Today, everything from hailing a ride to shopping for groceries or signing up for classes happens online. But behind this convenience lies a crucial need: making sure money moves smoothly behind the scenes.

That's where the <a href="https://www.skydo.com/blog/what-are-capital-and-current-account-transactions">Current Account</a> comes in. It's the protagonist in your business's financial story, making everyday transactions easy. However, it's not alone—special accounts like Nodal and Escrow accounts also play significant roles, handling the tricky money transfers that come with doing business online.

The blog covers the functions, advantages and framework for nodal, escrow, and current accounts. It will help you to choose the right tool to improve your financial management and ensure compliance.

Nodal accounts, mandated by the RBI, are specialised bank accounts tailored for businesses functioning as intermediaries in the online space. Its purpose is to safeguard the interests of customers and vendors, ensuring that payments are efficiently collected, processed, and disbursed to relevant vendors without unnecessary delays.

How Nodal Accounts Facilitate Fund Transfers

Nodal accounts act as temporary vaults, ensuring collected <a href="https://www.skydo.com/blog/choose-international-payment-gateway-2024">payments are processed promptly</a> and payouts to relevant stakeholders occur without delays. For example, when a customer pays for a product online, the nodal account handles payouts to the seller and manages funds for shipping partners and payment processors.

Industries and Scenarios Where Nodal Accounts are Commonly Used

Nodal accounts are popular in industries with complex interactions between customers, vendors, and payment gateways. It includes the following business categories.

From the Middle Ages, escrow means a deposit of trust or security. In modern times, an escrow account is a temporary financial vault managed by a trusted third party, securing funds on behalf of two parties bound by a contract.&nbsp;

The key characteristics of an escrow account are as follows.

Escrow accounts are common in business transactions, especially in real estate and online transactions. In real estate, a buyer deposits the total house value into an escrow account, with staged payments tied to project completion levels. For instance, 10% may be due upon laying the foundation.&nbsp;

Escrow is indispensable in unknown buyer-seller scenarios such as second-hand purchases. Serving as buyer protection, it ensures fund release only upon satisfactory product receipt, minimising disputes or chargebacks for the seller.&nbsp;

In an e-commerce transaction, the customer initiates a purchase and submits payment. When the funds reach the escrow account, the intermediary prompts the seller to dispatch the goods. Following shipment, the buyer receives the goods and verifies their satisfaction, confirming it to the intermediary.&nbsp;

Upon this confirmation, the intermediary transfers the funds from the escrow account to the buyer, completing the secure transaction process. The intermediary usually charges a fee to facilitate the transaction.&nbsp;

Legal and Regulatory Aspects of Escrow Accounts

Escrow agreements involving a buyer, seller, and escrow agent are contractual arrangements outlining terms for escrow payments. In India, specific transactions are legally bound to employ escrow accounts, emphasising the need for businesses to understand applicable laws.&nbsp;

These stringent regulations aim to protect the interests of all parties involved in escrow transactions in India.

Pros of Using Escrow Accounts for Business Operations

Cons of Using Escrow Accounts for Business Operations

A <a href="https://www.skydo.com/blog/what-is-a-zero-balance-current-account?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">current account</a> is a financial account that allows deposits, withdrawals, and daily transactions. It serves as a gateway for managing day-to-day financial activities, offering easy access to funds.

Features of Current Accounts for Businesses

Nodal and Escrow accounts share the principle of involving a third party for fund holding and settlements.

In contrast, the Current Account follows a different approach by channelling all payments through a single account. It is common for businesses to support online and offline transactions with no upper limit on daily transactions.&nbsp;

Considerations for Choosing a Current Account Provid

When to Use Nodal, Escrow, or Current Accounts

Choosing between Nodal, Escrow, or Current Accounts depends on a business's specific financial needs and operations. Each account type serves distinct purposes, addressing unique requirements in fund management and transactions.&nbsp;

Examples of businesses that benefit from these three types of accounts

Scenarios Where Escrow Accounts Are the Ideal Choice

In specific scenarios, opting for an escrow account is strategically sound, addressing various industries and transactions.

Advantages of Current Accounts in Specific Business Contexts

Overview of regulations governing nodal accounts

The Reserve Bank of India (RBI) issues guidelines to regulate nodal accounts that primarily focus on ensuring the security, transparency, and efficiency of payments within marketplace ecosystems. Here are some key aspects.

