India has always been a country dominated by medium and small-sized businesses. They play a major role in India’s economy, in fact in 2023, MSMEs accounted for 46% of India’s export products. For the Indian export market to grow, international payments for small businesses need to be more accessible. 

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The problem with small business international payments is that the rates on small money transfers are not favorable, banks tend to prefer high-ticket clients. However, there are various international payments a small business can use. Here are the top 7:

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Best International Payment Methods for Small Businesses 

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Bank Wire Transfers  

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Bank wire transfers help send money to other countries and are often used by Indian businesses because they are dependable. It lets people send money directly between bank accounts, offering a safe way to move funds internationally.

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Pros

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Trust: Wire transfers are safe and trusted, often chosen for big payments.  

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Cons

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High Charges: Indian banks usually ask for large fees for sending money abroad, which reduces profits.  

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Slow Process: Transfers might take several days, leading to delays in business and cash flow.  

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Karbon

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Karbon helps Indian small and medium businesses involved in international trade. It offers better exchange rates, low markup fees, and faster processing times,  saving companies both money and time during international transactions.

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Pros

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Expert Help: Karbon provides extensive support for international payments, guiding businesses through tricky transactions.

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Virtual Accounts: By using international virtual accounts, Karbon provides one of the lowest fees for international transactions.

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Cons

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Smaller Reach: Karbon may not work with as many countries or currencies as bigger platforms.

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Choosing Karbon helps Indian SMEs improve their global payment methods.

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Online Payment Platforms (e.g., PayPal, Wise, Payoneer)  

Online payment platforms like PayPal, Wise, and Payoneer help Indian small and medium businesses trade with other countries. They offer quick and easy ways to send and receive money from abroad.  

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Pros

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Low Fees: Usually these platforms charge less for transactions than regular banks. Ideal for small businesses.  

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Speed: Payments arrive fast. Sometimes right away or within a few hours. Cash flow benefits a lot this way.  

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Simple Design: Easy-to-use layout so business owners can manage money without difficulty.  

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Cons

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Currency Conversion Fees: Initial fees might seem low, but extra costs pop up when converting money.

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Withdrawal Limits: Online payment platforms are not as well regulated as traditional banks and as such, there are limits on how much you take out at one time. 

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Account Holds: Accounts get easily frozen or blocked in case of customer disputes. 

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Multi-Currency Accounts  

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Multi-currency accounts let Indian small businesses keep money in different foreign currencies, helping with international deals.  

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Pros

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Conversion Costs: By keeping money in several currencies, businesses avoid frequent currency change fees, saving cash.  

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Easier Payments: Businesses pay international suppliers in their currency, helping speed and cash flow.  

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Cons

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Account Charges: Banks often ask for bigger fees to keep multi-currency accounts.  

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Fewer Currency Choices: Some accounts won’t support all needed currencies, limiting choices.

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International Payment Gateways (e.g., Razorpay, Instamojo)  

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Payment gateways like Razorpay and Instamojo help Indian e-commerce businesses handle international transactions.

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Pros

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Currency Conversion: Payments turn into local currency automatically, simplifying things.  

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Strong Security: Advanced tools protect financial details, keeping transactions safe.

Ease of Use: Simple interfaces allow businesses to manage payments easily, improving customer experience.  

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Cons

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Transaction Fees: These gateways often charge fees for processing international payments, which might become expensive for smaller businesses.  

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Integration Problems: Some businesses may struggle to connect these gateways with their systems and might need extra support.  

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Trade Finance Tools (for example, Letters of Credit)  

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Trade finance tools such as Letters of Credit (LC) really help Indian small businesses in global trade. These tools lower payment risks, leading to easier deals.

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Pros

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Risk Reduction: Letters of Credit promise payment. Sellers get the cash after shipping the goods.  

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Trust: They probably increase faith between buyers and sellers. This really matters in international trading.

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Cons

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Expensive: Banks often ask for high fees to give and watch over Letters of Credit.  

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Hard Paperwork: The steps need a lot of forms, and take a lot of time.

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Conclusion: Picking the Right Method for Indian Small Businesses  

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Indian small businesses need to look at their specific needs before choosing a payment method for international payments. Think about things like cost, speed, and safety. Different ways have their own advantages. Bank transfers feel safer, but online methods save money and time. Using accounts with many currencies cuts down on conversion fees. Trade finance tools give extra safety. In the end, businesses need to look at both the good and bad sides to find what matches their goals and way of working.

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FAQs:

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Which international payment method is fastest for Indian small businesses?

Online payment platforms like PayPal and Wise typically offer the fastest transaction times, often processing payments instantly or within hours. However, the dispute resolution mechanism on these platforms heavily favors the buyer and chargebacks are common. Karbon Forex or Wire Transfers are better suited for business payments.

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How can Indian SMEs minimize transaction fees for international payments?

Using multi-currency accounts and platforms with competitive exchange rates, such as Karbon Forex, can help reduce currency conversion fees and minimize overall transaction costs.

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What are the safest options for sending money abroad from India?

SWIFT payments and trade finance instruments like Letters of Credit provide high levels of security for cross-border transactions.

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