Key takeaways
- International payment charges stack up, platform fees, FX markups, withdrawal costs, intermediary deductions, and GST on fees, turning a nominal 2 to 3% into a painful 6 to 8%.
- On a $1,000 invoice, the difference between a 1% fee at mid market rates and a 4.4% fee with FX markup is often ₹3,500 to ₹5,000, money that should be yours.
- For most Indian freelancers, local receiving accounts via ACH, SEPA, or FPS beat SWIFT wires and card rails for both speed and cost.
- Zero FX markup matters more than a slightly lower platform fee, a 3% FX spread on $50,000 yearly income can cost over ₹1.2 lakh.
- Platforms like Karbon Business combine a flat 1% fee, mid market rates, fast INR settlement, and automatic e-FIRA, resulting in the highest net INR for B2B freelance payments.
- Always compare your platform’s quoted rate with the live mid market rate, and ask clients to use “OUR” fee option for SWIFT if they will not pay via local rails.
What makes up international payment charges in India
International payment charges are rarely a single line item, they are a stack of fees that quietly drain your earnings. Understanding each component helps you pinpoint the leak.
- Platform receiving fee: PayPal around 4.4%, Stripe around 4.3%, Karbon Business 1% flat. On a $5,000 project, the difference between 1% and 4.4% is $170, roughly ₹14,000.
- FX conversion spread: Often the biggest hidden cost. A 2 to 4% markup over mid market adds up quickly. On $1,000 at ₹83, a 3% markup costs ₹2,490.
- Withdrawal and intermediary fees: Some platforms charge to move INR to your bank, SWIFT wires can lose $15 to $40 at each intermediary bank.
- Card processing fees: Typically 3 to 4%, plus chargeback risk and dispute fees.
- GST on fees: 18% on the platform’s service fee only, not on your entire remittance.
- Setup or monthly charges: Less common, but can add ₹2,000 to ₹10,000 yearly.
Formula to know your truth: Net INR receipt = Invoice Amount minus Platform Fees minus FX Spread minus Withdrawal and Intermediary Charges minus GST on Fees.
Real world effect: A Mumbai content writer invoicing $1,000 via PayPal nets around ₹78,500, the same through Karbon Business nets around ₹82,100, a difference close to four hours of paid work.
Understanding inward remittance options for Indian freelancers
India offers multiple RBI and FEMA compliant ways to receive foreign payments. Choose based on client location, invoice size, and your cash flow needs.
- Karbon Business: Virtual USD, GBP, EUR, CAD accounts with local rails like ACH, SEPA, FPS. Flat 1% fee, zero FX markup at mid market, INR in 24 to 48 hours, automatic e-FIRA.
- Wise Business: Transparent fees and strong FX rates for INR conversion, local accounts for India residents are limited, but SWIFT to INR is available.
- Payoneer: Multi currency receiving accounts, typical combined fees 2 to 3% with FX markup, 2 to 3 business days settlement.
- PayPal: Fast and familiar, often under 24 hours, but expensive due to 4.4% fee plus 3 to 4% FX markup.
- RazorpayX International and Tazapay: India focused options with competitive pricing and compliance support.
- Traditional bank SWIFT: No platform fee, but banks add 2.5 to 3% FX markup, and intermediaries deduct $15 to $40, settlement in 2 to 4 days.
- Stripe and card rails: Useful if clients insist on cards, but 4.3% fees plus FX spread and higher chargeback risk.
- WorldFirst and OFX: Better FX versus banks, suited to larger transfers where exchange optimization matters.
Tip in action: A Delhi software developer moved three US clients from PayPal to Karbon Business and saved ~₹47,000 in the first year on $60,000 of billings, setup took one afternoon.
PayPal vs Karbon vs others: real numbers on $1,000 invoices
Assuming ₹83 per USD, here is what lands in your Indian account when a US client pays $1,000.
- PayPal: 4.4% fee = $44, plus ~3.5% FX markup on conversion, GST on fee ≈ ₹662, net ≈ ₹78,500, effective cost ≈ 5.4%.
