Mehta prefers online money platforms, such as PayPal, Wise, and Payoneer, for their convenience and better conversion rates. "But it's hard to get all clients to use them. Some larger organizations have internal policies or banking tie-ups, so they insist on direct bank-to-bank transfers."

In such cases, he ends up losing roughly 2% on the actual exchange rate. Add a 0.18% goods and services tax (GST) on the foreign currency conversion, and even modest payments can lose meaningful value before they reach his account.

India's freelancer economy has exploded in recent years, with many professionals now servicing clients overseas. But while remote work removes the need to cross borders, payments are still subject to country-specific policies.

For every dollar a client sends, multiple entities—banks, intermediaries and payment processors—claim their cuts for facilitating the transfer. The difference between the mid-market rate—the real exchange rate between two currencies—and what a freelancer receives is where most of this leakage hides.

There are three ways for Indian freelancers to receive money from abroad: direct bank transfers via SWIFT (Society for Worldwide Interbank Financial Telecommunication), online platforms, such as Wise, Skydo, Payoneer, Winvesta, Salt, or PayPal, and export earners' foreign currency (EEFC) accounts. Each has its own cost structure, convenience, and suitability.

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Bank transfers

The direct bank-to-bank SWIFT transfer remains the most common way freelancers receive foreign payments, but it is also usually the most expensive.

To begin with, some banks such as Axis Bank, HSBC Bank, and Indian Overseas Bank, among others, charge a ₹250-300 remittance fee for inward SWIFT transfers, plus 18% GST. Others, including ICICI and HDFC, have removed these charges. The bigger hit, however, comes from the foreign-exchange markup. Most banks offer an exchange rate that is 2%-3% lower than the mid-market rate, which significantly reduces the final amount credited.

GST on foreign currency conversion adds further cost. The structure is: 18% on 1% of the amount of currency exchanged (ACE) up to ₹1 lakh; ₹180 plus 0.09% of ACE between ₹1 lakh and ₹10 lakh, capped at ₹990; and ₹990 plus 0.018% of ACE above ₹10 lakh, capped at ₹10,800. In addition, many banks charge ₹100-200 to issue a FIRC (Foreign Inward Remittance Certificate) or FIRA (Foreign Inward Remittance Advice), which serve as proof of foreign inward remittances.

Together, these components can cost freelancers 2.5%-4% per payment. The percentage may seem small, but when payments are frequent, the losses accumulate quickly.

Software architect Akash, who goes only by his first name, has relied on bank transfers throughout his 15 years of working with global clients, but with one underrated tactic to minimize losses: negotiating the conversion rate.

"I have been getting my payments at a 40 paise per USD negotiated exchange rate with HSBC. Recently, I checked with my relationship manager at IndusInd Bank to see if they could do better, and they offered 30 paise per USD. I will be using that going forward," he said.

What also helps Akash is that he is HSBC's premier banking programme member, which not only gets him a lower rate but also a waiver on remittance and FIRA fee. For every $1,000 remitted, he pays only about 0.65% in conversion and GST–quite similar to what online payment platforms charge.

While negotiating with banks is a useful tactic, it works best when payment volumes are high and relationships with the bank are strong.

Ankur, founder of online platform for credit card users Card Insider, said freelancers who remit $2,000-3,000 per month can expect to get ₹0.30-0.5 per USD rate. "Freelancers must discuss with multiple banks and select the one which takes the lowest charges and sends digital FIRCs. If the bank is charging 2-3%, it's better to use the fintech platforms," he said.

Cross-border payment platforms

Online cross-border payments platforms are fast becoming the preferred options for freelancers seeking better exchange rates, faster settlement, and clearer pricing. Platforms that promise conversion on mid-market rates typically track very close to the actual market rate, often within 0.2-0.3%.

In contrast, the more popular platforms, such as PayPal and Stripe, are relatively expensive for freelancers. PayPal charges a 4.4% forex markup on the base rate plus a commission of $0.20-0.50. Stripe takes about a 4.3% processing fee and may charge an additional up to 2% for currency conversion. In both these cases, freelancers can lose 5-7% of their earnings, and hence, most experienced freelancers avoid PayPal and Stripe for receiving international payments unless mandated by the client.

Money sent through these platforms is deposited directly in INR into a freelancer's Indian bank account. Because Reserve Bank of India (RBI) regulations prohibit individuals from holding foreign currency in online wallets, these platforms route payments through virtual multi-currency bank accounts in the remitter's country.

Movin Jain, co-founder of Skydo, explains the flow: "We create a local receiving account in the sender's country. The client pays into this virtual account, which works only as a pass-through. The amount is collected, converted into INR at real-time exchange rates and then credited straight to the freelancer's Indian bank account."

Since the conversion happens before the money reaches India, the Indian bank does not perform any foreign-exchange processing, which saves GST on currency conversion.

Importantly, these virtual accounts are not owned by the freelancer. The payments platform acts as the custodian, removing liability or compliance obligations for the user. "The underlying accounts are held with regulated banking partners in each market, with the platform being the legal account owner of the virtual account. If the freelancer closes their account with the payments platform, the associated receiving account details are automatically deactivated," explained Taneia Bhardwaj, South Asia Expansion Lead at Wise.

For the same reason, these accounts do not qualify as foreign assets for tax purposes either.

This structure keeps compliance simple while allowing payments to be collected abroad, converted instantly and credited in INR to the freelancer's bank account.

Clients usually don't need an account on the same platform you prefer for receiving payments. "The sender doesn't have to adopt a new workflow; they simply pay a local account number, exactly as they would pay any vendor in their own country," Jain added.

However, they may have their own banking arrangements or platform preferences. The key is to persuade recurring clients to use your preferred platform so you can manage and minimize the fees on your end.

EEFC accounts

The third option for freelancers receiving foreign payments is the EEFC account. This is an RBI-approved facility that allows exporters and service providers to open an account in a particular currency and retain the earnings in foreign currency with an Indian bank.

"The account holder can track conversion rate and convert to INR whenever they think the rates have swung in their favour," said Mittal. "The biggest advantage of these accounts is for those who do a lot of outward remittance, as they don't have to pay two-fold conversion charges."

While this setup suits exporters and large services firms, it can also benefit freelancers with recurring international costs, like recurring subscriptions to design and cloud tools.