5 Mistakes Indian Businesses Make When Receiving International Payments (2026)

Most Indian businesses lose money on international payments without realising it. Here are the five most common mistakes — and what to do instead.

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Mistake 1: Using PayPal as the Default International Gateway

PayPal is familiar. That's the only reason most Indian businesses are still on it. The economics are indefensible:

• PayPal charges 4.4% + $0.30 processing fee
• Then applies 2.5-3.5% forex markup on withdrawal to your Indian bank
• True effective rate: 7-9% per payment On $5,000/month: PayPal costs ~$350-450/month. Playto Pay costs $200 (4% cards) or $50 (1% VBA). Annual saving from switching: ₹1.2-3.3 lakh on $5K monthly revenue.

PayPal also freezes Indian accounts far more aggressively than purpose-built Indian cross-border gateways. The combination of high fees AND hold risk makes it the worst choice for Indian service exporters.

Do this instead: Playto Pay card link (4% flat, zero markup) or VBA (1% flat). Share the payment link with clients and retire PayPal.

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Mistake 2: Not Accounting for Forex Markup

Every Indian business calculates their gateway's stated fee. Almost none calculate the forex markup on top.

When you receive USD via a gateway that applies 1.5% below mid-market on conversion: that's 1.5% you never see, not deducted from any fee statement, not labelled as a charge.

Check your last 5 international receipts: Compare the exchange rate your gateway applied to the mid-market rate on that date (Google "USD INR [date]"). The difference is your forex loss per transaction.

At $10,000/month with 1.5% forex markup: ~$150/month = ₹1,24,800/year silently lost to FX.

Do this instead: Use a gateway with zero forex markup. Playto Pay applies mid-market rate on all settlements.

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Mistake 3: Receiving Directly to Indian Bank SWIFT Without a VBA

Directing clients to wire directly to your Indian bank SWIFT account seems simplest. It's not:

• SWIFT takes 3-6 business days vs 1-2 for VBA
• Your Indian bank applies their TT buying rate (1.5-2% below mid-market)
• You must request FIRC from the bank (₹500-2,000 each, 2-5 days)
• Every wire goes through correspondent banks (delay and error risk) VBA solves all of this. Client sends domestically. Arrives faster. Zero markup. FIRA auto-generated.

Do this instead: Playto Pay USD/GBP/EUR/AED VBA at 1% flat. Client sends a domestic transfer. You receive INR daily.

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Mistake 4: Not Filing LUT Before April 1

Without a filed Letter of Undertaking (LUT), your international service invoices should technically carry 18% IGST. Most Indian businesses don't file LUT on time and either:

a) Incorrectly issue zero-rated invoices without LUT authorization, creating GST compliance risk, or

b) Pay 18% IGST upfront and claim refund (painful cash flow impact, 30-60 day refund cycle)

LUT is filed once a year, takes 30 minutes on the GST portal, and is free. There is no reason not to file it before April 1 every year.

Do this instead: Calendar a reminder for March 25 every year. File LUT at gst.gov.in before April 1. Spend 30 minutes. Save months of GST refund hassle.

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Mistake 5: Not Generating and Storing FIRA Per Transaction

FIRA is required for:

• GST zero-rating export documentation
• Income tax return foreign income declaration
• FEMA compliance
• Proof of payment receipt if ever audited Many Indian businesses collect international payments for years without systematically generating and filing FIRA. When it's needed (GST refund claim, IT scrutiny, bank query), they scramble.

At 50 international transactions/year: Retroactively requesting bank FIRC for each = 50 x ₹1,500 = ₹75,000 + weeks of admin effort.

Do this instead: Use a gateway that auto-generates FIRA per transaction (Playto Pay). Download quarterly, organize by financial year, hand to CA at ITR time.

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Summary