- Karbon Business: 1% fee = $10, zero FX markup, GST on fee ≈ ₹149, INR in 24 to 48 hours, net ≈ ₹82,100, effective cost ≈ 1.18%.
- Stripe for India: Around 4.3% fee plus ~2% FX spread, GST on fee applies, settlement in 2 to 3 days, net ≈ ₹77,900, cost ≈ 5.6%, see Stripe fees in India.
- Bank SWIFT: 0 to 0.5% receiving, intermediary $15 to $40, 2.5 to 3% bank FX markup ≈ ₹2,400, net ≈ ₹77,200, cost ≈ 7 to 8% with intermediaries.
- Payoneer: 2 to 3% combined fees, 1.5 to 2% FX markup, net ≈ ₹79,500, cost ≈ 4 to 4.5%.
| Platform | Platform Fee | FX Markup | Intermediary | GST on Fee | Time to INR | Net INR (Est.) |
|---|---|---|---|---|---|---|
| PayPal | 4.4% ($44) | 3 to 4% | ₹0 | ₹662 | Under 1 day | ~₹78,500 |
| Karbon | 1% ($10) | 0% | ₹0 | ₹149 | 1 to 2 days | ~₹82,100 |
| Stripe | 4.3% ($43) | ~2% | FIRA charges | GST on fee | 2 to 3 days | ~₹77,900 |
| Bank SWIFT | 0 to 0.5% + $30 | 2.5 to 3% | $15 to $40 | GST on fee | 2 to 4 days | ~₹77,200 |
| Payoneer | 2 to 3% | 1.5 to 2% | ₹0 | GST on fee | 2 to 3 days | ~₹79,500 |
Zooming in, PayPal versus Karbon:
| Component | PayPal | Karbon Business |
|---|---|---|
| Receiving fee | 4.4% ($44) | 1% ($10) |
| FX conversion | 3 to 4% markup | 0% mid market |
| Withdrawal fee | ₹0 | ₹0 |
| GST on fee | ₹662 | ₹149 |
| Settlement time | Within 24 hours | 24 to 48 hours |
| e-FIRA | Yes, often manual | Automatic |
| Net INR | ~₹78,500 | ~₹82,100 |
The 24 hour speed advantage of PayPal rarely justifies the extra cost for routine income. For regular B2B payments, the 24 to 48 hour settlement from Karbon Business keeps more in your pocket, see bank charges for foreign outward remittance.
Hidden costs that eat into your international payments
- FX spread impact: The classic silent killer. Always compare with the live mid market rate you see on Google or Xe.
- Intermediary bank fees: SWIFT paths may touch multiple correspondent banks, each deducting $15 to $40 without a heads up.
- Double conversion: Charging USD but getting paid in GBP, then converting to INR, doubles your markups. Invoice in the currency your client actually pays.
- Chargeback risk on cards: Card rails allow disputes up to 120 days. A dispute can reverse funds and cost a $15 to $25 fee, see Stripe fees in India.
- Compliance delays: Wrong purpose codes or missing documents can freeze funds. Automation that issues e-FIRA quickly reduces this risk.
- Client borne deductions: If the sender chooses BEN or SHA in SWIFT, you bear fees. Ask for OUR so the sender pays all charges.
- Currency fluctuation loss: If you must convert immediately, you lose timing flexibility. Platforms that let you hold USD, GBP, EUR, or CAD for a while can help.
Pro move: Ask clients to pay via local rails like ACH or SEPA into your local receiving accounts. You avoid intermediaries completely, you also settle faster.
Practical tips to reduce international transfer fees in India
- Prefer local receiving accounts over SWIFT wires. US clients pay you via ACH, UK via FPS, EU via SEPA, avoiding intermediary fees entirely.
- Avoid card rails for invoices over $500. For regular projects, cards cost more and increase dispute risk, bank transfers are cheaper and safer.
- Pick zero FX markup platforms. A 3% markup on ₹40 lakh yearly receipts is roughly ₹1.2 lakh lost. Karbon Business passes mid market rates.
