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Making International Business Payment? Here’s What You Need to Know

You have business transactions going overseas.

You finally achieved your goal of having your brand’s global outreach touch its peak.

Yet, the banking hassle that comes with making international business payments might still be haunting you and that is why you are here.

To help you navigate the tedious processes in an international business transaction, we break down everything you need to know- what international business payment essentially means, what are your different options and how to go about doing it.

Read on…

What Is an International Business Payment?

International business payments involve the movement of funds between accounts located in different countries.

International business payments commonly involve different currencies, with foreign exchange operations.

The significance of international business payments cannot be overstated.Without such transactions, international trade would be impossible.

The seamless flow of funds across borders enables businesses to engage in international collaborations, fosters economic growth, and empowers individuals to participate in the global marketplace.

What Are the Different Types of International Payments?

International business payments offer various options for execution. Bank transfers and card payments are generally what , involving currency exchange. Meanwhile, alternative methods like cryptocurrency, mobile payments, and e-wallets are gaining prominence as well.

  1. Wholesale Payments

Wholesale payments are transactions conducted between banks and financial institutions, serving as a foundation for consumer and business operations.

This category of payments encompasses activities such as borrowing, lending, and foreign exchange. Wholesale payments also play a crucial role in facilitating imports, exports, and market trading for governments and corporations.

  1. Retail Payments

Retail payments encompass transactions between businesses and consumers, covering a wide range of activities including e-commerce purchases and employee salary payments.

Put simply, any transaction that is part of our daily routine can be classified as a retail payment.

Options for International Business Payment Processing

1. Traditional Bank Transfers

Historically, banks have played a major role in facilitating international transfers. Business owners would provide their international bank account details to authorized bank representatives, who would then initiate SWIFT transfers. Bank transfers have traditionally taken 1-5 business days for payments to be delivered.

2. Fintech Services

Fintech companies play a vital role in assisting firms with international business payments. Here's how fintech helps businesses in this area:

Streamlined Payments: Fintechs provide digital payment solutions that simplify and international business payments.

Faster Transactions: Leveraging advanced technology and payment networks, fintech enables faster settlement of international business payments.

Compliance Support: Fintech platforms integrate compliance checks to ensure businesses meet anti-money laundering (AML) and know-your-customer (KYC) requirements.

How do I pay a foreign supplier?

To pay a foreign supplier, follow these steps:

  1. Agree on Terms: Reach an agreement with your supplier regarding payment terms, currency, and any associated fees.

  1. Collect Supplier Information: Obtain the necessary details from your supplier, including their bank account information (IBAN, SWIFT/BIC code), billing address, and any specific payment instructions.

  1. Initiate Payment: Proceed to make the payment using your chosen method, ensuring accuracy in the beneficiary details and payment amount.

  1. Review Transaction Fees: Take note of any applicable transaction fees, exchange rates, or other charges linked to your chosen payment method to understand the total cost of the transaction.

  1. Confirm Payment: After completing the payment, verify with your supplier that they have received the funds and reconcile the payment with any outstanding invoices or orders.

  1. Maintain Records: Keep comprehensive records of the payment transaction, including payment receipts, invoices, and communication with the supplier, for future reference and accounting purposes.

How Do International Business Payments Work?

  1. Payment Request: The recipient, usually the business or vendor receiving the payment, provides the sender with the necessary payment details, such as the invoice amount, currency, etc.
  2. Payment Instruction: The sender prepares a payment instruction that includes the receiver’s banking information, such as their bank account number, SWIFT/BIC code, and relevant details.
  3. Sender's Bank: The sender initiates the payment by submitting the payment instructions to their bank. The bank verifies the account balance and ensures compliance with regulatory requirements, and processes the payment. Banks may charge a fee for this service called NOSTRO charges.
  4. Intermediary Banks: In some cases, the payment may pass through one or more intermediary banks, depending on the payment route.
  5. Foreign Exchange: If the payment involves a currency conversion, the payment amount is converted from the sender's currency to the receiver’s currency. Foreign exchange rates are applied during this process.
  6. Recipient's Bank: Once the payment reaches the recipient's bank, the funds are credited to the recipient's account based on the provided payment instructions.
  7. Payment Confirmation: The recipient's bank confirms the successful payment to the recipient, usually in the form of a SWIFT payment invoice, payment advice, bank statement, etc.

How Do You Make an International Business Payment With Karbon Forex?

With Karbon by your side, businesses can unlock a treasure trove of opportunities, accepting payments from over 165 countries. Gone are the days of complicated currency conversions and hefty exchange fees.

