Step into the dynamic world of e-commerce, where boundaries dissolve and opportunities abound. Imagine you’re a merchant of a clothing brand and want to reach out to customers worldwide. But wait, how do we deal with the hassle of international payments?
That’s where Razorpay steps in, revolutionizing the game by letting you receive payments in USD directly to your EEFC account. Say goodbye to borders and hello to global success, all with just a few clicks!
What is an EEFC account?
An EEFC (Exchange Earners’ Foreign Currency) account is a special account maintained in foreign currency with authorized banks. It allows foreign exchange earners like exporters to credit 100% of their earnings directly into the account. This eliminates the need for converting foreign currency into Rupees, reducing transaction costs. Various types of earnings can be credited into an EEFC account, including inward remittances, export-related payments, professional earnings, and more.
What are the Benefits of having an EEFC account?
- Cost Savings
By allowing foreign exchange earners to credit 100% of their earnings directly into the account, EEFC accounts eliminate the need for converting foreign currency into Indian Rupees and vice versa. This helps minimize transaction costs associated with currency conversion.
- Currency Risk Mitigation
Balances held in an EEFC account can be hedged against exchange rate fluctuations through forward contracts. This enables account holders to mitigate currency risks and protect their earnings from adverse movements in exchange rates.
- Convenient Fund Management
EEFC accounts offer flexibility in managing foreign exchange earnings. Funds held in the account can be used for various permissible purposes, including outward remittances, trade-related payments, and settlement of international transactions.
- No Interest Charges
Since EEFC accounts are maintained as current accounts, no interest is payable on the balances held in these accounts. This eliminates the cost of interest charges typically associated with savings or deposit accounts.
- Joint Holding with Resident Relatives
Resident individuals have the option to include resident relatives as joint holders in their EEFC accounts. This facilitates collaborative fund management and succession planning, providing added flexibility and convenience.
The High Cost and Complexity of International Vendor Payouts
The challenge faced by merchants was majorly on the complexity and costliness of international payouts to vendors. Converting funds from INR to foreign currencies incurred hefty conversion charges, leading to financial inefficiencies. Moreover, the absence of protection against current value changes left businesses at the risk of loss of money due to fluctuating exchange rates. This lack of protection and the high costs of currency conversion hindered merchants’ ability to conduct international transactions efficiently, calling for solutions to streamline processes, reduce conversion costs, and lower the risks linked to currency changes.
Razorpay’s EEFC Account: A Frictionless Solution for International Payments
Razorpay’s innovative approach not only streamlines the payment process but also minimizes costs and mitigates risks associated with currency fluctuations. By leveraging EEFC accounts powered by ICICI, merchants can now receive settlements in USD, eliminating the need for multiple currency conversions. This groundbreaking initiative empowers merchants to make direct payouts to international vendors in their preferred currency, fostering smoother transactions and enhancing operational efficiency. Notably, Razorpay’s proactive stance has led to the onboarding of prominent merchants such as Adam Vacations and Thomas Cook, solidifying its position as an industry trailblazer.
Merchants embracing this innovative solution can seamlessly integrate it into their existing international payment infrastructure. Razorpay facilitates the setup of EEFC accounts and collaborates with ICICI First Data to procure terminals, ensuring a hassle-free onboarding experience. Upon activation, merchants receive settlements in USD, enabling direct payouts to international vendors without the complexities of currency conversion.
Key Considerations
- EEFC support for international cards is exclusively facilitated through ICICI First Data terminals.
- Settlements are processed on a T+1 day basis, ensuring swift and efficient transactions.
- Refunds and chargeback handling are managed directly by ICICI First Data, streamlining dispute resolution processes.
- Settlements occur in USD, with ICICI First Data handling currency conversions from non-INR currencies.
- FIRS (Foreign Inward Remittance Certificate) will be provided by ICICI First Data for EEFC terminals, aligning with regulatory requirements.
- Only 3DS 2.0 authenticated transactions are permitted under this model, enhancing security measures.
Razorpay Redefines Cross-border Transactions!
In conclusion, Razorpay’s introduction of EEFC support for international card payments marks a significant milestone in revolutionizing cross-border transactions. By offering a seamless and cost-effective solution, Razorpay empowers merchants to harness global opportunities, driving growth, and fostering sustainable business expansion in an increasingly interconnected world. What are you waiting for? Let’s go global with International Payments!
