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

Amirul Imtiaz bin Shah Rizal
Jul 18, 2022
5 minutes of read


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

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.

Digital payments work so frequently and seamlessly such that it may only look like a few clicks between payment providers to an average Joe. But what belies these clicks are infrastructures held in place via API calls, always-on servers, and other functions that serve both B2B and B2C markets globally.

With this in mind, the discerning merchant based in India may be curious to know how their payments work when they export their products or services on the international market. After all, India’s export market is sized at USD 284 billion for goods and USD 205 billion for services in the year of 2020².

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A market of interest to these Indian exporters would be the United States of America, who is India’s largest destination country valued at USD 64.2 billion in 2020². Exporters in India would stand to gain from targeting this country’s consumers by not only offering the product or service American buyers would need, but to also ensure that the checkout process is localised to their sticky buying habits.

Online Checkout: The American Buyer Makes their Payment

For platforms that would like to optimise their checkout to the US market, it should ideally have multiple payment methods such as card payments, digital wallets, local bank transfers, etc.

In the USA, cards have a very strong presence both online and offline, where credit cards are the most common payment method in the US consisting of 58% of the 2020 eCommerce payments market according to JPMorgan’s study3.

Some of the most used card networks are Visa, Mastercard, American Express and Discover. The ubiquity of credit cards and debit cards has made them an enabler of digital wallets in the US where consumers can link their payments and top up their digital wallets using card networks. Thus, making it the second most popular payment method there.

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 the payment is made by the buyer, the payment gateway starts processing the payment. The process differs for different payment methods used to pay. If the buyer has chosen to pay by card or wire transfer, the funds would not be held at the local bank account but sent directly using the payment method’s payment rails.

On the other hand, if the buyer pays by local bank transfer, it will first be held by the payment provider’s local bank account before transferring the funds to the seller’s bank account in India.

Cross-Border Payment: Sending the Money from USA to India

Sending payments cross-border can be simply boiled down to sending money from an origin country’s account to a destination country’s account. In this instance, the origin country would be the United States and the destination country is India.

For bank transfers, cross-border payments are sent via SWIFT wire transfers. Outside of the bank transfer payment method however, card networks would have their own payment rails to send funds into. But platform fees may still vary from one payment method to another.

Generally speaking:

  • Bank Surcharges affect payments linked to the banks themselves. The surcharge amount varies depending on the bank.
  • Card Surcharges can go as high as 4%, and depends on the card’s network fees.
  • Wire Transfer Costs are expensive for international transactions, but tends to be cheaper for local transactions.
  • FX Conversion Costs may also be levied on top of payment method costs.

While it would be beneficial to keep these factors in mind, some payment providers like Tazapay may have cheaper platform fees due to partnering with local payment providers to keep these costs low.

Hedging Against FX Fluctuations by Holding USD in a Multicurrency Account

For merchants that deal with suppliers internationally, it may make sense to opt to receive payments in USD in order to hedge against fluctuations in their local currency.

This can be achieved by opening a multicurrency account in the merchant’s own country so that they can both hold USD, their local currency, and any other currencies that they may need when dealing with other businesses.

Payout or Disbursement: Releasing the Payment to the Indian Seller

The last step in international payments happens when the merchant based in India would receive their payment from the payment provider.

Merchants who built their own with integrations to the payment platform, have built their storefronts with tools like Shopify or WooCommerce, or use the payment platform directly can expect to receive their payouts by the next business day or a week depending on the buyer’s chosen payment method and whenever they request for the payout.

On the flipside, merchants who sell via an online marketplace may have a fixed time period to receive their payout as it is more economical for the online platform to club their payouts to a single day of the month. When this happens would be mentioned on the eCommerce marketplace’s Terms & Conditions page when the merchant first signs up with the platform to sell. These funds then get compiled and sent to the Indian merchant’s local bank account.

Some major Indian banks to look out for include:

  • HDFC Bank
  • State Bank of India
  • ICICI Bank
  • Yes Bank
  • Bank of Baroda
  • Bank of India etc.

Legislation and Compliance: Proof of Export with an FIRC/FIRA

After receiving any form of international payments, the Indian merchant needs to obtain an FIRC or FIRA to prove that there was foreign inward remittance into an Indian bank account. Obtaining an FIRC/FIRA is part of the legislative requirements set in place by the RBI in order to prevent money laundering or fraud from taking place within the country.

Obtaining an FIRC or FIRA would require the Indian exporter to request for the document from an AD1 (Authorised Dealer Category 1) bank that has processed their cross-border payment. RBI has provided a list of such banks on their website⁴.

US to India Cross Border Payment in a Nutshell

With this knowledge on how cross-border payments work from the United States to India, you now know the importance of having an online checkout that not only caters to the American consumer in terms of ease of use, but also allows for a seamless transfer of money from one country to another.

Keeping these steps and features in mind will ensure that you are able to select a payment provider that helps you to decrease cart abandonment and passes time and cost savings to you. If you are looking for a payment provider, why not give Tazapay a try? With coverage of over 173+ countries and local payment options in over 70 major markets, satisfy your customers anywhere in the world by providing them a seamless checkout experience.


  1. Three trends redefining the global cross-border payments market
  2. India (IND) Exports, Imports, and Trade Partners | OEC - The Observatory of Economic Complexity
  3. 2020 E-commerce Payments Trends Report: United States Country Insights
  4. RBI: Authorized Dealers in Foreign Exchange
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Payment Gateway Rails: How does Cross Border Checkout from USA to India Work?
Payments Resources

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

Jul 18, 2022
5 min of read

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