Compliance Requirements for Businesses Using Escrow Accounts

Regulatory framework for current accounts and its impact on businesses

The regulatory framework for current accounts encompasses various aspects impacting businesses. Below are some examples.

Factors to Consider When Choosing The Right Account Type

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For enterprises catering to a diverse global clientele, selecting an appropriate international payment gateway is essential. Such payment solutions streamline operations significantly by eliminating the need for a physical account in each country.&nbsp;

Furthermore, it provides accurate currency conversions, ensuring you receive payments in your preferred currency.

However, with numerous options in the market, selecting the right one requires thoughtful consideration. Here are the five best expert-picked payment solutions and things to consider before choosing the right one for your business.

Skydo is a modern international payment gateway that simplifies <a href="https://www.skydo.com/blog/skydo-cross-border-payment-challenges?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">cross-border B2B payments.</a> It cuts foreign exchange charges by over 50%, making global transactions more cost-effective.

Through collaborations with leading banks worldwide, Skydo provides businesses with <a href="https://www.skydo.com/features/international-accounts">virtual foreign accounts,</a> eliminating tax and compliance complexities.&nbsp;

They offer real-time currency conversion at the live FX rate, free from markups, and a straightforward flat fee of just USD 19 for transactions up to USD 2000 and USD 29 for transactions above USD 2000 to USD 10000.

With a swift <a href="https://www.skydo.com/blog/a-quick-guide-to-using-the-skydo-platform?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">5-minute onboarding process</a>, Skydo prioritises efficiency.&nbsp;

Businesses opting for Skydo find advantages in reduced foreign exchange charges, transparent pricing, and a user-friendly platform for seamless cross-border transactions.

2. <a href="https://wise.com/in/">Wise&nbsp;</a>

<a href="https://www.skydo.com/blog/top_5_wise_alternatives_for_international_payment">Wise</a> is a prominent financial technology company specialising in international money transfer services. Through their platform, individuals and businesses can conduct cross-border transactions at more advantageous exchange rates.

The fee varies based on the currency. Typically, Wise charges around <a href="https://wise.com/in/pricing/">30.69 USD</a> for a 1000 USD transaction.

3. <a href="https://www.payoneer.com/">Payoneer</a>

<a href="https://www.skydo.com/blog/best-alternative-to-payoneer?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Payoneer</a> is a global financial services company offering online money transfer and digital payment services. Its mission is to simplify cross-border transactions, providing businesses and professionals with a seamless way to send and receive funds on an international scale.

Their transaction fees are up to <a href="https://www.payoneer.com/about/pricing/">3.5% and a 2%</a> foreign exchange markup per transaction.

4. <a href="https://www.salt.pe/">Salt.pe</a>

Salt.pe, a startup headquartered in Bengaluru, is dedicated to simplifying cross-border payments for Indian businesses. They enable Indian enterprises to receive payments from abroad effortlessly by providing local account details in seven foreign currencies: USD, GBP, EUR, HKD, AUD, SGD, and CAD.

Salt.pe applies a flat fee of <a href="https://www.salt.pe/paypal">1.75% per transaction</a>.

5. <a href="https://www.paypal.com/">Paypal</a>

<a href="https://www.skydo.com/blog/top-paypal-india-alternatives-for-international-payment">PayPal</a> is a popular online payment platform that ensures secure financial transactions for users engaging in digital purchases, fund transfers, and receipt of payments.

PayPal applies a <a href="https://www.paypal.com/in/webapps/mpp/paypal-fees">transaction fee of 4%</a> of the transaction amount, with a fixed cost determined by the received currency. Furthermore, for transfers out of PayPal, they impose an additional 3.0% above the base exchange rate, with other associated merchant fees.

These solutions solve payment problems that you may currently have. But which one should you choose?

Things to Consider When Choosing Your <a href="https://www.skydo.com/blog/choose-international-payment-gateway-2024?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Payment Solution</a>

For each processed transaction, payment solutions typically apply fees that vary based on payment method, transaction volume, and currency conversion.

It's crucial to compare transaction fees and rates across various payment gateways to identify the optimal choice for your business.

Select a payment solution that accommodates your customers' preferred payment methods like debit cards, credit cards, bank transfers, and currencies prevalent in your business's target markets.

3. Integration and seamless user experience

Prioritise a solution that depicts user-friendliness, ensuring a seamless and intuitive payment process for your valued customers.

