Forex

Ultimate Guide: How Do B2B Cross-Border Payments Work

Instead of giving you mere words, we’ll give you facts. The current status of B2B cross-border payments is as follows. 

  • Optimism Abounds: In general there is a positive business outlook.
  • Focus on Savings: Is at an all-time high
  • Fintech platforms are definitely gaining popularity amongst businesses as B2B cross-border payment services. 

But for some questions, you need to have a closer look to get an idea in its entirety. 

So in this article, we dig deep to tell you everything you need to know about B2B cross-border payments - the Forex rate, what are B2B cross-border payments, the challenges involved in B2B cross-border payment, and more. 

Let’s dive right in! 

What is a B2B cross-border payment system?

The B2B cross-country payments meaning can be defined in different ways. 

A B2B (Business-to-Business) cross-border payment system involves digital or electronic tools and procedures to simplify financial transactions between two businesses. These systems optimize the payment and invoicing workflows within the landscape of business-to-business transactions, enhancing efficiency, and security, and frequently incorporating automation. 

What are the payment terms for B2B cross-border payments?

1. SWIFT

SWIFT is widely utilized by financial institutions and banks to allow the movement of funds across borders. This network is not only used by banks but also by clearance houses, money transfer agents, security dealers, and other entities involved in processing substantial amounts of money. When it comes to B2B cross-border payments in India processed through the SWIFT infrastructure, the typical processing time ranges from one to five business days.

To access the SWIFT network, financial institutions establish NOSTRO accounts through collaborations with correspondent banks in foreign countries. These NOSTRO accounts enable them to effectively utilize the SWIFT network for seamless cross-border fund transfers.

2. RDA

Under B2B cross-border payments, Resident Foreign Currency Account (RDA), is a term that is used frequently. To enable rapid B2B cross-border payments for Indian users residing overseas, banks establish partnerships with exchange houses. Customers have the option to approach these exchange houses and deposit funds, which will be promptly transferred to the designated recipient in India.

3. MTSS

MTSS (Money Transfer Service Scheme) is used for receiving inward remittances from foreign countries for personal purposes. The commission charged ranges from 0.3% to 5%.

The completion of the payment process usually requires three to five business days. For example, this payment operates through a collaboration between Indian agents and foreign money transfer agencies, like JP Morgan, for inward remittances through fintechs. 

It's important to note that each beneficiary is limited to a maximum of 30 transactions per year, with a transaction amount cap of USD 2500 per attempt. These restrictions help regulate and monitor the flow of transactions within the MTSS framework.

4. Legal Entity Identifier

The legal entity identifier is mandatory for B2B cross-border payments

For B2B cross-border payments surpassing Five crores, the Reserve Bank of India now insists on using a Legal Entity Identifier (LEI). This distinctive 20-digit alphanumeric code is received from recognized Local Operating Units.

The LEI serves to improve risk management and precision in financial data reporting systems. This guideline tackles the issue of pinpointing those initiating and receiving transactions, especially with numerous subsidiary companies in the picture.

What is the difference between P2P and B2B payments?

Peer-to-peer payments, or person-to-person payments, are digital transactions between two people using mobile banking. Money goes directly from one person's bank account, card, or app to another's.

On the other hand, B2B payments, or Business-to-Business payments, involve businesses exchanging money. This includes buying goods, settling invoices, or other financial interactions between companies.

What is a B2B cross-border bank transfer? 

In India, B2B cross-border payments operate while ensuring originality and authenticity.

To do the B2B cross-border payments, a bank with branches in both India and the respective foreign countries is involved. The funds are transferred based on the prevailing exchange rate and sent to the recipient's bank account securely.

For this convenience fee of 10 to 15% is paid by the sender.

One exception permits money transfer operators, such as Western Union, to deposit funds into bank accounts using the Money Transfer Transaction Scheme(MTTS). 

For instance, the National Payments Corporation of India (NPCI), which serves as a digital payment facilitator in India, has partnered with PayNow to enable swift and cost-effective cross-border payments between India and Singapore, benefiting both countries.

How do B2B cross-border payments work for businesses in India?

For standard B2B cross-border payments, specific data, setup, and infrastructure are needed, requiring the vendor's personal and banking information.

This data includes the IBAN (International Bank Account Number) and Bank Identifier Code (BIC) to ease the completion of B2B cross-border payments. But, if an Indian customer is purchasing an international e-commerce platform, such detailed information might not be needed.

SWIFT payments can be triggered, which will require the vendor's beneficiary account details, their bank's postal address, and their SWIFT code. This allows the use of different approaches for cross-border transactions.


Challenges with B2B Cross-Border Payments

B2B cross-border payments present several challenges for companies, involving various aspects:

  • Exchange rates: The volatility of exchange rates can influence the value of payments, making some B2B cross-border payments highly expensive. 

  • Regulations and taxes: Navigating and adhering to diverse regulations and tax obligations across multiple countries can be intricate and time-consuming.

  • Hidden fees: Additional charges, including intermediary fees like NOSTRO charges, and currency conversion fees, impact the overall cost of payments and sometimes remain undisclosed or unclear.