- Batch small invoices. One monthly invoice beats four weekly ones when platforms have minimum or per transfer charges.
- Invoice in client currency. Keep conversion paths simple to avoid double markups.
- Negotiate SWIFT “OUR”. Especially for $10,000+ transfers, insist the sender pays all bank fees.
- Hold foreign currency tactically. If rates are unfavorable today, wait, a 1 to 2% move can add thousands on large receipts.
- Automate compliance. Automatic e-FIRA and purpose codes save time and prevent holds.
- Compare annual all in cost. A lower headline fee can be worse after FX and fixed costs, run the math on your actual volume.
Cheapest way to get paid from abroad India: a decision guide
The cheapest route depends on transaction size, client geography, and frequency.
- Under $700: Karbon or Payoneer via local rails, even PayPal if speed is critical. Avoid SWIFT and card rails because fixed costs bite.
- $700 to $10,000: Karbon Business local accounts or Wise SWIFT. Zero FX markup wins as amounts grow.
- Over $10,000: SWIFT with “OUR” fees or Karbon if limits allow. Focus on minimizing FX spread, not just platform fees.
Regional best practices: Share ACH for US clients, SEPA for EU, FPS for UK, NPP or local options for AU when available. Ask clients to avoid cards for B2B invoices, conversion and disputes make them costly.
India specific compliance and paperwork for foreign payments
- e-FIRA: Mandatory proof of inward remittance with FX details, needed for taxes and RBI compliance. Many platforms automate this, others require branch requests, also see Stripe fees in India for process nuances.
- Purpose codes: Choose the right RBI code for your service, for example P0802, P0803, P0904, P0913. Wrong codes trigger delays.
- GST on fees: 18% applies only to the platform’s service fee, not to your full remittance.
- Onboarding documents: PAN, address proof, recent bank statements, and a digital work profile. Karbon Business typically verifies in 2 to 4 working days.
- Limits on remittances: Service exports are generally unrestricted under FEMA when legitimate and documented.
- Tax treatment: Income is taxable in India on receipt, fees are deductible as business expenses, maintain invoices and e-FIRAs for at least six years.
Where Karbon Business fits in your payment strategy
Karbon Business is built for Indian freelancers receiving B2B payments via bank transfers.
- Best for recurring clients: Share local account details in client currency, they pay domestically, you receive INR in 24 to 48 hours.
- Ideal for $500+: 1% fee plus zero FX markup saves ₹3,500 to ₹6,000 per $1,000 compared to high fee platforms.
- Automated compliance: e-FIRA in 24 hours, pre filled purpose codes, no branch runs.
- Hold currency flexibility: Keep USD, GBP, EUR, or CAD for up to 60 days, convert when rates improve.
- Edge cases: If a client insists on cards or you need funds same day, consider PayPal or Stripe for that one off, then revert to local rails. For more on bank costs, see bank charges for foreign outward remittance.
Hybrid approach: Use Karbon for regular B2B invoices, keep PayPal for occasional urgent small transfers, keep Wise for one off SWIFT from new clients.
Quick fee calculator worksheet for your own payments
Apply these nine steps to any platform to find your real net INR.
- Invoice amount: Example $1,500.
- Mid market rate: Example ₹83, so $1,500 = ₹1,24,500.
- Platform fee: 1% is $15, 4.4% is $66.
- Fixed charges: Add any withdrawal or intermediary costs, SWIFT often has $15 to $40.
- FX markup: Convert at mid market if zero markup, else reduce the rate by the spread.
- GST on fees: 18% on the fee component only.
- Subtract GST: From your converted INR to get net.
- Effective cost %: (Mid market INR minus Net INR) divided by Mid market INR.
- Annualize: Multiply per transaction cost by your yearly number of invoices.
Outcome: You will quickly see why zero FX markup plus a low platform fee often beats seemingly “free” bank wires with hidden spreads.
FAQ
What is the cheapest way to receive international payments in India for freelancers?
