PSD2, or the Revised Payment Services Directive, is the European Union's framework for regulating payment services and creating a more open, competitive, and secure payments market. It introduced stronger security requirements for online payments while opening the market to regulated third-party payment providers.

PSD2 applies to payment service providers and banks within its scope across the EU and European Economic Area. Among other requirements, it introduced Strong Customer Authentication (SCA) for many electronic payments and established rules governing regulated third-party providers that access payment accounts through open banking.

The directive was adopted in 2015, and EU member states were required to transpose it into national law by 13 January 2018. The SCA requirements subsequently came into force in September 2019, completing the main PSD2 implementation.

PSD2's key features include strong customer authentication, open banking through regulated third-party providers, rules for payment initiation and account information services, and restrictions on certain payment surcharges. Together, these measures were designed to make electronic payments safer while opening the market to new payment providers.

PSD2 applies to payment service providers operating within the EU and EEA, including banks and regulated payment institutions. The EEA includes the EU member states plus Iceland, Liechtenstein, and Norway.

The UK is no longer part of the EU's PSD2 framework or its payment-services passporting system. It now operates under its own Payment Services Regulations, although many of its payment rules remain closely aligned with PSD2.

PSD2 does not directly regulate an Indian freelancer or exporter simply because they receive a payment from Europe. However, the European payment provider handling the transaction may have to follow PSD2 requirements such as strong customer authentication when the customer authorises the payment.

PSD2 makes payments safer and more transparent for consumers while giving regulated non-bank providers more room to compete with traditional banks. Its main benefits include wider open banking access, greater control over account data, clearer payment information, stronger refund protections, and improved security.

PSD2 expanded on PSD1 by making payments more secure, opening bank-account access to regulated third parties, strengthening consumer protection, and bringing newer payment services into the regulatory framework.

PSD1 was approved in 2007 and came into effect in 2009. It created a common legal framework for electronic and non-cash payment services across the EEA, opened the market to new payment service providers, and helped establish the regulatory foundations for the Single Euro Payments Area (SEPA).

By 2013, the growth of digital commerce and new payment services had exposed gaps in PSD1. The European Commission proposed PSD2 to extend consumer protection, improve payment security, and create a more competitive market for newer payment providers. PSD2 was approved in 2015, with EU member states required to implement it by 13 January 2018.

How Is PSD2 Relevant to Stop Hidden Fees?

PSD2 makes payment costs more transparent by requiring clear disclosure of charges and exchange rates, restricting certain surcharges, and giving consumers greater visibility into their account activity through open banking. It offers:

How Does PSD2 Affect Indian Freelancers and Exporters Receiving International Payments?

PSD2 can affect Indian freelancers and exporters indirectly through the European payment provider handling the transaction, particularly when that provider applies Strong Customer Authentication (SCA). The Indian recipient does not have a direct PSD2 compliance obligation simply because they receive a payment from Europe. Some challenges include:

A Mumbai-based UX designer invoices a Berlin startup. When the startup initiates the payment, its European bank may require SCA before authorising the transaction. If the client does not complete that verification, the payment may not be sent. The designer therefore sees a delay without necessarily knowing that the problem occurred during the client's bank-side authorisation.

What are the Challenges and Concerns With PSD2?

The main PSD2 challenges fall into two groups, i.e., customers face more choice, data-privacy concerns, and extra authentication steps, while businesses face compliance costs, technical integration work, stronger competition, and the need to educate customers.

What Does the Global Payments Landscape Look Like With PSD3?

PSD3 and the accompanying PSR are set to make Europe's payment market more connected, more tightly regulated, and harder to exploit. The changes affect how banks share account data, how payment fraud is detected and handled, and how non-bank providers participate in payment infrastructure. As of August 2026, however, the new framework is not yet in force.

<a></a>From Open Banking to Enforceable Infrastructure

The reforms aim to make account-data sharing work more consistently while giving users more say over access to their information.

Fraud prevention is becoming a larger part of the payment framework, with checks and provider responsibilities changing alongside it.

The changes also make it easier for some non-bank firms to participate in payment infrastructure while tightening the boundaries around exemptions.

How Does Skydo Help Receive Payments from Europe?

