Payments Resources

Payment Gateway Rails: How does Cross Border Checkout from USA to India Work?

Payment Gateway Rails: How does Cross Border Checkout from USA to India Work?

Every day, digital payment gateways facilitate seamless online cross-border transactions. With the cross-border payments industry projected to reach $156 trillion USD by 2022, the integration and functionality of these systems are more crucial than ever. Although these transactions might seem like simple clicks to the average consumer, they are underpinned by robust infrastructures including API calls and always-on servers that cater to both B2B and B2C markets globally.Online cross-border transactions happen on the daily through a whole slew of digital payment gateways. They happen so frequently and so seamlessly that the cross-border payments industry is expected to reach $156 trillion USD in 2022¹.

The Indian Merchant

As Indian merchants continue to expand their reach into international markets, understanding the mechanics of international transactions becomes vital. In the fiscal year (FY) 2023–24, India's export figures are forecasted to be US$776.68 billion1. Particularly, the largest market for these exporters, are the United States, representing a significant opportunity. The U.S. will account for 17.7% of India's exports in FY 2023-24, which has increased over the past 13 years by 7.6 percentage point2.

The American Buyers

To capture the American market effectively, it's essential for platforms to offer diverse payment methods including card payments, digital wallets, and local bank transfers. In 2023, cards were the primary payment method in the U.S. digital commerce market, accepted by 99% of top online retailers, reflecting consumer preference and retailer confidence3

Digital wallets are 2nd in popularity at 81% acceptance, driven by the ubiquity of credit and debit cards. Consumers can link their payments and top up their wallets using card networks such as Visa, Mastercard, and American Express. By integrating and supporting digital wallets, merchants can cater to the preferred payment methods of U.S. consumers.

In addition, other payment methods include bank redirect apps and local bank transfers using banks such as:

JPMorgan Chase

Bank of America

Citibank group

Wells Fargo

Goldman Sachs

Morgan Stanley, etc.

Once an American buyer completes a purchase, the payment gateway springs into action, processing payments through various methods. Whether it’s a direct card payment or a local bank transfer, each method utilises distinct payment rails. Notably, if the payment method is a local bank transfer, the funds are initially held in the payment provider’s local bank account before transferring to the seller’s bank account in India.

Cross-Border Payment

Sending payments across borders essentially involves transferring funds from an account in the origin country to one in the destination country. In this scenario, the origin is the United States and the destination is India.

For bank transfers, cross-border payments are typically conducted via SWIFT wire transfers. Beyond that, card networks have their own payment rails for transferring funds, although platform fees may vary depending on the payment method used.

Key cost factors to consider in cross-border payments include:

  • Bank Surcharges: These are linked to the banks themselves and the surcharge amount varies by bank.
  • Card Surcharges: These can reach up to 4% and are dependent on the card network's fees.
  • Wire Transfer Costs: While expensive for international transactions, wire transfers tend to be cheaper for local transfers.
  • FX Conversion Costs: Foreign exchange conversion costs may also be applied on top of the payment method costs.

For more information, read our blog article on the actual costs of choosing a payment gateway.

It's important to note that some payment providers, like Tazapay, may offer lower platform fees through partnerships with local payment providers, thus reducing these costs. Understanding the intricacies of cross-border checkout and payment gateway rails from the USA to India can help merchants optimise their payment strategies and reduce transaction costs.

Hedging Against FX Fluctuations by Holding USD in a Multi Currency Account

For merchants dealing with suppliers internationally, opting to receive payments in USD can be a strategic move to hedge against fluctuations in their local currency.This strategy can be implemented by opening a multi currency account in the merchant's own country. Such accounts enable merchants to hold USD, their local currency, and any other necessary currencies when conducting business across borders. A multi currency account not only provides flexibility in handling various currencies but also offers a buffer against the volatile nature of foreign exchange rates, thus stabilising financial operations.

By maintaining USD in a multi currency account, merchants can mitigate the risks associated with FX conversion costs and enhance their financial strategy in international trade. This approach ensures that they are well-positioned to manage global transactions efficiently and protect their financial interests against adverse movements in exchange rates.


The final step in the international payment process occurs when the merchant based in India receives their payment from the payment provider. Merchants who operate their own sites, integrate payment platforms, or utilise e-commerce tools like Shopify or WooCommerce can generally expect to receive their payouts by the next business day or within a week. This timeline depends on the buyer's chosen payment method and the merchant's payout request timing.

Conversely, merchants who sell through online marketplaces may experience a fixed payout schedule, often consolidated to a single day each month to economise the process for the platform. The specifics of this schedule are typically outlined in the e-commerce marketplace’s Terms & Conditions, which merchants agree to upon registration. Subsequently, these funds are compiled and transferred to the merchant’s local bank account in India.

Key Indian banks involved in these transactions often include:


State Bank of India


Yes Bank

Bank of Baroda

Bank of India

Legislation and Compliance

After receiving international payments, it is crucial for Indian merchants to secure an FIRC (Foreign Inward Remittance Certificate) or FIRA (Foreign Inward Remittance Advice) to demonstrate that there has been a foreign inward remittance into an Indian bank account. This step is vital for complying with the legislative requirements established by the Reserve Bank of India (RBI) to prevent money laundering and fraud within the country.

To obtain an FIRC or FIRA, the Indian exporter must request the document from an Authorised Dealer Category 1 (AD1) bank that has processed their cross-border payment. As of 30 Apr 2024, the list of AD1 banks are as per the following document by the RBI⁴. However, the RBI also provides a list of such banks on their website5, which can be consulted by merchants to ensure they engage with the appropriate financial institutions for their compliance needs.

Obtaining these certificates is a mandatory part of the documentation process for Indian exporters, serving as proof of the legitimacy and legality of their international transactions. This not only fulfils regulatory requirements but also helps in maintaining transparent and secure financial practices.

With an understanding of the nuances of cross-border payments from the USA to India, merchants can optimize their checkout processes to appeal to American consumers and ensure smooth financial transactions. For those seeking an efficient payment gateway, consider Tazapay, which offers extensive coverage and local payment options in over 70 major markets, helping you reduce cart abandonment and improve cost-efficiency.

By keeping these steps and features in mind, you can choose a payment provider that significantly reduces cart abandonment and offers substantial time and cost savings. For those seeking an efficient payment gateway, choose Tazapay. With coverage in over 173 countries and local payment options in more than 70 major markets, Tazapay enables you to provide a seamless checkout experience that meets the needs of customers globally.

Contact us for your payment solutions and ensure your business thrives in the competitive landscape of international e-commerce.

1 India market’s 2024 forecasted export figures
2 India’s export reliance on the US (Business Standard) 

3 2023 Digital payment trends in the US
4 List of RBI approved AD1 banks as of 30 April 2024 

5 RBI website