: Banks charge ₹500 to ₹1,000 per transfer for SWIFT payments, and additional charges may apply for services like tracking payments or generating MT103 reports.
PayPal Fees: Popular for its convenience, PayPal deducts 4.40% as a transaction fee. For example, receiving USD 1,000 means losing USD 44 to fees. Such charges significantly reduce the actual earnings of exporters and freelancers, especially for small transactions.
- Forex Markups: One of the biggest hidden costs in cross border payments is the forex markup. Banks and platforms rarely provide live exchange rates, offering lower rates instead. For instance, if you receive USD 10,000 with a live exchange rate of 1 USD = ₹84, you should receive ₹8,40,000. However, banks may offer ₹82 per USD, leaving you with ₹8,20,000—a direct loss of ₹20,000. Over time, such markups can result in exporters losing lakhs annually without realizing it. Platforms like PayPal and Payoneer also apply a 3–4% forex markup, further impacting your earnings.
- Regulatory Compliance: Cross border transactions come with strict regulatory requirements to prevent illicit activities like money laundering. While necessary, these compliance measures can be burdensome. For example, Choosing the right purpose code is mandatory for processing payments, but with many similar options, selecting the correct one can be confusing. Similarly getting FIRA (Foreign Inward Remittance Advice) after every cross border payment is essential for compliance and taxation but often involves paying additional fees and repeated follow-ups with banks to obtain it.
Together, these challenges make cross-border payments a time-consuming and costly process for many exporters and freelancers in India. Addressing these issues is essential for smoother and more cost-effective global transactions.
How Skydo is Simplifying Cross Border Payments for Indian Exporters and Freelancers
Skydo is tackling the challenges of cross border payments head-on with its innovative virtual international accounts. These accounts provide exporters and freelancers with virtual bank accounts in key markets like the US, UK, and Australia. Clients in these countries can send payments as local transfers, eliminating the high costs and delays of traditional international transfers. Skydo consolidates these local payments and transfers them directly to the recipient’s personal bank account in India.
Here’s how Skydo addresses the key challenges of cross-border payments:
- Faster Timelines
Traditional bank transfers can take up to 7 business days, while platforms like PayPal may take 5 days or more. With Skydo, once a payment reaches your virtual account, it’s transferred to your personal bank account, with most payments settling within 24 hours. This significantly faster process ensures steady cash flow for exporters and freelancers. - Transparent and Affordable Fees
Skydo eliminates international SWIFT fees and other ancillary charges. Its flat and transparent pricing is simple: USD 19 for payments under USD 2,000 and USD 29 for payments between USD 2,001 and USD 10,000. No hidden fees, no setup costs, and no transaction charges—what you see is what you pay.
- No Forex Markup
Forex markups are a common pain point for exporters, cutting deeply into their earnings. At Skydo, we offer live exchange rates with zero markup. If the live rate is INR 84 for 1 USD and you receive USD 10,000, you’ll get the full ₹8,40,000 —no deductions, unlike banks and other platforms.
- Simplified Compliance
Regulatory compliance around cross border payments can be complicated, but Skydo makes it effortless. Users receive instant, free FIRAs after every payment—no follow-ups or extra charges. Additionally, our expert team is always available to help with compliance-related queries, whether it’s selecting the right purpose code, filling out W8BEN/W8BEN-E forms, or handling other requirements.
Skydo is designed to make cross border payments faster, cheaper, and stress-free for Indian exporters and freelancers. With no hidden fees, quick settlements, and a focus on compliance, Skydo is the smarter choice for managing your international transactions seamlessly.
How can I track my cross border payments with Skydo?
Skydo provides real-time payment tracking through its platform. Once a transaction is initiated, you can monitor its progress and receive instant updates until the payment reaches your account.
Does Skydo offer support for multiple currencies?
How do exchange rates impact cross border payments?
What documents are required to receive cross border payments in India?