For Indian freelancers and exporters, Skydo offers a digital way to collect money from European clients without dealing with the usual bank paperwork and uncertainty. It combines local EUR receiving details, upfront pricing, payment visibility, automated FIRA generation, and export-compliance support in one platform.

With <a href="https://www.skydo.com/">Skydo</a>, you can get paid through a EUR account. Skydo gives you EUR receiving details at no account or maintenance cost. You can also open accounts in USD, GBP, SGD, AUD, and CAD. Your European client can pay using a local transfer method such as SEPA, while setup takes about five minutes and does not require a relationship manager.

Additionally, you know the cost before you transact. Payments with Skydo are:

There is no monthly fee or FX markup, so the exchange rate does not come with an additional percentage margin. Also, Skydo's live tracking shows the progress of an incoming transfer, including when a payment is held up during processing. This gives you visibility instead of having to repeatedly check with banks or the payer.

Additionally, Skydo generates an instant FIRA at no extra charge for each payment automatically. The certificate provides a record of the inward remittance that can be used for GST, tax, and other compliance requirements.

Exporters can connect their DGFT account, upload shipping bills in bulk, and use Skydo's payment mapping to generate eBRCs. The platform also provides support for closing relevant EDPMS entries. Alongside this, once Skydo receives the payment, funds are transferred to the user's Indian bank account within 24 hours, giving businesses a more predictable payout window.

Proforma Invoice: Meaning, Format And Template

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What Is a BACS (Bankers' Automated Clearing System) Payment?

BACS is the UK's electronic clearing system for moving pounds sterling between bank accounts. Instead of settling each transaction on its own, it collects payment instructions into batches and clears them on a fixed three-working-day cycle.

That batch design is what makes it the default for scheduled, high-volume payments. UK businesses use it for monthly payroll, supplier invoices, state pensions, customer refunds, and any recurring bill that needs to leave or arrive on a predictable date.

The system runs on two payment types. Bacs Direct Credit pushes money out, with the payer instructing its bank to deposit funds into someone else's account. Bacs Direct Debit pulls money in, with a business collecting an agreed amount from a customer's account under a mandate the customer has already authorised.

For example, a UK company running payroll for 500 employees submits one Direct Credit file to its bank rather than 500 separate transfers. If the file goes in on Monday, BACS processes it on Tuesday and the money lands in employee accounts on Wednesday.

The <a href="https://www.skydo.com/blog/everything-about-fps-bacs">Bacs</a> network supports two main payment methods, and the key difference is who initiates the transaction. Bacs Direct Debit lets a business collect money from a customer's account after the customer has authorised the arrangement. Bacs Direct Credit works in the opposite direction, with an organisation instructing its bank to send funds to the recipient's account.

BACS transfers run on a three-working-day timetable, with each stage taking place on a separate working day.

For example, a payroll instruction submitted on Monday can be processed on Tuesday and reach employees' accounts on Wednesday. If the payment file misses Monday's cut-off, processing starts on the next working day, moving the expected payment date back by a day.

BACS uses a standard three-working-day cycle, so the payment date is determined by when the payment instruction enters the system.

The three-day count runs from Monday to Friday, excluding UK bank holidays. A weekend or bank holiday therefore moves the expected settlement date to the next available working day. For example, if a payment enters the BACS cycle on Thursday, the three working days are Thursday, Friday, and Monday, so the funds are settled on Tuesday.

A payment instruction submitted after the bank's cut-off may not enter the cycle until the next working day, which pushes the settlement date back by another day. The fixed schedule works well for planned payments such as salaries and recurring Direct Debits, where the sender and recipient can prepare for a known payment date.

BACS is a low-cost payment option for UK businesses, with charges commonly ranging from 5p to 50p per transaction.

The small charge per transaction becomes particularly valuable when a business needs to make hundreds or thousands of payments at once. A payroll run covering 1,000 employees, for instance, can be processed much more economically than 1,000 separate bank transfers.

Pricing is set by the business's bank or payment provider. Depending on the account, BACS processing may be included in a monthly business-banking charge rather than billed separately for each transaction.

Note that BACS itself does not add a network charge for receiving a payment. The applicable processing cost is generally paid by the organisation making the payment.

