Wire Transfer from USA to India: What You Need to Know
Case in point: India’s US exports reached $77.5 billion in 2023- 2024, increasing cross-border transfers from the US to India. As wire transfers continue to be the primary means of making these transactions, understanding how they work is crucial for Indian business owners.
In this blog, we have covered the ABC of wire transfers from the USA to India including fees, timelines, and documents to help you get started. At the end, we will explore a smarter alternative to wire transfers that can improve efficiency and reduce business costs.
But before we begin, this blog will cover business payments in detail and only touch up on personal payments.
Wire Transfer from USA to India: Understanding the Basics
Wire transfer is a method of making international payments electronically from one country to another. Most wire transfers are done via SWIFT, a secure messaging network connecting a vast network of banks and financial institutions worldwide.
The wire transfer process is quite simple. Consider, that you have a US-based client and they are paying you via a wire transfer. Here's what the process will look like:
- First, you need to share the requisite account details with your client, including name, bank account number, and SWIFT Code will share the recipient’s bank account details with their bank
- In the next step, your client will visit the bank and share the recipient's details
- Next up, your client will pay the amount to their bank and instruct them to transfer the funds electronically to the Indian business owners' bank account.
- The sender’s bank verifies all the information and transmits a message to the bank in India.
- The recipient bank will transfer the money to the business owner’s account after the message is received.
Wire transfer from the USA to India has long been the go-to way to transfer funds between these two countries thanks to their credibility and trustworthiness. However, wire transfer from USA to India also involves a lot of complexities including steep fees, longer settlement times and more which we will discuss in the upcoming sections.
What Is Wire Transfer Time from USA to India
A wire transfer from the USA to India typically takes 5-7 business days to settle. However, it can get extended due to bank holidays and if there are more intermediary banks participating in the transaction.
Further, if there are any errors in the details that you have shared with your client, like an incorrect bank account number or incorrect SWIFT code, then your payment can get further delayed or even cancelled.
Therefore, we strongly advise business owners and freelancers to double-check their information before sharing their account details with their clients.
Wire Transfer Charges from USA to India
When you receive a wire transfer from the US, charges are applied under different categories. These charges are often passed on to you as the receiver for business transfers or payments. Therefore, knowing about these charges will tell how feasible this payment option is for you.
SWIFT Fee: This is charged by the sender’s bank based on the amount and destination. While sending money from the US to India, the fee mostly ranges between $15-$50, which is approximately around Rs.1,200 to Rs. 4,200
Forex Markup: Banks usually make money here by offering a lower exchange rate during currency conversion. This markup is like a margin for covering the cost of foreign currency conversion and can substantially reduce the amount. For example, if the live exchange rate for 1 USD is Rs. 86, the bank will use the applicable exchange rate of Rs. 84. For a payment of $10,000 you will receive Rs. 840,000 (84*10,000) instead of Rs. 860,000 (86*10,000).
Intermediary Bank Fees: Intermediary banks facilitate wire transfers if there is no direct relationship between the sending and receiving bank. In return, they charge a fee depending on the complexity of transactions and services involved. If more intermediary banks participate, the total fees add up, resulting in higher deductions.
Exchange Rate Fluctuations: The constant changes in exchange rate can also result in a loss. For example, when your client initiated the wire transfer, the exchange rate was Rs. 86, but by the time you received it, the rate dropped to Rs. 85. For a $10,000 transfer, that is a straightaway loss of Rs. 10,000
Receiving Bank Fee: Your bank receiving the amount might also charge an inward remittance fee depending on the amount and other factors. For example, IDBI Bank charges Rs. 100 flat for foreign currency inward remittances.
FIRA Charges: Foreign Inward Remittance Advice (FIRA) is an essential document for a business owner or freelancer receiving international payment. It’s proof that you have received a foreign income in India. Banks issue FIRA, but not by default. You must request the bank for an FIRA and pay an upfront charge which differs from one bank to another. For example, HDFC bank issues Rs.200 for a single FIRA. This means you must spend Rs. 200 to get the FIRA every time you receive a wire transfer.
What Documents Are Needed for Wire Transfer from USA to India?
Having the right documents is a key to receiving wire transfers without hiccups and on time. Here is the list of documents for sending and receiving wire transfers from the US to India:
For the Receiver (You)
- Your name and address as mentioned in the bank records
- Bank details like name and address
- Account type (savings or current) and account number
- SWIFT Code of your bank. You can use Skydo’s SWIFT code finder to find out your bank’s code
- Government-issued IDs like PAN Card or Aadhaar
- Purpose Code is an alphanumeric code explaining the intent behind receiving the international payment. You can use our purpose code finder tool to know the exact code
- FIRA as proof of receipt of payment
- Bank Realisation Certificate (BRC) is for businesses exporting goods or software that fall under SOFTEX.
Note: Indian businesses and freelancers receiving money from the US must also fill out Form W8BEN and W8BEN E. Filling these forms and sharing them with your client before the transfer ensures they apply the correct US withholding tax rate as per US treaties.
For the Sender (Your client)
- All the details shared by the receiver (name, address, and bank information)
- Sender’s name and address
- Bank account number
- Amount and currency type
- Purpose of transfer
Skydo: A Smart Alternative Wire Transfer from USA to India
Skydo, a new-age payments platform, offers a smarter alternative way of receiving money from the US via virtual international accounts. Virtual international accounts are digital international accounts linked to your physical bank account in India. It is almost like having a local bank account in your client's country, which in this case would be the US. Each virtual account has a unique 18-digit number that you can share with your US-based clients to receive payments.
Here are the three reasons why virtual accounts are a smarter alternative to wire transfers:
Quick Settlement
Virtual accounts are much faster for settling international transactions than wire transfers. Platforms like Skydo transfer the money to the client’s bank account in 24-48 hours. This means you receive the payment 1-2 days earlier, providing more liquidity.
Cost-effective
As virtual accounts do not use the SWIFT network, no SWIFT fee is levied on the transaction. In addition, most platforms offer a more competitive exchange rate than banks. This ensures you get a better value during conversion. With Skydo, there is no additional charge for receiving money and getting an FIRA. In fact, the FIRA is provided instantly in your dashboard after you receive a payment from the US.
Transparency is also a cause of concern with wire transfers as it’s difficult to know how much fees will be deducted in each transfer. On the other hand, virtual platforms are more transparent in pricing. For example, Skydo charges USD 19 for receiving payments up to $2,000, USD 29 for payments from $2,001 to $10,000, and 0.3% of the amount if it’s more than $10,000, all at live forex rate without any markup. Beyond this, you don’t have to pay anything extra.
Active Customer Support
Skydo offers an India-based support team to assist you with onboarding and resolve your queries in case you get stuck.
But why must your US-based client agree to pay you through a virtual account?
The answer is convenience and trust. You have to share your US virtual bank account number with your client, and your client will be paying you in that account, making it a local transfer instead of an international one. Your client will feel like working with someone from their own country.
The other aspect is trust. In cross-border business transfers, there is always an element of risk from threats like data breaches and identity thefts. But platforms like Skydo go the extra mile to ensure data security. Personal information is stored in a tightly controlled virtual safe, transmission data is encrypted end-to-end, and suspicious activities are monitored continuously. This benefits you in strengthening your relationship with them and expanding your business faster.
Is virtual account the right medium for receiving payment from the US? Sign up for a free demo with Skydo.