This strategic choice enhances operational efficiency and contributes significantly to a positive customer experience.

Evaluate how well your payment partner delivers customer support. Swift and effective support is vital, especially when dealing with technical issues or resolving disputes.

The optimal global payment solution is a cornerstone for achieving operational excellence and fostering positive customer experiences.

Achieving a customised fit requires a deep dive into particulars such as transaction fees, supported payment methods, and the quality of customer support.

If you are searching for a payment solution, understand your and your customer’s payment needs, conduct comprehensive research, and make informed decisions. This approach ensures the integration of a solution that precisely aligns with your distinct requirements.

Q1. What are the biggest differences between the fees and exchange rates offered by these platforms?

Ans. Differences in fees and exchange rates exist across international payment gateways. It's essential to compare them, considering some may have lower transaction fees but less favourable exchange rates, while others might offer competitive rates with higher fees. Transparent fee structures should be a priority, as well as an understanding of any hidden charges.

Q2. Is there a minimum or maximum amount I can send/receive through any of these platforms?

Ans. Yes, most platforms have transaction limits. RBI's <a href="https://www.skydo.com/blog/online-payment-gateway-service-provider-opgsp?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Operational Guidelines for Payment Gateways and Payment Aggregators (OPGSP)</a> may stipulate a transaction limit of USD 10,000 per transaction. Ensure that the payment gateway adheres to these limits, providing flexibility for your business's financial requirements.&nbsp;

Q3. Can I integrate any of these platforms with my existing accounting software?

Ans. Many international payment gateways offer integration with accounting software like QuickBooks or Xero. Integration options vary. Thus, checking compatibility and available features is wise.

Direct plugins or APIs can automate transaction tracking, reconciliation, and reporting, enhancing efficiency and reducing errors. Ensure your chosen platform seamlessly integrates with your existing accounting software for a cohesive financial management system.

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There has been notable growth in the payments industry in the last ten years, driven by technological advancements and user experience improvements.

The emergence of a new cohort of payment processors, payment methods, value-added services, and infrastructure providers has further accelerated this progress. These innovations respond to the increasing customer demand for more straightforward payment procedures, especially online payments.

This blog will shed light on embedded payments and how they are helping businesses streamline their payment processes. 

<a href="https://blog.payjunction.com/embedded-payments">Embedded payments</a> are where customers can click a single natively available payment link on a website and choose from various payment options. They allow companies to ensure customers do not have to leave their websites or mobile applications to pay for a product or service.&nbsp;

For example, if you are buying a product from Amazon, embedded payments allow you to make online payments for the product without having to leave the website or the app. Furthermore, you can choose from multiple payment methods at your convenience.&nbsp;

Most embedded payments fall under the umbrella of embedded <a href="https://www.skydo.com/blog/global-finance-made-easy-with-skydo?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">finance.</a> Embedded finance definition refers to a process, where third-party payment providers such as banks and financial institutions offer their services to execute single-click payments. In most cases, embedded payments are executed with pre-saved payment credentials on the websites or the apps.&nbsp;

Embedded payments differ from traditional checkout processes, as in traditional checkouts, users are redirected to a separate payment page hosted by a third-party payment provider. This page may have a different look and feel from the rest of the website, which may be a less smooth and cohesive user experience.&nbsp;

<a href="https://www.adyen.com/knowledge-hub/embedded-payments">Embedded payments</a> are made possible and successful because third-party providers developing API tools. These API tools allow these third-party payment providers to integrate their payment systems on other websites and mobile applications.&nbsp;

For tech-enabled platforms and mobile applications, embedded payments work using two methods–natively or through utilising a third-party provider.&nbsp;

1. Registered Payment Facilitator (PayFac)

<a href="https://blog.payjunction.com/embedded-payments">The PayFac model </a>is used by big companies such as Shopify, Uber, Stripe, etc. The payment provider encourages companies to facilitate transactions on their behalf directly from the websites or mobile apps. The companies integrate a processor or payment gateway into their platforms for seamless transactions.&nbsp;

The processor or the payment gateway works as an information intermediary between the platform and the customer’s bank and completes payments by securely transferring financial information. In such a case, customers can also save their payment credentials for the future to avoid entering the details every time and make faster payments.&nbsp;

A perfect example of the PayFac model is Uber, where you can book cabs and make immediate payments without leaving the app. Here, Uber works as a registered payment provider, permitted by available embedded finance providers to execute payments on their behalf.&nbsp;

Companies that aren’t substantially funded or have high resources look towards payfac-as-a-service. It provides all the advantages of embedded payments but in a cost-efficient way, that is simpler to execute and integrate.&nbsp;

The model requires companies who want embedded links on their platforms to work with third-party payment providers who facilitate embedded payments for businesses without requiring them to build the payment system natively.