BACS vs Other Payment Methods in the UK (Faster Payments, CHAPS): Differences and Similarities

BACS, Faster Payments, and CHAPS all move GBP through the UK payments infrastructure, but they are designed for very different payment needs. BACS is built for scheduled, high-volume payments, Faster Payments is geared towards speed and 24/7 availability, while CHAPS is designed for high-value payments that need same-day settlement.

All three support GBP payments through UK banking infrastructure, although CHAPS can also handle cross-border sterling transactions. They are established UK payment systems operating within the country's regulated payments framework.

What Bank Details Does Your UK Client Need to Send a BACS Payment?

For a standard Bacs Direct Credit, your UK client will generally need the name on your account, your 6-digit sort code, and your 8-digit account number. These details tell the banking system where the payment should go and allow the payer's bank to verify the intended recipient.

BACS is a UK domestic payment system, so your client normally does not need an IBAN or SWIFT/BIC to make a Bacs Direct Credit. If they ask for those details, they may be setting up an international payment instead.

Ask the client to include something identifiable, such as your invoice number or business name. This makes it easier to match the payment to the right invoice when it arrives. Additionally, because Bacs Direct Credit follows a three-working-day processing cycle, your client should submit the payment at least three working days before the invoice due date, with extra time allowed if a weekend or UK bank holiday falls within the cycle.

Can Indian Freelancers Receive BACS Payments Without a UK Bank Account?

Yes. Indian freelancers and exporters can receive GBP from UK clients without opening a traditional UK bank account. Platforms such as Skydo help <a href="https://www.skydo.com/receive-international-payments-in-india">receive international payments in India</a>. It provides UK receiving details that let clients make local GBP payments, while the platform handles the conversion and transfer to India.

These accounts provide a UK sort code and account number that clients can use to send money through BACS or Faster Payments. Once the GBP arrives, Skydo converts it to INR and settles the funds into the recipient's Indian bank account.

For the UK client, the payment works like a domestic GBP transfer using the provided UK account details, rather than requiring a SWIFT transfer or an international wire.

<a></a>How Skydo Helps Indian Businesses Receive GBP Payments

<a href="https://www.skydo.com/">Skydo</a> provides a free GBP virtual account with a UK sort code and account number, allowing UK clients to pay through BACS or Faster Payments. Additionally, Skydo is considered to be one of the <a href="https://www.skydo.com/blog/best-international-payment-gateways-for-freelancers-india">best international payment gateways.</a> With Skydo, you:

<a href="http://www.skydo.com">Learn More Here</a>

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Skydo vs Infinity

SEPA (Single Euro Payments Area) is a common payment framework that makes euro payments between participating European countries work much like domestic bank transfers. Its purpose is to create a standardised way to send and receive euros across the region, making cross-border payments simpler, more consistent, and easier to process.

For example, a business in France can pay a supplier in Germany €5,000 through a SEPA credit transfer. The French business can send the payment in euros to the supplier’s German bank account using the recipient’s IBAN, without having to navigate a separate payment system for the two countries.&nbsp;

Before SEPA, cross-border euro payments often involved different national banking systems and payment rules, making transfers more complicated and less predictable. SEPA brought these payments under a common framework with standardised rules, maintained by the European Payments Council (EPC), while the European Commission and European Central Bank provide the broader regulatory and oversight framework. SEPA credit transfers use the recipient’s IBAN to identify the destination account, and the accounts involved must be in countries covered by the relevant SEPA scheme. A BIC may also be used in some payment flows, but it is not universally required for SEPA credit transfers.

<a></a>What Are the Types of SEPA Transfers?

SEPA payments come in three main forms, i.e., Credit Transfer, Instant Credit Transfer, and Direct Debit. For an Indian business receiving an invoice payment from a European client, the two credit-transfer options are the ones that matter most.

For an Indian recipient, the SEPA payment type determines how the European payment leg is processed. Once the euros reach the receiving account, any conversion and settlement into India follows a separate process and timeline.

Money within SEPA moves through a shared clearing and settlement system built specifically for euro payments, rather than the correspondent-banking chain typically associated with international transfers.

For an Indian recipient using a platform such as <a href="https://www.skydo.com/">Skydo</a>, the journey from a European client's bank to the final Indian account happens in seven steps:

Note: The IBAN is the key identifier for a SEPA Credit Transfer and can contain up to 34 characters depending on the country. A BIC, also known as a SWIFT code, may be used in some payment flows but is not universally required for SEPA Credit Transfers.

