B2B Cross-Border Payments: Working, Challenges & Alternatives
TL;DR - Summary
- What are B2B cross-border payments? - B2B (business-to-business) cross-border payments are financial transactions where companies in different countries send or receive money to settle commercial invoices, trade goods, or pay for services.
- How do B2B cross-border payments work? - In international B2B payments, money moves from the buyer's bank through the relevant payment network and, where required, intermediary banks before reaching the exporter's bank. The funds are then converted into Indian Rupee (INR) and credited to the business account.
- What are the main challenges with B2B cross-border payments? - Indian businesses can face hidden fees, FX losses, settlement delays, compliance paperwork, reconciliation issues, and payment-security risks when receiving international B2B payments.
- What compliance rules apply to B2B cross-border payments in India? - Businesses receiving foreign payments must use an authorised channel and comply with FEMA and RBI requirements, including the correct purpose code, KYC/AML checks, FIRC/FIRA documentation, and EDPMS or eBRC requirements where applicable.
What Are B2B Cross-Border Payments?
B2B cross-border payments refer to financial transactions between businesses operating in different countries. For example, an Indian IT services company billing a US client and receiving USD into its Indian bank account is a B2B cross-border payment. The same is true for a garment exporter shipping to a European buyer, or a SaaS company billing a client in Singapore.
Unlike a simple domestic bank transfer, B2B cross-border payments involve currency conversion, multiple banking systems that may or may not be connected directly, and country-specific regulations on both sides of the transaction. All of those add cost, time, or paperwork, often all three.
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B2B cross-border payments differ greatly from consumer (B2C) cross-border payments, as they tend to be higher-value transactions, billed on net terms (30, 60, or 90 days), and with more stringent documentation requirements related to trade compliance rather than just KYC.
How Do B2B Cross-Border Payments Work?
B2B cross-border payments work by moving money from the buyer's bank or payment platform through the relevant payment network and, where required, intermediary banks before reaching the exporter's bank. The receiving bank then performs the required compliance checks, converts the foreign currency into INR where applicable, and credits the funds to the exporter's account.
Once the client's business opts to pay, here's more or less how the money moves:
- Invoice issued - the exporter issues an invoice in the agreed currency (USD, GBP, EUR, etc.).
- Payment sent - the buyer's bank or payment platform sends the money through SWIFT or a local payment rail.
- Correspondent bank routing - one or more correspondent (intermediary) banks route the funds if the sending and receiving banks don't have a direct relationship. Each can take a fee off.
- Compliance checks - the receiving Indian bank performs Know Your Customer (KYC)/Anti-Money Laundering (AML) and Foreign Exchange Management Act (FEMA) checks before crediting the account.
- Currency conversion - the bank converts the incoming foreign currency into INR at its own rate.
- FIRC/FIRA issued - a Foreign Inward Remittance Certificate is issued as documentary evidence that the money has come from outside India.
- INR credited - money is credited to the exporter's account, and the finance team reconciles the receipt with the original invoice.
The amount your client sends and the amount you receive are not always the same. Intermediary-bank deductions and FX conversion can happen before the funds reach you, so confirm the expected net amount before you settle on a payment route.
A payment corridor involving multiple correspondent banks can increase transaction processing time and costs. The more correspondent banks involved, the longer and more expensive the journey becomes. A payment that goes through two or three intermediaries may take two to five business days and cost considerably more than a more direct route.
This is one of the key reasons fintech platforms can offer faster and more cost-effective transfers: they use local payment rails in the sending country and their own internal settlement networks, reducing or eliminating the need for correspondent banks before converting the funds to INR.
What Are the Biggest Challenges with B2B Cross-Border Payments for Indian Businesses?
The biggest challenges with B2B cross-border payments for Indian businesses are hidden fees and FX losses, slow and unpredictable settlement, heavy FEMA/RBI documentation, manual reconciliation errors, and fraud risk. Here they are in detail:
Hidden fees and FX losses: Bank wires can involve FX markups, sender fees, and correspondent bank charges, making the final INR amount difficult to predict upfront. Card-based payments can also add merchant and currency-conversion fees.
Regulatory and documentation burden: FEMA requirements, purpose codes, FIRC/FIRA, GST documentation, EDPMS closure, and eBRC generation can create significant manual work, particularly for businesses without a dedicated finance team.
Slow and unpredictable settlement: International wire transfers can take several business days to settle. Correspondent-bank reviews and processing cycles can cause further delays, making cash-flow planning harder.
Manual reconciliation: Businesses may need to reconcile the original foreign-currency invoice with the INR amount received after FX conversion and fee deductions. Without a clear transaction trail, this can lead to mismatches and payment-tracking issues.
Fraud and payment-security risks: Businesses can be targeted by phishing and Business Email Compromise (BEC) scams, including fraudulent requests to redirect payments to a different bank account.
Wire Transfers (SWIFT)
- How it works: The client's bank sends a payment instruction through the SWIFT network to the Indian business's bank.