  • Payment scams: Businesses must maintain a high level of vigilance to protect themselves against fraudulent activities like phishing scams or unauthorized payment requests.

Karbon Forex charges no extra fee and helps you get your B2B cross-border payments completed in as little as 24 hours. Contact us now! 

What to consider for choosing a B2B cross-border payments solution

As businesses think about growing globally, selling to customers in other countries is exciting. But, the real challenge is getting paid from customers in different countries. That's why we made a simple checklist for B2B cross-border payments. It shows what businesses need to handle payments from international customers.

1. Invoicing in local currencies

To provide excellent customer service and avoid unnecessary complications, it is crucial to avoid leaving the responsibility of translating your invoices and managing currency conversions solely to your international customers.

In certain cases, invoices may need to be translated into the local language, and the payer must provide specific documentation for India. tax purposes. To streamline these processes and ensure compliance, it is essential to leverage a cross-border payment solution that automates these tasks for you. 

2. Convenient local payment methods and currencies

Meeting the expectations of your customers includes providing them with local payment options that are convenient and familiar to them. Therefore, it is crucial to collaborate with a service provider who understands and offers preferred payment methods in each country. 

3. FX risk mitigation

Managing FX risk when dealing with global customers is crucial to safeguard your business from financial uncertainties. 

In the current economic landscape, there are numerous complexities and internal capabilities required to handle international financial transactions effectively. Beyond the impact on your business's financial exposure, fluctuations in FX rates can create challenges for your customers in making accurate payments. 

4. Regional restrictions

The landscape of laws and regulations governing payments is dynamic and subject to rapid changes. 

Payment processors and providers need to stay updated and well-versed in the complexities associated with processing payments to navigate the evolving regulatory environment effectively. 

5. Statutory and regulatory compliance 

Choosing a provider that prioritizes robust security measures and holds the highest level of security certifications is paramount. It is crucial to align data privacy and security practices with the specific regulations and frameworks of each region and country. 

Additionally, ensuring that any third-party vendors or partners also comply with these requirements is essential. For instance, compliance with GDPR in the UK and Europe necessitates stringent controls on the storage, usage, and sharing of personal data, with severe penalties for non-compliance. 

6. Integration Simplicity 

When selecting a payment solution, choosing one that seamlessly integrates with your existing systems and workflows is crucial. Investing in a solution should not result in working with separate systems or manually transferring data. 

An effective international payment solution goes beyond simply collecting payments and tracking money flows. It should seamlessly integrate with your enterprise applications, enabling automated sharing of payment information. This integration simplifies the reconciliation process and provides real-time updates on account statuses to all stakeholders involved. 

7. Expertise 

Various payment solutions are designed to cater to specific types of applications. Payment processors, for instance, specialize in handling high-volume, low-value transactions, etc. 

Their primary focus is on speed, allowing them to quickly rectify any payment errors with minimal impact on the business or the customer. 

On the other hand, solutions like Karbon are specifically built to manage lower-volume, higher-value payments, ranging from thousands to hundreds of thousands of dollars.

If you are engaged in B2B transactions, it is crucial to consider a solution provider that can handle the complexities of high-stakes payments. 

B2B Cross-Border Payments with Karbon 

At Karbon Forex, we understand the complexities and challenges that small and medium businesses face when dealing with cross-border transactions and compliance with ever-changing regulations. That's why we are dedicated to providing comprehensive solutions.


  • With Karbon Forex, you can streamline your business payment processes 


  • Say goodbye to lengthy processing times for B2B cross-border payments. Karbon Forex offers SWIFT international payments at competitive rates, ensuring that your funds reach their destination without unnecessary delays.


  • Furthermore, Karbon Forex eliminates intermediary wire fees, providing cost savings of 40% or more compared to traditional bank transactions and interchange fees. 

Take the first step towards simplifying your cross-border payments by requesting a free demo from us today!

FAQs On B2B cross cross-border payments

1. How to avoid extra FX payments in B2B cross-border payments?  

  • For B2B cross-border remittances, secure favorable forex rates by timing your currency exchange right. If your remittance doesn't have strict deadlines, consider asking your financial institution to alert you about the optimal time when currency exchange rates are at their lowest.
  • Select a fintech provider that provides clear rates, avoiding hidden costs like NOSTRO fees, FIRA, FIRC charges, and forms such as 15CA and 15CB that banks may typically charge for all B2B cross-border remittances. 

2. What are the payment methods for B2B in India?

  1. Cash In Advance
  2. Letter Of Credit also called Documentary credit 
  3. Documentary collection
  4. Trade finance
  5. Open account
  6. Consignment 

3. How big is the B2B cross-border payments market?

Survey findings reveal that the B2B cross-border payments sector is anticipated to reach a market size of $39.3 trillion by 2023. Furthermore, it is projected to experience a 43% growth by 2030, reaching $56.1 trillion by that time. This data was reported on April 27, 2023.


The views expressed in the blogs on this page are solely the opinions of the authors and do not constitute expert advice. While we strive to provide accurate and up-to-date information, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk. We disclaim any liability for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

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