"Instant" only describes the European leg of the journey. For an Indian recipient, the<a href="https://www.skydo.com/blog/how-long-does-international-wire-transfer-take"> time taken for an international wire transfer</a>, i.e., to receive INR depends on both the SEPA payment into the European account and the subsequent settlement into India.

<a></a>Which Countries Are Part of the SEPA Zone?

41 countries and territories currently fall within the SEPA geographical scope. This includes all 27 EU member states, the UK, four EFTA countries, four European microstates, and five additional countries that have joined the SEPA geographical scope in recent years.

SEPA membership does not require using the euro domestically. Countries such as Denmark, Sweden, Poland, Czech Republic, Hungary, and Switzerland retain their own currencies while participating in SEPA euro payment schemes.

India is outside SEPA. Indian bank accounts cannot receive SEPA payments directly because India is not part of the SEPA geographical scope and Indian banks do not participate in the SEPA payment schemes.

A euro-denominated SEPA payment is priced like the equivalent domestic payment for the European sender. The bigger cost difference for an Indian business appears after the euros leave the SEPA payment leg and have to be converted and settled into India.

EU rules require banks to charge the same for a cross-border euro payment as they charge for an equivalent domestic payment. That does not mean every SEPA transfer is free, but if the bank's comparable domestic transfer costs €0, the SEPA transfer should cost €0 too. With that,

Bank FX margins can add to the cost. When a conventional bank converts incoming foreign currency into INR, the exchange rate may include a markup. The exact margin varies by bank and transaction. Along with that,

Additionally, note that there is a broader cost of receiving international payments as an Indian freelancer, and you must know the nuances of <a href="https://www.skydo.com/blog/international-bank-transfer-fees-freelancers-india">international bank transfer fees </a>accordingly.

<a></a>How Long Does a SEPA Transfer Take?

Inside Europe, a SEPA payment can clear in anywhere from a few seconds to one business day. An Indian recipient, however, waits on two separate legs before the money arrives as INR.

Timing on the European side depends on which SEPA scheme carries the payment:

SEPA and SWIFT differ mainly in their coverage, currency, cost, speed, and the destinations they can serve. For an Indian business, the most important distinction is that SEPA itself cannot settle a payment directly into India, while SWIFT provides the messaging infrastructure used for international payments that can reach India.

SEPA is designed to make euro payments within its geographical area fast, standardised and similar to domestic payments. SWIFT serves a much broader purpose, providing the messaging infrastructure financial institutions use to communicate international payment instructions across

currencies and countries. <a href="https://www.skydo.com/blog/swift-money-transfer-ultimate-guide">SWIFT</a> itself does not move or settle the money.

A European client's finance team might still ask for a SWIFT or BIC code even when planning to pay through SEPA. That does not mean the payment is being sent through SWIFT. BIC can be used as a financial-institution identifier within SEPA payment messages, while the SEPA payment itself follows the relevant SEPA scheme and clearing arrangements. An IBAN is the key account identifier for a SEPA Credit Transfer, and BIC is not universally required from the payer.

Holding an IBAN is not proof of SEPA membership either. Countries outside the SEPA geographical area can use IBAN-based account numbering without participating in SEPA payment schemes.

For an Indian recipient, the distinction becomes especially important at the point where the payment leaves the SEPA environment. A SEPA payment cannot itself settle into an Indian bank account. The subsequent India leg requires a separate international settlement arrangement.

<a></a>How Can Indian Businesses Receive SEPA Transfer Payments?

Indian businesses cannot receive a SEPA transfer directly into an Indian bank account because India is outside the SEPA geographical area. Indian bank accounts use an account number and IFSC rather than an IBAN, so a European client cannot send a standard SEPA payment directly to an Indian HDFC, ICICI, or other domestic bank account.

The practical workaround is a <a href="https://www.skydo.com/blog/virtual-account-numbers">virtual EUR account</a>. Cross-border payment platforms such as Skydo provide European receiving details, including a virtual EUR IBAN. The European client sends euros to those details through SEPA, after which the platform handles conversion and settlement into the Indian bank account.