- Best suited for: Large or high-value international B2B payments.
- Speed: Typically 2–5 business days, making it one of the slower options.
- Cost: Can be expensive due to FX markups and correspondent-bank fees.
- Key drawback: Correspondent charges may be deducted during the transfer, making the final amount received difficult to predict.
International ACH Payments
- How it works: ACH processes electronic payments in batches, primarily for payments originating from the US.
- Cost: Generally cheaper than a SWIFT wire.
- Speed: Can be slower than other electronic payment methods.
- Availability: Not supported across all currency corridors into India, so its usefulness depends largely on where your clients are based.
Virtual Accounts and Fintech Platforms
- How it works: Fintech platforms provide virtual accounts in foreign currencies such as USD, GBP, and EUR. The client pays into a local account in their country, while the platform handles conversion and settlement into the Indian business's bank account.
- Key advantages: Can offer faster settlement and more transparent pricing than traditional bank wires.
- What to look for: Compare fees, settlement speed, supported currencies, and FIRC/FIRA support. Some platforms automate FIRC/FIRA issuance, which traditional banks generally do not offer by default.
| Method | Typical Fee Range | Settlement Time | FIRC Issued? |
|---|---|---|---|
| Bank wire (SWIFT) | Approximately 5–8% in total Foreign Exchange (FX) markup and correspondent fees, depending on the corridor | 2–5 business days | Yes, via the bank (manual process) |
| PayPal | ~4.4% + fixed fee (up to ~7–8% all-in with FX conversion) | 1-3 days (to PayPal balance) | Weekly FIRA issued |
| Skydo (fintech) | $19 flat (under $2,000) / $29 flat ($2,000–$10,000)/0.3% (over $10,000) | Within 24 hours | Yes, auto-issued free |
What are the Compliance Rules for Receiving B2B Cross-Border Payments in India?
Every foreign remittance to India is governed by FEMA and administered by the RBI. The cardinal rule: the payment has to go through an RBI-approved channel, an authorised dealer bank or an RBI-approved payment aggregator, and it has to be properly documented. A personal account or an unauthorised channel cannot receive foreign business payments.
Exporters commonly face the following compliance requirements:
- Purpose codes - each inward remittance is assigned a code by the RBI indicating the nature of the transaction (e.g., software services, goods export, professional fees). An incorrect code can delay the payment.
- FIRC (Foreign Inward Remittance Certificate) - the receiving bank issues this to show that foreign exchange has been received. Exporters need this for income-tax filing, GST refund claims on zero-rated exports, and general audit purposes.
- BIRC/FIRA - the equivalent document when payment is made by a fintech aggregator instead of directly by a bank. It serves the same purpose; the name depends on who processed the remittance.
- EDPMS (Export Data Processing and Monitoring System) - incoming remittances for goods exporters are matched with shipping bills here. Unclosed entries can draw the attention of regulators.
- eBRC (Electronic Bank Realisation Certificate) - a certificate issued by the Directorate General of Foreign Trade (DGFT) after matching the inward remittance with the shipping bill, and required to claim export benefits.
- KYC/AML checks - mandatory on every inward foreign remittance under RBI and FEMA guidelines.
- Repatriation time frames - export proceeds must be brought into India within the period set by the RBI. This window has changed more than once recently: as of August 2026 it is 9 months from the date of export, and it moves to 15 months from 1 October 2026 under the new FEMA 2026 regulations. Because the rule is in flux, confirm the current requirement with your authorised dealer bank or CA before planning around it.
How Does Skydo Simplify B2B Cross-Border Payments
Skydo simplifies B2B cross-border payments for Indian exporters and freelancers by replacing unpredictable bank fees with flat per-transaction fees, auto-issuing FIRCs, and settling funds within one working day. Here is what Skydo does differently from a normal bank:
- Flat, predictable fees - instead of a percentage markup that is hard to predict, Skydo charges $19 flat on payments under $2,000, $29 flat on payments between $2,000 and $10,000, and 0.3% on payments above $10,000. On a $3,000 payment where a bank might deduct up to $240, Skydo charges $29, and the INR amount is known before the client even sends the money.
- Auto-issued FIRC/FIRA - generated for each transaction without any manual request to a relationship manager.
- eBRC and EDPMS closure assistance - link a DGFT account once and upload bulk shipping bills to auto-map remittances and generate eBRCs.
- Faster settlement - funds typically settle within one working day, as opposed to the two-to-five days typical of bank wires.
How long does it take to receive an international B2B payment in India?
Usually two to five business days by bank wire (SWIFT), depending on the number of correspondent banks in the corridor. On local rails via fintech platforms, often one day after the client sends the funds.
Why does my foreign client send $3,000 but I receive less than that in my account?
Do I need to declare foreign payments received to the RBI or file any returns?
Which cross-border payment platform is best for small Indian exporters and freelancers?