Karbon has cracked the code, providing a seamless, hassle-free experience for international business payments. It's time to embrace a world of limitless possibilities, where international payments are no longer a challenge

  • Customer Support: Experience exceptional client support like never before with Karbon. No more worrying about the status of your transactions. Simply log in to your Karbon User dashboard, and all the information you need will be right at your fingertips. But wait, there's more! In case you have any queries or need assistance, our dedicated team of customer executives is just a phone call away.
  • Hassle-free compliance process: Say goodbye to the headaches of compliance processes with Karbon. We've streamlined everything to make it hassle-free for you. All you need to do is provide the necessary documents and leave the rest to us. Our expert team will handle the compliance procedures with efficiency and precision
  • Cheapest markup rates: Unlock unbeatable savings with Karbon! Our markup rates are a jaw-dropping three times cheaper than those offered by traditional banks in India. With Karbon, you can enjoy the same reliable and secure international payment services at a fraction of the price. Experience the power of affordability with Karbon today! Sign Up Now!

FAQs on making international business payments

Is it necessary to have a business bank account with Karbon in order to initiate an international payment?

You do not need to have a current account with Karbon to make an international business payment. If you are conducting a transaction from any of the RBI-recognized banks such as ICICI, AXIS, HDFC, or others, your payment will still be processed seamlessly.

How long will it take for an international payment to get fully processed?

If you are making a payment to a vendor listed in our historical transaction records, we ensure a quick transaction time of as little as 24 hours (provided all required documents from your company's end have been provided). However, for first-time transactions with new vendors, the processing time may take up to 3-5 working days.

What are the charges associated with making an international business payment?

Karbon provides transparent disclosure of all fee components, including form 15 CA 15 CB, SWIFT fee, NOSTRO fee, and more. Contact us now to find out the markup fee you are eligible for!

How can I make foreign payments from India?

To make foreign payments from India, businesses can opt for  Karbon Forex which offers a seamless and efficient process. Here's how you can do it:

  • Sign up and verify your account.
  • Add beneficiary details.
  • Select payment method, amount, and currency.
  • Review and confirm the transaction.
  • Track your payment.
  • Receive confirmation.

What are the methods of payment in foreign trade?

Different ways of paying for goods in foreign trade make it easier to do business across countries. Cash in Advance means the buyer pays before getting the goods, so the seller feels safe. Letter of Credit guarantees payment when certain documents are shown, which helps both the buyer and seller. With Documentary Collection, the buyer's bank gets the money when shipping documents are given. An Open Account lets the buyer pay after getting the goods, based on trust. Consignment means the seller sends goods to the buyer, who pays later after selling them. Payment Platforms like PayPal offer easy digital payments with lower fees. Each method helps with different needs and risks in international business.

How do you deal with foreign suppliers?

Dealing with foreign suppliers involves researching, communicating, negotiating terms, documenting agreements, verifying credentials, agreeing on payment methods, monitoring performance, and building long-term relationships. For example, if an Indian software company intends to delegate coding tasks to a Ukrainian counterpart, they would commence by researching prospective suppliers, outlining project specifications, and bargaining over terms such as costs and deadlines. Upon reaching an accord, they would formalize the agreement, authenticate the supplier's credentials, and settle on a secure payment channel in adherence to Indian outward remittance regulations. Overseeing the supplier's performance throughout the project is essential, with a focus on cultivating a lasting partnership for potential future endeavors.

Can GPAY do international transactions?

No. With respect to making international business transactions, google pay or Gpay cannot be used. There are exceptions however.

  1. Online Purchases: Users in India can use GPAY to make purchases from international online stores that accept Google Pay as a payment method. For instance, buying books from Amazon's US website or purchasing digital goods from international app stores.

  1. Travel Expenses: Travelers can use GPAY for various international transactions, such as booking flights, hotels, or activities abroad. For example, booking airline tickets through international travel websites or paying for accommodations through platforms like Airbnb.

  1. International Remittances: Some users may use GPAY to send money internationally to friends or family members. While this usage may be limited compared to other dedicated remittance services, GPAY may facilitate peer-to-peer international transfers in certain regions.

  1. Digital Services: GPAY can be used to pay for digital services or subscriptions offered by international companies. For example, purchasing software subscriptions, accessing online courses, or paying for streaming services like Netflix or Spotify.

Does UPI work internationally for business payments?

No. Unified Payments Interface (UPI) is exclusively tailored for domestic transactions within India and does not cater to international business payments. Developed by the National Payments Corporation of India (NPCI), UPI is a swift payment system enabling instantaneous fund transfers between Indian bank accounts through mobile platforms. Although UPI ensures convenient and secure domestic transactions, it does not support international payments for business endeavors.

Which document is required for foreign payment?

For business payments to overseas entities, an essential document required is Form 15CA and Form 15CB. Form 15CA tells about the money sent to another country, while Form 15CB is a certificate from a Chartered Accountant (CA) saying the payment follows tax rules and international agreements. These forms are needed by the Income Tax Act of 1961 for sending money abroad from India.

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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