The virtual IBAN is a receiving arrangement, not a separate overseas bank account owned by the Indian business. The provider controls the underlying account structure and routes the received funds to the Indian bank account registered with the platform.

<a></a>How Skydo solves this for Indian exporters and freelancers:

<a href="https://www.skydo.com/">Skydo</a> provides a free EUR virtual account alongside USD, GBP, SGD, AUD, and CAD receiving accounts. The entire account setup is digital, with no monthly subscription fee, and hidden charges.

European clients can pay the EUR virtual account through SEPA using the account's European banking details. The subsequent settlement into India is handled separately by Skydo rather than through SEPA itself.

There are no monthly fees, so businesses pay when they transact. Settlement takes up to 1 working day after the funds reach the virtual account. Every transaction includes a free FIRA (Foreign Inward Remittance Advice) certificate, generated instantly, and automatically to provide documentation for the resulting foreign inward remittance.

<a href="https://www.skydo.com/">Skydo</a> is built for Indian businesses receiving export payments, including exporters of goods and services, freelancers, and eligible online sellers.

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Proforma invoice vs quoation

A B2B payments platform is software that collects, converts, reconciles and settles the invoices between two businesses. For an Indian exporter, it means translating a foreign client's invoice into rupees inside a domestic bank account, with the compliance paperwork attached, not chased down later.

B2B payments are different from B2C payments in three key ways:

A B2B payments platform moves value from a buyer's business to a seller's business against an invoice with agreed terms, net-30, net-60, or milestone-based. Unlike a card tap, there are approvals, purchase orders, and reconciliation on both sides in the flow.

This is what that looks like for an Indian exporter <a href="https://www.skydo.com/blog/how-to-receive-international-payments-in-india">receiving a payment</a> of $5,000 from a US client:

The most friction for Indian exporters is in Steps 4-7: currency conversion, sanctions screening, RBI documentation, and matching a settled rupee amount to a dollar-denominated invoice. Modern B2B payment solutions automate these steps by auto-matching settled amounts to invoices, validating purpose codes before submission, and flagging currency or amount mismatches before settlement, not after.

Best B2B payments platforms for Indian businesses

The best ways to receive B2B payments in India for businesses receiving foreign invoices are ones with RBI Payment Aggregator – <a href="https://www.skydo.com/blog/what-are-cross-border-payments-and-how-skydo-can-help-you-receive-them">Cross Border</a> (PA-CB) authorisation, automatic FIRA issuance, transparent FX pricing, and settlement of funds to an Indian bank account in one business day.

Bank wire (traditional): Used extensively for high-value or time-sensitive cross-border transactions, with no limit on transfer amount. Fees come from three places: the FX spread (banks convert at an interbank rate they don't show you, then mark it up), intermediary/correspondent bank deductions ($15-40 for each SWIFT hop, and there can be more than one hop), and time spent on manual reconciliation. There's also uncertainty about the timing of settlement.

<a href="http://www.skydo.com">Skydo</a> has obtained full Payment Aggregator - Cross Border (PA-CB) authorisation, with flat-fee pricing perfect for service invoices and a free FIRA certificate on every transaction. Skydo provides virtual accounts in six currencies (USD, EUR, GBP, CAD, AUD and SGD), settlement in 1 working day, and no monthly fees.

PayPal: Supports B2B and B2C payments but was built for consumer and outbound payments first. Fees are percentage-based and compound on large invoices. PayPal isn't set up for FEMA-compliant inward remittances, and its FIRA support is limited.

<a href="https://www.skydo.com/blog/stripe-vs-paypal-international-payments-2025">Stripe</a>: Popular for API integrations, with percentage-based fees (2.9% + $0.30 per transaction on pay-as-you-go). It is built for outbound/domestic card payments, and there is no India-specific inward remittance compliance baked into it.

<a href="https://www.skydo.com/blog/razorpay-alternatives-international-payments-india">Razorpay</a>: Has full PA-CB authorisation (as of December 2025). This is useful if you are already running an Indian checkout and want to add a cross-border collection on the same stack. Pricing is an FX markup based on a percentage, with FIRA support. <a href="https://www.skydo.com/blog/how-to-receive-international-payments-in-india">International settlement</a> is 3-5 business days and is approximately 1% on the MoneySaver export route, or up to approximately 3% + 18% GST on cards.

