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Running a small or medium-sized business globally can be tough. Unlike larger companies, SMBs often struggle with limited resources, high operational costs, and inefficient processes. When it comes to international payments, it’s like making business decisions with less room to pivot and a ticking clock.
But as they say, every challenge is an opportunity in disguise.
If SMBs find the right platform to manage global payments, the process becomes much smoother. They don’t need to go through the complicated banking red tape that large companies face.
Instead, SMBs can open an international bank account with minimal documentation and start receiving payments quickly. By being strategic, they can even significantly reduce transaction fees.
Types of International Bank Accounts SMBs Can Open Online in India
Businesses in India can open the following types of international bank accounts:
- Virtual Bank Accounts with IBANs – Easy to open online
- Multi-Currency Accounts – Easy to open online
- Offshore Accounts (via selected banks) – Need assistance
- Foreign Currency Accounts (USD, EUR, GBP) – Easy to open online
Note: Although all these accounts can be opened online, opening and offshore account would require assistance from experts.
Virtual Bank Accounts with IBAN
A virtual bank account with an IBAN allows businesses to receive and send payments as though they have a local bank account in a specific country.
If you have clients in the UK, you can provide them with a virtual bank account number. They send payments as if it’s a local account, avoiding international fees.
You can also withdraw funds from your virtual IBAN account in the currency linked to your IBAN.
Let's say, you have an IBAN for the UK. To withdraw in your local currency (e.g., INR), you’ll need to convert your funds from GBP to INR first.
Steps to Open a Virtual International Bank Account online:
The steps to open an virtual bank account is simple. You have to submit a few details and within a few businesses days your account will be activated.
- KYC Details: Provide your Aadhaar and PAN card for identity verification.
- Bank Account Details: Submit your bank account information.
- Account Activation: Your GBP virtual account will be ready to accept payments within 2-3 business days.
Multi-Currency Accounts
A multi-currency account lets businesses hold, send, and receive payments in several currencies (USD, EUR, GBP, etc.) from one account.
For example, if you're selling products in Europe and receiving raw materials from Asia, a multi-currency account allows you to hold both euros and yen in the same account.
When you receive payments from your European customers, you get paid in euros, while you can pay your Asian suppliers in yen. This way, you don’t have to constantly convert funds between currencies, saving on fees and reducing the risk of unfavorable exchange rates.
You can also withdraw funds from your multi-currency account in the currency available in your multi-currency account.
For example, if you have a balance in USD, EUR, and GBP, you can withdraw funds in those respective currencies. If you need to withdraw in your local currency (INR, for instance, in India), you must convert your multi-currency balance into your local currency and withdraw it.
(The steps are the same to open a multi-currency account.)
Offshore Account
An offshore account is a bank account opened in a foreign country, in jurisdictions known for financial privacy, favourable tax policies, or currency stability. These accounts are commonly used to expand globally, manage international transactions, and optimize tax liabilities.
Step-by-Step Guide for International Offshore Accounts:
Below is the generic procedure you need to follow to open an offshore account with banks like HSBC, Barclays, Standard Chartered, and Deutsche Bank.
Step 1: Get Started
• Start Application: Complete the eligibility check.
• Create Account: Register and set up your login credentials if eligible.
• Check Email: Find the application link in your inbox.
• Verify Identity: Upload a clear photo of your ID and selfie.
Step 2: Apply, Upload & Sign
• Provide Details: Fill in additional required information.
• Review & Sign: Review your details and sign the application.
• Upload Documents: Submit supporting documents, including your signature.
• Final Step: A video call may be required for final verification.
Foreign Currency Accounts (USD, EUR, GBP)
A foreign currency account holds a single currency (e.g., USD, EUR, GBP), allowing businesses to receive payments directly in that currency without converting them into local currency. Before the introduction of multi-currency accounts, businesses dealing with just one currency typically used these accounts.
Due to better flexibility and almost similar pricing, businesses now prefer multi-currency accounts that allow them to manage multiple currencies in one place, streamlining international transactions.
Charges for Opening an International Bank Account Online
Opening an offshore account with banks like HSBC is free. They may also waive maintenance fees if you meet certain conditions, such as maintaining a minimum balance, making regular deposits, or having specific services with the bank.
Similarly, opening a virtual or multi-currency account is free with Karbon, Wise, etc.
Transaction Charges For International Transfers- Account Type Wise Breakdown
FAQs
Can I use a virtual or multi-currency account for both personal and business transactions?
Yes, you can open a virtual or multi-currency account for personal use. However, Karbon specifically offers virtual and multi-currency accounts for SMB owners, mainly for receiving business payments from international clients.
Are there any transaction limits with virtual accounts?
There is no set transaction limit for virtual or multi-currency accounts. The only limitation is a lower limit of $23—you can accept amounts below this, but you won't be able to claim them until the total exceeds the minimum. There is no upper limit.
Can I open multiple virtual or multi-currency accounts with the same provider?
You can open only one virtual or multi-currency account per PAN. This is because the PAN is a unique identifier for individuals or businesses in India, and financial institutions are required to comply with regulatory guidelines.
These guidelines limit the number of accounts tied to a single PAN to prevent money laundering and ensure proper tax reporting.
What happens if my business doesn’t meet the minimum requirements for maintaining an international account?
If the minimum balance or activity requirements aren’t met, banks like HSBC charge monthly maintenance fees.
If you're concerned about meeting these requirements, you can always open a virtual bank account online with providers like Karbon, Wise or Payoneer.