A perfect example of payfac-as-a-service Paytm, registered with numerous banks and financial institutions but extends its services to other businesses to use its PayFac model to complete payments.&nbsp;

A full-service partnership is one of the most effective embedded payment models as it allows ISVs (independent software vendors), developers, and their customers to have a robust payment solution.&nbsp;

The partnership involves tightly integrating payment processing functionalities, and the platform providing the service takes care of all the included factors, such as pre-sales demos, pricing, <a href="https://www.skydo.com/blog/effective-sales-and-marketing-strategies-for-sole-proprietors?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">marketing</a>, onboarding, setup, and customer support.&nbsp;

Embedded payments eliminate the need for users to navigate to external payment gateways, streamlining the purchasing process and reducing the likelihood of abandoned carts. They also facilitate subscription and recurring billing models, enabling businesses to establish predictable revenue streams and enhance customer retention.

Integrated payment systems allow for strategic placement of upselling and cross-selling prompts during checkout, boosting opportunities to increase the average transaction value. All these factors allow for increased revenue by reducing friction in the purchasing process.&nbsp;

<a href="https://gocardless.com/en-us/guides/posts/what-are-embedded-payments/">Embedded payments</a> can automate tasks such as invoicing, reconciliation, and financial reporting, reducing the administrative burden on businesses. The effective integration provides real-time insights into transaction trends, customer behaviour, and other relevant metrics.

Embedded payments can help businesses comply with industry regulations and standards, such as the PCI DSS (Payment Card Industry Data Security Standard), by providing secure and compliant payment processing.&nbsp;

Embedded payments eliminate the need for users to input payment details repeatedly, offering convenience and speed. They come with robust security measures, instilling trust among customers. Furthermore, a smooth payment and user experience contributes to customer loyalty.&nbsp;

Embedded payments can facilitate entry into new markets by accommodating diverse payment methods preferred by customers in different regions. Businesses can innovate and optimise their strategies based on customer behaviour, preferences, and market trends as they can access payment data.&nbsp;

Implementing embedded payments positions businesses for the future, as it allows for flexibility in adapting to evolving payment technologies and consumer expectations

Best Practices for Implementing Embedded Payments

Provide various secure payment options, including credit/debit cards, digital wallets (e.g., PayPal, Apple Pay, Google Pay, UPI interface), and alternative payment methods. Ensure that all payment methods adhere to industry security standards and are highly secure.&nbsp;

Stay informed about and comply with relevant regulations, such as the Payment Card Industry Data Security Standard (PCI DSS). Furthermore, regularly audit and assess security measures to address any vulnerabilities.

Communicate <a href="https://www.skydo.com/blog/unlock-transparent-pricing-and-maximize-cost-savings-with-skydo?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">pricing details</a>, including transaction fees, before checkout. Avoid hidden or unnecessary charges to build trust and transparency. Clearly define the terms and conditions that may affect the payment terms, such as GST, refund policy, etc.

Create a simple and intuitive user interface for the checkout process. Minimise the number of steps required for a transaction to reduce user friction. Implement auto-fill features for forms and "Remember Me" options for returning users to reduce the effort required for repeat transactions.

The advent of embedded payments has revolutionised the way businesses engage with their customers and conduct transactions. Integrating seamless and secure payment functionalities directly into platforms and applications provides convenience and efficiency and enhances user experiences.

By offering a diverse array of secure payment options, ensuring rigorous user data security, complying with relevant regulations and providing transparent payment information, businesses can build trust and credibility in the minds of their customers. 

However, you must analyse and compare the different embedded payment models to ensure you choose the most suitable one for your business. In case of confusion, consulting an expert is the best solution.&nbsp;FAQs

Q1. What are the risks of using embedded payments?

