Top Ways For Indian Freelancers To Accept Overseas Payments in 2022
As many people sought alternative work opportunities following job losses in the pandemic, India emerged as the second-fastest-growing freelance market in the world in 2020.
This transition in the working pattern of people, including those in technology services, has contributed to a dramatic shift in traditional employment models.
Freelancers in India grew to 46% in the first and second quarters of 2020. And, that number has steadily grown amidst the continuing Covid-19 situation.
The freelance economy of India involves at least 15 million people. It is reported that the revenue of freelancers grew by 28% in just two months between May and June of 2020. The industry is expected to grow further to approximately $20 billion - $30 billion by the end of 2025.
In this digital age, it is common for freelancers to have clients in South America, Europe, or even across the world. And considering India is one of the best places for clients to find extraordinary talent at affordable rates, Indian freelancers are increasingly serving overseas clients and companies.
But if you are a freelancer who receives foreign payments, you know the challenges that come with it.
For one, it is difficult to determine the best payment option for you and your clients given the numerous choices available. Also, while deciding, you need to be mindful of the the time factor as well as the transfer charges and related fees.
But don't worry, you are in the right place. This guide will tell you all you need to know to choose the best payment option to receive your international payments in India.
The fundamentals of accepting international payments in India
Most money transfer providers and banks offer different services at varying costs. But the crucial elements to consider while receiving payments in India are:
- The time it takes for the funds to hit your account.
- The limit on the maximum amount receivable.
- The fees involved in using the service.
- The ease of using the service.
You also need to ensure that you are not paying any hidden fees when receiving money in India.
Many service providers use a weaker exchange rate instead of the mid-market rate while converting the funds to INR. You can easily confirm the accurate exchange rate on Reuters or Google. If it is different from what you are receiving, you are likely paying a hidden fee.
Most international clients pay in US Dollars or their local currency. This means, you must pay a currency exchange spread when receiving the payment. This could be anywhere between 1% - 4% of the total amount.
Credit card payments
In case your clients pay you through Paypal or a credit card, you will have to pay an additional 3 - 4% of the amount in fees.
Wire transfer fee
If your client send you the funds through wire transfer, they will have to pay an international wire fee that can go up to $50. There can even be intermediary bank charges close to $20 - $30, and your bank can charge you a fixed fee to receive the wire.
If you are a freelancer and your clients are located in various countries, you will likely need multiple services or accounts to receive those payments.
Platforms like Upwork or Freelancer charge up to 20% of the earnings as fees. You must keep this in mind if you are freelancing via such platforms.
Is the payment received from foreign companies taxable under the law of India?
So, you have chosen a provider for your international transfer, but are you aware of the tax you will be charged when you receive it?
If you are receiving income as a freelancer, the amount received will be added to your net income for that year. Then, you will be taxed as per your income slab.
If you receive a payment from your client into your personal account, any amount above INR 50,000 is taxable.
Note that this is entirely different from receiving money from your relatives, where the amount received comes under gift tax.
How to receive international payments in India
The various ways to accept payments from foreign companies are:
With Wise, your clients can easily send money using smart technology and keep costs low. Wise uses the mid-market exchange rate, which helps keep things relatively transparent and fair. You'll never come across any of the hidden fees or any markups here.
Wise can receive payments from over fifty-nine countries into India. Moreover, it provides high security and accepts debit and credit cards. It offers a straightforward sign-up process as well.
The tool Wise Batch Payment is convenient for companies to pay multiple salaries in one go. But if your client is using it, remember that you will not be able to track the transaction status.
PayPal has been one of the most popular money transfer services globally. However, it's neither the cheapest nor the easiest to use.
Not only is the account opening process tedious, but you are also charged each time you pull the money into your regular bank account. Though it's popular and well known, other providers are cheaper and better for receiving international payments.
Instamojo offers a relatively seamless payment link and payment gateway. There is no account maintenance or annual fee.
The platform does not offer a multi-currency option, so all payments are processed in Indian currency. For you to accept international payments, you need to contact Instamojo directly as it doesn't come with a global account.
Payoneer is popular with overseas clients as they can pay in various currencies such as EUR, USD, GBP, AUD, JPY, CAD, and MXN.
Once the funds hit your Payoneer account, you can move them into your INR account at a 2% fee levied over the mid-market exchange rate. The client is also charged a fee.
WinVista Multi-Currency Account (MCA) helps you create a foreign currency account to collect payments in your client's local currency. It allows over 30 currencies, including USD, EUR, and GBP. You can then get your WinVista MCA linked with your local bank account to receive the funds.
To open an account, you need a PAN card and address proof. The signing-up process is relatively easy and quick.
Once you receive the payment from your client, it is converted to INR within your account at a very transparent conversion rate. You can decide whether to transfer the money to your local Indian bank, which takes one working day or keep it in your account.
WinVista MCA makes the process of settling the invoice convenient for both the client and you.
Skrill is another popular payment gateway that offers a competitive exchange rate and low transaction cost to its users. It's less popular than PayPal, but it provides benefits such as free money transfer service, zero deposit fees, and zero withdrawal fees that make it an good choice for freelancers.
2Checkout offers a wide variety of choices to its users. It lets you choose between 87 currencies, 15 languages, and eight payment types. It can select even PayPal as one of its payment methods.
2Checkout offers an advanced fraud protection feature that protects its customers from scams. The only drawback to using it is the average fee it charges on currency conversion, which is around 2 - 5% above most bank exchange rates.
Stripe was founded in 2011, but it entered the international payments market in India only recently. It is considered the 2nd most popular online payments gateway after PayPal due to its ease of use. Its fees are also lesser than PayPal's.
PingPong is one of the newest payment gateways, charging lower payment acceptance fees and offering excellent customer support.
PingPong will charge you a 1% fee on receiving money from your overseas clients as a freelancer.
Clients are usually less inclined to send you payments directly to your Indian bank account as it takes longer for funds to reach you, and many times, banks hold them for additional checks.
Regardless, these are the banks you could work with to receive overseas payments.
SBI can help you receive overseas funds via demand draft, wire transfer, and Express Remit. Please note that Express Remit is available only for individual accounts, not business accounts.
SBI charges a fee to the sender, so be prepared to have your client deduct that amount from your paycheck.
HDFC offers international money transfers into India in twenty-two currencies such as AED, USD, JPY, EUR, AUD, GBP, CAD, etc. It also provides options of foreign currency cheque collection and foreign currency demand draft. While there is no charge for receiving money, your client will be charged for the transfer.
With ICICI, you can receive overseas funds into your account in India via wire transfer. You need to provide the client with details such as your account number, the amount receivable, and the wire transfer instructions.
Once your client makes the payment, it may take approximately 24 - 48 hours for the funds to reflect at ICICI. As a final step, you need to provide supporting documentation to receive the money in your account.
Axis Bank lets you receive inward remittances directly into your business account through the online inward remittance option, wire transfer, or SWIFT. These are available in fourteen currencies. As always, you need to provide all the necessary documents to verify the transaction.
We hope this article helps you in zeroing on the best way to receive international payments in India. In case you are interested in working for a reputable company instead of dealing with the constant uncertainty in a freelance career, look no further.
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