Globalization and the great digital shift are doing much to create new revenue opportunities for all manner of firms — large and small — that export their offerings (sometimes via platforms) into new markets.
Reeju Datta, co-founder of Cashfree Payments, told PYMNTS in a recent interview that the complexities of inward remittances can prove challenging to smaller Indian firms when it comes time to receiving payment.
He noted that inward remittances, from an Indian enterprise’s perspective, are tied to selling goods or services into foreign corridors — a freelancer, for example — needs to accept payments from outside India.
Cost Complexities on Multiple Geographies
Some of the same challenges are in place no matter where the payment is originating (abroad or at home), said Datta. Those challenges include everything from setting up business accounts with a bank, or even getting payments functionality up and running in the first place.
“But there are challenges that are unique to the exporter,” said Datta. “The biggest challenge is how do you access multiple geographies?” The payment methods preferred in those new countries, Datta said, might be significantly different than what is most favored in India. Some consumers might favor PayPal, for example, while others might opt for automated clearinghouses.
See also: Inside the Upside of India’s New Bundled, Cross-Border Remittance System
In the case of the latter option, noted Datta, there’s a higher cost associated with the payment — and it’s a fixed cost, which renders low-value payments more expensive, especially when factoring in currency costs. For some firms exporting what they have on offer beyond India — freelancers, for example — they can wind up being prohibitive.
Compliance Complexities
Datta told PYMNTS that there are also costs and time involved in ensuring that government rules and tax collection standards are adhered to. Many payment methods are tailored to large companies and not for the smaller and midsize firms so prevalent in India’s economy. The small eCommerce outfit that has found success domestically, with a hypothetical $1 million top line, would understandably want to see what momentum can be gained in foreign markets.
“On one side of the equation you might have businesses outside of India that want to send payouts to multiple Indian bank accounts for payments for goods or services that were delivered,” which also poses a thorny issue for the platforms themselves: How to onboard those accounts and ensure that the right documentation and compliance is in place?
See also: Cashfree Payments Unveils New Tool for Digital Lending
India’s businesses must also contend with getting documentation known as a Foreign Inward Remittance Certificate (FIRC) that documents and proves that payments have been sourced, sent and received — and reported to the relevant government portals. There are tax benefits that can accrue to exporting firms, said Datta, which of course can help boost cash flow.
Streamlining Cross-Border Payments With Best-in-Class Infrastructure and Partnerships
Third-party providers and payment processors such as Cashfree Payments, said Datta, can help eliminate some of the complexities — enabling payments acceptance across a variety of markets and local payments choices. Cashfree also enables the disbursement of funds and helps client firms make payouts.
“We’ve been partnering with the FinTechs that solve the problems for these exporters,” said Datta, including obtaining FIRC and “for activities like onboarding and KYC.”
Those streamlined partnerships help cut down on the costs where an exporter would, traditionally, partner with a bank and upon invoices being satisfied (and payments received) could pay as much as $50 a transaction. Cashfree’s ability to “bulk up” those payments across exporters, and its experience in negotiating discounts with partner banks, can improve the flow of funds and margins.
“The payments come through in time, with the lower transfer costs, and all of the associated documentation is there, too,” he told PYMNTS.
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