For B2B invoices, the cheapest, most consistent route is a platform that gives you local receiving accounts in your client’s currency, charges about 1%, and converts at mid market with zero markup. In practice, Karbon Business fits this, ACH, SEPA, or FPS in, INR out in 24 to 48 hours, no intermediary losses. SWIFT is costlier due to FX spreads and hidden intermediary fees, cards are costliest due to 3 to 4% processing and disputes.
PayPal vs Karbon Business, which gives me higher INR for a $1,000 invoice?
Typical outcomes at ₹83 per USD: PayPal nets around ₹78,500 after 4.4% platform fee, FX markup, and GST on fees. Karbon Business nets around ₹82,100 with a 1% fee, mid market conversion, and GST on the fee only. That is roughly ₹3,600 more per $1,000 in your pocket with Karbon Business.
How do I avoid high SWIFT intermediary charges when my client prefers bank wire?
Ask the client to select the “OUR” option, so the sender pays all fees. Also provide local receiving details whenever possible, for US clients ACH, for UK FPS, for EU SEPA via platforms like Karbon Business. Local rails remove intermediaries, you see the full amount, and settlement is usually faster.
Which purpose code should I use for software development, UI/UX, or content work?
Common RBI purpose codes are P0802 for software consultancy or implementation, P0806 for other computer services, P0904 for advertising, trade fair, market research, and P0913 for architectural or technical services. Choose the one that matches your invoice scope. Platforms like Karbon Business auto suggest correct purpose codes to avoid bank queries.
Do I need an IEC code to get paid from clients in the US or Europe?
No, IEC is needed for goods, not for services. Freelancers exporting services only need PAN, a bank account, and proper documentation like e-FIRA and invoices. This keeps your onboarding simple, especially on platforms that automate compliance.
Can I hold USD or EUR for a better exchange rate, or is conversion instant?
Some platforms force instant conversion, which can be disadvantageous when the rupee is strong. Karbon Business lets you hold USD, GBP, EUR, or CAD for up to 60 days, so you can time your INR conversion when the rate improves, adding 1 to 2% upside on large receipts.
How do chargebacks work on Stripe or PayPal, and should I accept card payments for projects?
Cards come with dispute windows up to 120 days, a chargeback can reverse funds and cost a non refundable fee. For services above $500, avoid card rails. Prefer ACH, SEPA, FPS, or SWIFT with OUR, where payments are push based and chargeback risk is minimal. Karbon Business is designed for these bank based flows, making it safer and cheaper for freelancers.
How is GST applied on international payments, is it on the full remittance?
GST at 18% applies only on the platform’s service fee, not on your entire foreign remittance. Example, if the fee is ₹830 on a ₹83,000 remittance, GST is ₹149. Keep fee invoices from your payment provider as expense proof during ITR filing.
Is Wise allowed for receiving freelance payments in India, and how does it compare?
Yes, Indian residents can receive via SWIFT with conversion to INR on Wise, though local currency receiving accounts are limited for India based freelancers. Wise is transparent and competitive on FX, but if your clients can pay locally via ACH or SEPA, platforms like Karbon Business often yield a higher net due to zero FX markup and no intermediary deductions.
How long do ACH or SEPA payments take to land in my Indian bank account?
With local receiving details, US ACH or EU SEPA typically reaches your platform account in one to two business days, INR settlement to your bank is usually within 24 to 48 hours after you claim the funds. Karbon Business follows this timeline consistently for freelancers.
Can I reduce fees by batching invoices or changing currency on the invoice?
Yes, batching small invoices into a monthly invoice reduces repeated minimum or fixed charges. Also invoice in the currency your client will actually pay, USD for US clients, GBP for UK, EUR for EU, to avoid double conversion. Pair this with a zero FX markup platform like Karbon Business to maximize INR received.
What documents should I keep for taxes when receiving international payments?
Maintain client invoices, contracts, bank statements, and every e-FIRA. Your taxable income is the gross amount you bill, while platform fees and bank charges are deductible business expenses. Platforms that auto deliver e-FIRA and fee invoices, like Karbon Business, make audit trails clean and fast.