Ans: Embedded payments come with certain risks, such as data security concerns, inadequate regulatory compliance, integration challenges, dependency on third-party infrastructure, and transaction errors.&nbsp;

Ans: <a href="https://www.brandloom.com/10-best-payment-gateways-in-india">Embedded payments</a> do not come with a cost for customers, but businesses have to pay a specific cost to the embedded payment provider. The costs range between 0.50% to 2% per transaction.&nbsp;

Q3. Do I need to be a financial expert to implement embedded payments?

Ans: While having a background in finance or expertise in financial matters can be beneficial, it's not a requirement to implement embedded payments. You can employ technical experts or take a full-service partnership to implement them.&nbsp;

Q4. What kind of platforms are suited for embedded payments?

Ans: You can implement embedded payments across platforms like e-commerce, mobile apps, subscription platforms, digital wallets, booking platforms, SaaS platforms, etc.&nbsp;

Q5. How can I get started with embedded payments?

Ans: You can start with embedded payments by understanding all three payment models and choosing the most suitable one. Thereafter, you can contact the service providers and create a business synergy. Integrating the required software in your platform is important to ensure successful embedded payment integration.

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Cash flow is the lifeblood of any business, and late cross-border payments can bleed through your operational costs. From missed opportunities to strained relationships, delays in foreign or inward remittances have a significant impact. 

This blog unpacks the payment system intricacies across key markets, to help you navigate the global payment maze and avoid costly delays.

Time Taken For Inward Remittances Worldwide&nbsp;

The central banks of various countries have set frameworks and policies to ensure seamless and secure financial transactions. Like India’s NEFT and RTGS, major countries have their payment networks with distinctive processing times and cost structures. 

Here are the major countrywide payment systems with their processing times.&nbsp;

<a href="https://www.skydo.com/blog/everything-about-ach-payments?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Automated Clearing House, or the ACH network,</a> is an interconnected computer system that communicates with each other to help transfer or receive payments within the US.&nbsp;

The ACH network has evolved from person-to-person payments to allow individuals to utilise the network to make bill payments, pay salaries to employees or make mortgage repayments.&nbsp;

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<a href="https://www.federalreserve.gov/paymentsystems/fedach_about.htm">The National Automated Clearing House</a>, or NACH, governs the payments executed through the ACH network.&nbsp;

Payments made through ACH usually take 1-3 business days to settle. Such payments, called standard ACH payments, differ in cost structure from same-day ACH, which settles the payments on the same day but comes with a higher fee.&nbsp;

<a href="https://tfx.treasury.gov/taxonomy/term/10659#:~:text=The%20Originating%20Depository%20Financial%20Institution,party%20to%20its%20ACH%20operator.">ODFI (Originating Depository Financial Institution)</a> settles regular ACH payments at 8:30 AM on the following business day after initiating debit requests and settles credit requests at 8:30 AM on the following second business day.

<a href="https://www.skydo.com/blog/everything-about-fps-bacs">The Faster Payments Service (FPS)</a> allows the settling of digital financial transactions between two bank accounts registered in the UK. The FPS payment network includes three stakeholders that ensure the successful transaction settlement:

<a href="https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/">Using the Faster Payment Systems,</a> individuals can send up to £1 million, if the bank accounts of both parties are registered in the UK.&nbsp;

FPS payments are settled almost immediately after payment initiation. However, some payments may take up to two hours. Although the upper limit is £1 million, banks set their limit for the maximum amount entities can send per transaction or daily using FPS.

Unlike ACH, which carries an average <a href="https://tipalti.com/payments-hub/ach-fees/#ach-payment-processing-cost">cost of $0.29 per transaction</a>, FPS payments are free for retail customers but carry a fee of <a href="https://www.hellozai.com/blog/a-guide-to-faster-payments-service-fps#:~:text=Although%20Faster%20Payments%20are%20free,two%2C%20however%2C%20is%20speed.">around £2.50 per transaction</a> for corporate customers.&nbsp;

<a href="https://www.skydo.com/blog/what-are-sepa-transfers?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">SEPA, or The Single Euro Payments Area</a>, is a payment network to send and receive payments electronically within Europe. The transfer happens in Euros between two banks or financial institutions in the Eurozone (European region).&nbsp;

Thirty-six countries are members of the SEPA network, and the two bank accounts should be registered in any of the member countries for the SEPA transfers to be completed.&nbsp;

<a href="https://www.ecb.europa.eu/paym/integration/retail/sepa/html/index.en.html">SEPA transfers</a> are generally free of cost, and users can transfer a maximum of €100,000 in one single payment using the Instant Credit facility.&nbsp;

