Remittance Companies for B2B: How They Work & Top Players in India (2026)

India processes billions in remittances annually, making it one of the largest recipients of international transfers in the world. Yet many businesses still struggle with traditional banking channels that charge hefty fees and take days to process payments. Remittance companies offer a specialised alternative, typically processing transfers faster and cheaper than banks.

This guide examines how these financial service providers work, their revenue models, and which options best serve Indian businesses navigating RBI regulations and FEMA compliance.

What is a Remittance Company?

Remittance companies serve as crucial intermediaries in India’s foreign exchange ecosystem, bridging the gap between slow traditional banking and modern business needs. A remittance company is a non-bank financial institution (NBFI) authorised by the Reserve Bank of India to facilitate cross-border fund transfers. These entities operate under strict RBI supervision as Authorised Persons (APs), Full-Fledged Money Changers (FFMCs), or money-transfer operators, executing both inward and outward remittances for business customers.

Unlike traditional banks that offer remittance services alongside numerous other products, these companies focus exclusively on international money transfers. This specialisation allows them to optimise their operations for speed and cost-efficiency. Their digital-first approach particularly benefits exporters who need quick settlements and automated compliance documentation.

Remittance companies must maintain rigorous KYC, AML, and Customer Due Diligence standards as specified by RBI and Financial Intelligence Unit requirements. This regulatory framework ensures transaction security whilst enabling faster processing than correspondent banking networks.

How Do Remittance Companies Work?

Having understood what remittance companies are, the operational mechanics reveal why they process transfers faster and cheaper than banks. The fundamental difference lies in their settlement approach: rather than moving money through multiple correspondent banks, they use pre-funded accounts and netting mechanisms to bypass traditional banking delays.

Step 1: The Funding Stage

The transfer process begins when a business customer initiates payment through the remittance platform. International buyers can fund transfers via multiple channels: bank transfers, credit cards, or direct debits.

• Customer submits payment instruction with beneficiary details and purpose code.
• Remittance company performs instant KYC/AML verification on the transaction.
• Funds are collected in the sender’s local currency (USD, EUR, GBP, etc.).

Step 2: The Netting and Settlement Mechanism

This stage distinguishes remittance companies from traditional banking channels. Instead of routing money through correspondent banks, the company uses its pre-funded Indian accounts.

Money rarely crosses borders in real-time for individual transactions. The remittance company maintains INR reserves with AD banks in India. When your overseas client pays in their currency, the company simultaneously releases equivalent INR from their Indian accounts to you. This “netting” mechanism eliminates the 3-5 day correspondent banking delay.

Step 3: The Disbursement Phase

The final stage involves crediting funds to the Indian exporter’s account after currency conversion.

• AD bank receives foreign currency credit and converts to INR per RBI rules.
• Compliance checks verify purpose code and documentation.
• Beneficiary receives INR credit with FIRC issuance for export realisation.

How Do Remittance Companies Make Money?

The settlement efficiency that makes remittance companies faster also creates their revenue opportunities. Understanding their income streams helps businesses negotiate better rates and identify hidden costs in seemingly “free” transfer services.

Upfront Transaction Fees

Transaction fees represent the most visible revenue component. Providers charge either flat fees (₹500 to ₹2,000) or percentage-based fees (0.5% to 2%) depending on transfer amount and corridor.

Many companies advertise “zero-fee” transfers to attract customers. However, these promotions typically compensate through higher exchange rate markups, making total costs comparable or higher than transparent fee structures.

Exchange Rate Markups (The Spread)

Exchange rate spreads generate the largest revenue share for most remittance providers. The mid-market rate (visible on Google or XE.com) represents the true interbank exchange rate.

Remittance companies add markups ranging from 0.5% to 4% above this rate. On a ₹10 lakh transfer, a 2% markup equals ₹20,000 in hidden costs. Volume-based businesses negotiate tighter spreads, whilst occasional users pay retail markups.

The Float Game

Float income derives from interest earned on funds held between collection and settlement. Companies invest customer funds in overnight markets or short-term instruments during the 1-3 day processing window.

Whilst individual transaction float appears minimal, aggregated across thousands of daily transfers, this creates substantial revenue. Instant transfer services reduce float opportunities, explaining their premium pricing.

Top Remittance Companies Operating in India (2025)

With revenue models clarified, choosing the right provider depends on matching their strengths to your business needs. India’s remittance market includes global operators and local specialists, each targeting specific customer segments through differentiated offerings.

The PA-CB (Payment Aggregator – Cross Border) framework introduced by RBI shapes which providers can serve Indian businesses legally. Only authorised entities meeting capital and compliance requirements can facilitate B2B remittances, creating a quality filter for business users.

Explore Razorpay’s Global Payment Solutions

Razorpay International Payment Gateway

Razorpay positions itself as the comprehensive solution for Indian exporters and service providers. Their MoneySaver Export Account provides local bank account details in key markets, allowing businesses to receive payments via ACH, SEPA, and SWIFT as if operating locally.

The platform’s standout feature is automated FIRC generation with single-click downloads. This eliminates weeks of bank follow-ups that plague traditional channels. Transaction fees typically run around 2%, significantly lower than legacy providers.

Supporting over 100 currencies with direct INR settlement, Razorpay handles the complete compliance workflow. The system automatically applies correct purpose codes and maintains documentation for RBI reporting.

Remitly

Focused primarily on personal remittances, Remitly serves the immigrant community sending money home. Their tiered service offers flexibility between speed and cost.

The ‘Express’ option delivers funds within minutes at premium rates, while ‘Economy’ transfers take 3-5 business days at lower costs.

