How to Accept International Payments in India

Accepting international payments has become an increasingly common requirement for individuals and businesses in India. The globalized economy, coupled with the rise of remote work and digital commerce, has expanded opportunities to engage with clients and customers worldwide. Receiving funds from abroad involves navigating specific financial mechanisms and adhering to local regulations. Understanding these processes is important for ensuring smooth and compliant transactions.

Methods for International Payment Acceptance

Direct bank transfers, often referred to as SWIFT or wire transfers, are a traditional and widely used approach. These transfers involve the sender’s bank sending a secure message through the SWIFT network to the recipient’s bank, instructing the crediting of funds. The SWIFT (Society for Worldwide Interbank Financial Telecommunication) network is a global messaging system for financial institutions, ensuring secure communication of payment instructions using unique SWIFT/BIC codes. Funds are debited from the sender’s account and credited to the recipient’s Indian bank account directly. This method is reliable for larger transactions and globally accepted.

Online payment gateways and platforms offer alternatives for receiving international funds, particularly for businesses engaged in e-commerce or services. Platforms like PayPal, Stripe, Wise (formerly TransferWise), and Payoneer act as intermediaries. These services allow senders to use various digital payment methods, disbursing funds to the Indian receiver’s local bank account.

For instance, Payoneer enables users to hold funds in multiple currencies, such as USD, EUR, and GBP, and then withdraw them to their Indian bank account in Indian Rupees. Stripe allows Indian businesses to accept payments in over 135 foreign currencies, settling payouts in INR. Wise provides local account details in various currencies, enabling clients to pay easily, with funds then converted at the mid-market rate and sent to the Indian bank. These platforms often integrate with invoicing systems or e-commerce sites, simplifying the payment collection process for freelancers and online businesses.

Requirements for Receiving Funds

Before accepting international payments, individuals or businesses in India need a suitable bank account, which can be a savings or current account depending on the entity. To facilitate international transfers, the bank will require specific details including the full account number, the Indian Financial System Code (IFSC), and the bank’s SWIFT/BIC code.

Know Your Customer (KYC) documentation is mandated by banks and online payment platforms for verification. This process helps prevent financial fraud and ensures compliance with anti-money laundering regulations. Common documents for individuals include a Permanent Account Number (PAN) card and an Aadhaar card, which serve as primary identity and address proofs. For businesses, verification typically involves providing the business’s PAN card, registration certificates such as a Certificate of Incorporation, and Goods and Services Tax Identification Number (GSTIN), if applicable. These documents establish identity and legal standing, enabling account setup.

Online payment gateways often require information during their application or registration process. This may include details about the nature of the business, a website URL, and an estimate of expected transaction volumes. Certain platforms, like Stripe, require the account to be registered as a company, Limited Liability Partnership (LLP), or sole proprietorship for accepting international payments; individuals are not supported.

For businesses exporting goods, an Import/Export Code (IEC) may be mandatory, while for service exporters, it may be optional unless accepting specific payment types like AMEX or claiming export benefits. Providing accurate and complete information during setup helps ensure a smooth onboarding process and avoids delays in receiving payments.

Indian Regulatory Framework

The acceptance of international payments in India is governed by laws and regulations. The Foreign Exchange Management Act (FEMA) of 1999 is the primary legislation overseeing foreign exchange transactions, including all inward remittances. FEMA’s role is to consolidate and amend laws related to foreign exchange, promoting the orderly development and maintenance of India’s foreign exchange market. All inward remittances must be routed through Authorized Dealer (AD) banks, which are financial institutions approved by the Reserve Bank of India (RBI) to deal in foreign exchange.

Purpose codes are a mandatory declaration for inward remittances. The Reserve Bank of India (RBI) assigns these unique alphanumeric codes to classify the nature of every foreign exchange transaction. These codes are essential for regulatory reporting, helping the RBI monitor foreign exchange inflows, compile Balance of Payments statistics, and ensure compliance with FEMA. For instance, a common purpose code like P0802 is used for payments related to software services or consultancy, while P1301 is for family maintenance and savings. Correctly identifying and declaring the appropriate purpose code is important for smooth processing and compliance, impacting documentation.

The Foreign Inward Remittance Certificate (FIRC) is an official document issued by an AD bank in India, serving as proof of foreign exchange inflow. It confirms the receipt of money from a foreign country and its conversion into Indian Rupees. FIRCs are particularly important for tax compliance, demonstrating the source of foreign income for Income Tax filings, and are often mandatory for claiming Goods and Services Tax (GST) refunds on exports, which are considered ‘zero-rated supplies.’ While traditionally physical, e-FIRCs are now common, especially for service and goods exports.

General reporting and compliance obligations extend to banks and payment platforms, requiring them to report international transactions to regulatory bodies. This process ensures transparency and helps prevent illicit financial activities. While there is generally no specific limit on the amount of inward remittances for personal transfers under the Rupee Drawing Arrangement (RDA), trade-related transactions under RDA are capped at INR 15,00,000 per transaction. Under the Money Transfer Service Scheme (MTSS), there is an upper limit of USD 2,500 per transaction, with a maximum of 30 transactions per beneficiary per year. Certain types of inward remittances, such as income from online gaming, betting, gambling platforms, or lottery winnings, are prohibited.