The processing time for SEPA transactions differs based on the four types of payment processing schemes, which are;&nbsp;

Similar to the US, ACH payment networks also allow settling funds in CAD within two bank accounts in Canada. Canada <a href="https://www.payments.ca/payment-resources/iso-20022/automatic-funds-transfer#:~:text=Payments%20Canada%20has%20developed%20the,continued%20support%20throughout%20the%20process.">AFT (Automated Fund Transfer)</a> is another cost-effective and convenient solution.&nbsp;

AFT, called Canada’s version of the ACH, works for both CAD and USD and transfers AFT files three times a day. Once the Canadian banks receive the AFT file, they must process <a href="https://www.linkedin.com/pulse/aft-going-forward-dan-dickinson">payments within two hours.&nbsp;</a>

<a href="https://www.pnc.com/insights/corporate-institutional/go-international/ten-things-you-need-to-know-about-payments-in-canada.html">AFT transactions in Canada</a> include electronic payments, such as direct deposits, bill payments, wire transfers, and online banking transactions. Canadian Payments Association (now part of Payments Canada) oversees and facilitates the electronic payment systems in the country.

<a href="https://www.rba.gov.au/payments-and-infrastructure/new-payments-platform/">The New Payments Platform (NPP)</a> was launched in February 2018 as an open-access infrastructure for executing fast payments within Australia.&nbsp;

The NPP enables businesses, households, and government agencies to make simple, near real-time fund transfers 24/7 with no cut-off time. NPP differs from other payment networks as it carries much richer remittance information with each payment message.&nbsp;

In 2022, <a href="https://nppa.com.au/the-company/">NPP merged with BPAY Group</a> and EFTPOS to form the Australian Payment Plus. More than 100 financial institutions offer NPP-enabled financial services to their customers in Australia.&nbsp;

<a href="https://nppa.com.au/faqs/">NPP comes with no transaction limit,</a> but banks can set their own per-transaction or daily limit as per their operating policies. There is no fee involved in making NPP transactions, but banks can set a specific cost for transactions made via products and services on the New Payments Platform.

Before choosing the right payment network, you should compare them based on the urgency of transaction settlement, amount, sender/receiver location, and fee.&nbsp;

Ensure that all recipient information is accurate and complete. Double-check the recipient's name, address, account number, and any other required details.

Initiate remittance transactions well in advance, especially if specific deadlines or time-sensitive requirements exist. Stay informed about the regulatory requirements for inward remittances in both the sending and receiving countries.	

Maintaining open lines of communication with both the sender and recipient and any intermediaries involved in the process can also prove ideal in avoiding processing delays.&nbsp;

Understanding the nuances of remittance worldwide is vital for seamless business transactions, as most countries have payment networks similar to India’s<a href="https://www.skydo.com/blog/differences-between-neft-and-rtgs?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link"> RTGS or NEFT.</a> As these payment networks differ in their processing time and cost structure, they can significantly affect the time taken for inward remittances.&nbsp;

Accuracy in recipient information, early initiation of transactions, and a comprehensive understanding of compliance checks form the foundation for minimising delays. Furthermore, it is vital to analyse and compare the payment networks based on factors such as transfer amount, urgency, and the requirement for bank accounts.&nbsp;

Ans: Remitter meaning in bank refers to the individual or entity that is sending or initiating a remittance. The remitter could be an individual sending money to family members, a business making international payments, or anyone involved in the process of transferring funds across borders.

Q2. What fees are associated with cross-border payments?

Ans: There are numerous <a href="https://tipalti.com/mass-payments-hub/cross-border-payments-guide/">costs associated with cross-border transactions,</a> such as bank fees, transfer fees, currency conversion fees, exchange fees, international money transfer platform fees, and international debit or credit card fees.&nbsp;

Q3. What are the most common payment methods for international transactions?

Ans: The most common payment methods include wire transfers, international debit/credit cards, and online payment platforms.

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Among the key players in the United Kingdom's financial landscape, the Faster Payments Service (FPS) and Bankers' Automated Clearing Services (BACS) stand out as cornerstones, facilitating the seamless movement of funds in different ways.