How do these B2B payments platforms compare against each other?

The most important criteria for an Indian exporter getting a $5,000 payment from a US client are: fees paid, time for settlement, availability of Foreign Inward Remittance Certificate (FIRC)/FIRA, and status of compliance with the RBI. The platforms below are compared on these criteria.

For Indian exporters, the highest cost in <a href="https://www.skydo.com/blog/cashfree-international-payments">B2B cross-border payments </a>is the FX spread rather than the visible transaction fee. Banks use a hidden exchange rate and then add a markup. So on a $10,000 invoice at an illustrative mid-market rate of ₹95, a two-rupee spread against the mid-market rate amounts to a loss of ₹20,000 on a single payment.

Correspondent banks can also take $15-40 per hop on a SWIFT wire, and there can be more than one hop, cutting down the amount that actually lands.

If you are an Indian freelancer, agency, or exporter billing foreign clients,<a href="https://www.skydo.com/"> Skydo</a> provides a free USD/EUR/GBP virtual account and flat-fee settlements, and takes 5 minutes to set up.

What Compliance Challenges Do B2B Payment Platforms Solve?

Indian exporters' B2B payment platforms address three core compliance challenges: FEMA purpose-code tagging on every inward payment, automatic FIRA/FIRC issuance for GST refund eligibility, and reconciliation of received payments against reported GST invoices.

How To Choose the Right B2B Payments Platform as an Indian Exporter?

Choosing the right platform for receiving international payments into India means running a six-point check, in order:

Step 1: Direction first - Are you receiving inward payments (most Indian exporters) or making outward payments to suppliers? Most global platforms are built for outbound payments. Few do inward-into-India cleanly.

Step 2: Licence check - Ensure that the provider has full RBI Payment Aggregator – Cross Border (PA-CB) authorisation for your direction (inward, for receiving). In-principle is a stage, not a completed licence.

Step 3: FX transparency - Find out what FX rate the platform converts at and what the exact margin is. Budgeting is easier with a platform that displays the margin in paise per dollar than one where a hidden spread is only revealed after conversion.

Step 4: Compliance evidence - Confirm auto FIRA issuance, purpose-code tagging, and no impact on your existing FIRC and GST workflow.

Step 5: Speed and settlement - Confirm that your money has reached your Indian bank account by the next business day (T+1). Correspondent-bank limbo of SWIFT wires can last a week.

Step 6: Fit and integration - Check direct integration with your accounting software (Zoho Books or Tally), API depth if you are a marketplace paying out to sellers, and multi-currency receiving so that you can be paid in USD, GBP, or EUR without opening a foreign bank account.

How Does Skydo Simplify Cross-Border B2B Payments for Indian Exporters?

<a href="https://www.skydo.com/">Skydo </a>is a one-stop solution for Indian exporters to simplify international B2B payments. The platform offers free multi-currency virtual accounts, flat-fee pricing with no hidden forex markup, automatic FIRA issuance, and full RBI PA-CB authorisation, and can be set up in just 10-15 minutes.

How Long Does an International Wire Transfer Take?

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A vostro account is an account that a domestic bank holds on behalf of a foreign bank, usually in the domestic currency. Banks use vostro accounts to facilitate local transactions, settle trade payments, and process remittances on behalf of the foreign bank. It is a core piece of correspondent banking, where banks in different countries use one another's infrastructure to move and settle funds.

For example, if JPMorgan Chase in the US opens an account with SBI and holds Indian rupees in it, SBI considers that a vostro account. It lets JPMorgan Chase access India's banking system without maintaining its own physical branch in the country.

A vostro account&nbsp;<a href="https://www.skydo.com/blog/nostro-and-vostro-account" target="_blank">may sound similar to a nostro account or a loro account</a>, but the difference comes down to which bank is describing the same balance:

What Are the Features of a Vostro Account?

The key features of a vostro account are local currency denomination, liability accounting on the host bank's books, its role as the backbone of correspondent banking, bilateral trade settlement in local currencies, inward remittance facilitation, and regulatory compliance with the host country's rules. Each one is explained below.