Western Union

As the oldest name in international transfers, Western Union maintains the world’s largest physical agent network. This makes them indispensable for cash-based transactions in rural areas.

While their fees and exchange rates rarely compete with digital alternatives, Western Union excels at accessibility. Recipients can collect cash from thousands of agent locations across India without needing bank accounts or smartphones.

Key Regulations for Remittance Companies in India

Understanding provider options requires grasping the regulatory framework governing their operations. The Reserve Bank of India oversees all cross-border remittance activities through comprehensive guidelines that providers and users must follow.

For Businesses: PA-CB and OPGSP Guidelines

The PA-CB framework replaced older OPGSP regulations, establishing clearer rules for digital payment providers. Business transactions typically face a ₹25 lakh cap per transaction under standard permissions.

For export compliance, every inward remittance should be evidenced by a Foreign Inward Remittance Certificate (FIRC/e-FIRC) issued by an Authorised Dealer bank as proof of receipt. This document is used for GST refund claims, income tax filing, and other regulatory compliance.

For Individuals: LRS and MTSS

Personal remittances operate under the Liberalised Remittance Scheme (LRS), permitting outward transfers up to $250,000 annually for approved purposes including education, travel, and investments. The Money Transfer Service Scheme (MTSS) governs small inward personal remittances, capped at $2,500 per transaction with a maximum of 30 transactions yearly. Higher amounts require the Rupee Drawing Arrangement (RDA) channel through banks.

Tax Collected at Source (TCS)

Outward remittances exceeding ₹7 lakh attract TCS at 20% (5% for education and medical purposes). This withholding tax creates cash flow implications for businesses making regular international payments.

Remittance companies must collect TCS and issue certificates for tax credit, helping businesses plan payments and manage cash flow efficiently.

How to Choose the Right Remittance Partner

Regulatory compliance forms the foundation, but practical business needs drive final selection decisions. The ideal remittance partner balances cost efficiency with operational reliability whilst supporting your specific transaction patterns.

Start by calculating total transfer costs rather than comparing headline fees. A provider charging ₹1,000 upfront with 0.5% FX markup costs less than “free” transfers with 3% hidden spreads on amounts above ₹35,000.

• Verify RBI authorisation: Confirm PA-CB registration or AD bank partnership
• Calculate all-in costs: Fees + FX markup + any receiving charges
• Check settlement speed: T+0 for urgent needs vs T+3 for cost optimisation
• Ensure purpose code support: Match provider capabilities with your business type
• Evaluate compliance automation: Digital FIRCs save weeks of manual follow-ups
• Test customer support: Complex transactions require responsive assistance
• Consider integration needs: API availability for high-volume operations

How Razorpay International Payments Simplifies Global Trade

Traditional banking channels create friction at every step of international trade. Razorpay addresses these pain points through purpose-built solutions for Indian exporters.

MoneySaver Export Account transforms how businesses receive payments. By providing local bank account details in the US, UK, and Europe, Indian companies can accept ACH, SEPA, and SWIFT transfers as if operating locally. Clients pay domestic transfer fees instead of expensive international wire charges.

Automated Compliance removes the biggest headache for exporters. The platform generates digital FIRCs instantly with single-click downloads. Every transaction automatically receives correct purpose codes and maintains audit trails for RBI reporting. This eliminates weeks of bank correspondence and manual documentation.

Significant Cost Savings come from bypassing traditional correspondent banking networks. By utilising local banking rails, Razorpay reduces transaction costs by up to 50% compared to legacy providers. The transparent pricing model shows exact fees upfront without hidden forex markups.

Conclusion

Remittance companies in India have transformed cross-border payments for Indian businesses, offering faster processing and lower costs than traditional banking channels. The key lies in understanding which provider aligns with your specific needs: automated compliance for exporters, accessible cash networks for rural recipients, or competitive rates for high-volume traders.

With the RBI’s November 2025 extension of export realisation timelines to 15 months and evolving PA-CB regulations, choosing the right partner becomes even more critical. Evaluate providers based on total costs, including forex spreads, compliance support capabilities, and settlement speeds rather than advertised fees alone.

FAQs

Q1. What is the LRS limit for personal remittances from India in 2025?

The Liberalised Remittance Scheme (LRS) limit remains USD 250,000 per financial year per individual for permissible purposes like travel, education, and investments. This limit applies to personal remittances only, not business transactions.

Q2. What are the new PA-CB regulations for Indian businesses?

The RBI’s PA-CB framework replaces OPGSP, enforcing stricter merchant due diligence and capping business transactions at ₹25 lakh per unit. Non-bank providers must be PA-CB licensed.

Q3. Is there a tax on sending money abroad from India?

TCS applies to outward remittances, with lower rates for education/medical and higher rates for investments or other purposes.

Q4. Why is a FIRC mandatory for receiving business payments in India?

A FIRC serves as legal proof that funds were received from foreign sources. Tax authorities require FIRCs for claiming GST refunds and filing returns, while RBI uses them to monitor export realisation compliance under FEMA

Q5. How long does a cross-border remittance transfer take to settle?

Transfer times depend on the method: SWIFT takes 3–5 days, while modern remittance providers using local networks often settle in 1–3 days. Documentary collections and letters of credit take much longer.

Q6. Are remittance companies safer and cheaper than traditional banks?

Licenced remittance providers operate under RBI supervision with mandatory KYC/AML compliance. They typically offer 1–3% better exchange rates than banks by avoiding correspondent banking fees, though safety depends on choosing RBI‑authorised providers.