The payment schemes are similar to ACH in the US and SEPA in the Eurozone. The Indian payment system NEFT comes in operations and processing, allowing two bank accounts to transfer funds seamlessly.&nbsp;

As a freelancer or service exporter in India, it is important to understand both payment methods as your UK-based clients may opt for these payment methods Understanding The Faster Payments Service (FPS)

The Faster Payments Service (FPS) was created in 2008 and reduces the payment times between bank accounts within the United Kingdom. Previously, such electronic payments between UK bank accounts used to take at least 3 business days, which the FPS has reduced to a matter of seconds.&nbsp;

In 2022, the Faster Payments Service processed transactions worth <a href="https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/faster-payment-system-statistics/">£3.2 trillion. </a>When making an FPS payment, there are three stakeholders involved in initiating and executing transactions:&nbsp;

<a href="https://www.pwc.in/industries/financial-services/fintech/payments/analysing-faster-payment-systems.html">A successful FPS transaction</a> consists of two vital steps:&nbsp;

There is no option to cancel or reverse them after initiation. In case of a mistake, entities can follow the Credit Payment Recovery (CPR) procedures. The procedures are in place to help recover any FPS payment sent due to an error.&nbsp;

Understanding BACS (Bankers' Automated Clearing System)

BACS, or Bankers' Automated Clearing System, is an electronic payment system allowing participants in the UK to send and receive funds. The electronic network includes 16 main building societies and clearing banks in the UK. Operated and managed by Pay.uk, it is one of the most cost-effective payment methods for entities such as freelancers and small businesses to send and receive payments.&nbsp;

BACS handles payments within the UK through UK-registered bank accounts and provides the following payment facilities:&nbsp;

In 2022, BACS processed <a href="https://newseventsinsights.wearepay.uk/media/ndopemiv/bacs-annual-processing-statistics-2022.pdf">direct debits of £4.7 billion</a> and direct credits of £2 billion. Currently, both the BACS payments; Direct Debit and Direct Credit work on a three-day cycle.&nbsp;

Similar to FPS, BACS payments also have an upper limit of £1 million. However, banks have the right to set their upper limit on the per transaction and daily amount users can transfer using BASC.&nbsp;

Comparing FPS and BACS As Payment Methods&nbsp;

Here is the difference between FPS and BACS as payment methods.

When choosing between the payment methods, it depends on:

For example, if you want to make payments without the urgency of settlement, you can use BASC. However, if you want to settle payments immediately, FPS would be the right choice.&nbsp;

​​To pay by BACS or FPS, you need the following information:&nbsp;

FPS and BACS for Indian Freelancers and Tech Service Exporters

As an Indian freelancer, tech service provider or any other type of business entity collaborating with clients in the UK, both payment schemes make it easier for international clients to make payments. This is because most business entities in the UK have a UK bank account, which they can easily use to transfer funds using FPS and BACS.&nbsp;

However, it becomes cumbersome for Indian freelancers or other service exporters to create a traditional bank account in the UK. Indian service exporters such as freelancers must create a virtual account on third-party platforms such as <a href="https://www.skydo.com/">Skydo</a>.&nbsp;

Using <a href="https://www.skydo.com/">Skydo</a>, you don’t have to open a traditional bank account in the UK and can virtually receive Pound Sterling payments. Once received, you can transfer funds from your virtual BACS and FPS account to your Indian bank account after converting the funds into INR.&nbsp;

In their essence, both FPS and BACS payment schemes have changed the B2B payments landscape in the UK. These play pivotal roles in facilitating seamless and efficient transactions within the country, serving both businesses and individuals alike.

The FPS, with its real-time capabilities, has revolutionized payment processing, offering a swift and secure channel for funds transfer. On the other hand, BACS, with its legacy and stability, remains a vital player and ensures the smooth flow of funds on a scheduled basis.

For Indian freelancers and service exporters, third-party platforms such as <a href="https://www.skydo.com/">Skydo</a> are making it easier to collaborate with UK clients and receive payments virtually, without having to create a UK bank account. You can open your virtual FPS or BACS account by visiting the <a href="https://www.skydo.com/">Skydo</a> website.&nbsp;

Q1. Do I need a UK bank account to receive FPS Payment?

Ans. To receive FPS payments, having a UK bank account is typically necessary. The FPS system relies on the UK banking infrastructure, and almost all participants are UK-based. In case you don’t have a UK bank account, some financial institutions and third-party payment providers like offer virtual account solutions for easy cross-border payments.

Q2. Do I need a UK bank account to receive BACS Payment?

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