Taken together, these features are what let a foreign bank hold funds locally, pay out in the host country's currency, and stay inside that country's regulatory perimeter without setting up its own presence there.

Vostro vs Nostro vs Loro: Key Differences

Nostro, vostro and loro are terms used to describe correspondent-banking account relationships from different perspectives. “Nostro” means “ours,” referring to a bank's money held with another bank. “Vostro” means “yours,” referring to that same balance from the perspective of the bank holding the money. “Loro” means “theirs,” referring to the account from the perspective of a third bank.

They are not two or three separate pots of money. The <a href="https://www.skydo.com/blog/nostro-and-vostro-account">nostro, vostro and loro</a> labels describe the same underlying correspondent-banking account relationship from different perspectives.

In India, RBI also permits Special Rupee Vostro Accounts (SRVA) for eligible international trade settlement. Under this mechanism, Indian exporters can receive export proceeds in INR from balances held in the designated vostro account, subject to the applicable RBI conditions.

A vostro account gives a foreign bank access to the domestic banking system by holding its funds with a bank in another country. In an INR vostro arrangement, the funds are held in Indian rupees, and the Indian bank can process payments from that balance on the foreign bank's instructions.

For an INR payment, the process can work like this:

The Indian bank acts as the local banking partner, processing payments and handling settlements on behalf of the foreign bank. Keeping funds in local currency can also reduce the need for currency conversion each time a payment is made. More broadly, vostro accounts support correspondent banking by allowing banks to provide services in countries where they do not maintain their own branches. Note that this is entirely different from the concept of <a href="https://www.skydo.com/blog/virtual-accounts-vs-local-banks">virtual accounts vs local banks</a>.

Consider Alpha Tech Solutions Pvt Ltd, a Bengaluru-based IT consulting firm that has completed a software project for Texas Retail Corp, its US client. Alpha Tech raises a USD invoice and uses <a href="https://www.skydo.com/">Skydo</a> to collect the payment. Behind the scenes, Skydo's payment infrastructure uses Vostro relationships with banking partners to receive the payment locally and settle it in India. Here:

Why Do Vostro Accounts Matter For Indian Exporters And Freelancers?

Vostro accounts provide the banking infrastructure that allows foreign banks to hold funds and make payments through Indian banks. Indian exporters and freelancers generally do not manage these accounts themselves, but they can benefit from the payment routes these arrangements make possible. With Vostro accounts, you get:

What Is a Special Rupee Vostro Account (SRVA)?

A Special Rupee Vostro Account (SRVA) is a rupee-denominated account that an Indian Authorised Dealer (AD) bank maintains for an overseas bank to facilitate eligible cross-border transactions in Indian rupees. It allows trade partners to invoice, pay, and settle eligible exports and imports in INR instead of relying entirely on a freely convertible currency such as the US dollar or euro.

RBI introduced the SRVA mechanism through A.P. (DIR Series) Circular No. 10 dated July 11, 2022, allowing Indian AD banks to open Special Rupee Vostro Accounts for correspondent banks of partner trading countries. The arrangement was introduced as an additional option for international trade settlement in INR, alongside existing settlement methods.

RBI issued A.P. (DIR Series) Circular No. 19, consolidating instructions from 5 earlier circulars issued between July 2022 and October 2025. The revised framework allows AD banks in India to open SRVAs for their overseas branches as well as banks resident outside India. It also permits SRVAs to be used for other permissible current and capital account transactions under FEMA.

The network has expanded significantly. Reports in early 2026 put the SRVA network at more than 80 accounts across more than 30 trading-partner countries. The current FEDAI directory confirms that the network spans countries including Russia, Germany, Bangladesh, Sri Lanka, Singapore, the UAE, the UK, Australia, New Zealand, Armenia, Belarus, Tanzania and others.

Russia remains a prominent example. The current FEDAI directory lists SRVA arrangements with Russian banks across multiple Indian AD banks, including Canara Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Bank of Baroda, UCO Bank, Axis Bank and others. India and Russia have continued exploring INR-based settlement to reduce dependence on the US dollar, although actual payment routes can vary by transaction and regulatory conditions.

Indian banks maintain SRVAs for overseas correspondent banks. For example, Punjab National Bank's International Service Branch in New Delhi currently lists 10 SRVAs, covering banks from Myanmar and Bangladesh. FEDAI also maintains the broader country-wise SRVA Directory, which is the best place to check the current list of Indian AD banks and their overseas banking counterparts.

How Skydo Helps Indian Businesses Receive Money Using Vostro Accounts?

Skydo uses global banking infrastructure, including Vostro relationships with banking partners, to handle the banking layer behind international payments. For Indian freelancers and exporters, that means they can receive payments through local-style international accounts while Skydo handles the cross-border settlement, INR credit, and remittance documentation.

Skydo provides free virtual accounts in USD, EUR, GBP, SGD, AUD, CAD and other supported currencies. Account setup takes about 5 minutes, and overseas clients can pay through local methods such as ACH, Fedwire, or SEPA where available. Additionally, Skydo charges:

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An international money transfer is the process of sending money from one country to another, usually with a currency conversion when the sender and recipient use different currencies.

In India, individuals can send money abroad for permitted purposes such as education, medical treatment, travel, employment, business visits, gifts and donations, subject to applicable RBI rules and documentation.

The basic process involves choosing the amount and currency, entering the recipient's bank details, completing KYC and other required checks, and sending the funds through an authorised payment channel. The exact steps, requirements and processing times on <a href="https://www.skydo.com/blog/how-long-does-international-wire-transfer-take">how long an international wire transfer take</a> can vary between banks and digital payment providers.

What Are the Different Ways to Transfer Money Internationally?

The main ways to transfer money internationally include bank wire transfers, online money transfer platforms, cash-based services, bank drafts or foreign-currency cheques, and international money orders. The most suitable method depends on the destination, amount, delivery method and how quickly the recipient needs the funds.

For Indian freelancers and exporters receiving international payments, the payment flow is different when money is coming into India rather than being sent abroad. A suitable virtual foreign-currency account or receiving platform can accept payments from overseas clients and settle the funds into the recipient's Indian bank account, depending on the provider and payment route.

Once again, the right payment method can affect the cost, processing time and documentation involved. Hence, it is advisable to understand the major differences between <a href="https://www.skydo.com/blog/ach-vs-wire-transfer-vs-card">ACH vs wire transfer vs card</a> before choosing one.

What Does It Actually Cost to Transfer Money Internationally?

The cost of an international money transfer is more than the fee shown at checkout. Depending on the provider and payment route, you may also pay through the exchange rate and intermediary-bank charges. By the end, the amount you send and the amount the recipient receives can differ.

Say, for an international payment, the costs can look very different depending on the provider:

Speed can affect pricing too. If you are a freelancer and need the money to arrive urgently, an express transfer may cost more than a standard option. Make sure you compare both the delivery time and total <a href="https://www.skydo.com/blog/international-bank-transfer-fees-freelancers-india">international bank transfer fees</a> before choosing a route.

Additionally, documentation can matter just as much for Indian freelancers and exporters. Check what proof of the incoming payment your provider supplies and whether you would need to contact a bank separately for any required FIRA or other remittance records.

What Are the RBI Rules for Sending and Receiving Money Internationally?

The RBI regulates international money movement involving India under FEMA, while the Liberalised Remittance Scheme (LRS) sets the framework for permitted outward remittances by resident individuals.

* Nepal and Bhutan: Transactions involving Nepal and Bhutan are subject to separate foreign-exchange provisions and are not handled under the ordinary LRS framework in the same way as other international remittances.

How Does Skydo Make International Money Transfers Simpler for Indian Exporters?

Skydo simplifies the process of receiving international business payments by combining global receiving accounts, flat-fee pricing, zero FX margin, faster INR settlement and automated payment documentation in one platform. With <a href="https://www.skydo.com/">Skydo</a>, you get:

Who Can Use It: Skydo currently supports Indian export businesses and freelancers receiving international payments, including sole proprietorships, partnerships, LLPs and private limited companies. It also supports Amazon Global Selling withdrawals through its global accounts.

<a></a>How to Receive an International Payment as an Indian Freelancer or Exporter?

If you are an Indian, and are <a href="https://www.skydo.com/blog/how-to-receive-money-from-usa-to-india">receiving money from the USA </a>or any other country, Skydo makes the process simple for freelancers and exporters. Follow these steps to receive your payment:

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