You export goods to a buyer in the US, but the payment arrives from their entity in Singapore. Your bank questions the transaction. Your compliance team panics about FEMA violations. This confusion costs Indian exporters billions in delayed payments and missed opportunities. RBI actually permits third-party payment for export transactions under specific conditions. Most exporters simply don’t know the rules. This guide explains exactly how to legally receive payments from third parties, maintain GST benefits, and streamline your global collections.
Key Takeaways
- Third-party payment = export proceeds received from a payer other than the buyer named on your commercial invoice/shipping bill
- RBI permits third-party payments with documentary evidence (payer named on order/invoice), remittance from FATF-compliant jurisdictions, receipt via authorised banking channels, and AD bank satisfaction; tripartite agreement no longer mandatory.
- No Master Direction monetary cap exists (subject to your AD bank); full export value must be realised within 15 months (extended from 9 months in November 2025).
- Remitter must be recorded correctly in your EDF/e-BRC with proper FIRC to claim GST refunds; mismatched documentation triggers bank holds and refund rejections.
- Properly documented third-party receipts preserve zero-rated export benefits; digital FIRC automation eliminates manual compliance burden.
What is a Third-Party Payment in Exports?
Let’s clarify what constitutes a third-party payment, often confused with third-party exports. A third-party payment occurs when export proceeds come from an entity other than the buyer named in your commercial invoice and shipping bill—for example, an invoice shows Company A, but payment comes from Company B. Common cases include MNCs paying from overseas headquarters, buying agents settling for clients, and payment aggregators handling marketplace transactions. Each scenario requires specific documentation.
| Aspect | Third-Party Export | Third-Party Payment |
| Definition | Manufacturer exports through merchant exporter (merchant is exporter of record) | Exporter receives payment from entity other than invoice buyer |
| Key Parties | Manufacturer → Merchant → Foreign Buyer | Exporter → Foreign Buyer; Third Party Payer → Exporter |
| Invoice Name | Merchant exporter’s name on shipping documents | Original buyer’s name remains on all documents |
| Payment Source | Foreign buyer pays merchant; merchant pays manufacturer | Third party pays exporter directly for buyer’s purchase |
Key RBI Guidelines for Third-Party Export Payments
Having clarified what third-party payments are, we now examine the RBI’s regulatory framework. The Reserve Bank governs these transactions through its Master Direction on Export of Goods and Services. Understanding these guidelines ensures compliance.
The Master Direction consolidates older Circulars No. 70 and 100, providing unified guidance. Authorised Dealer (AD) banks may permit such payments, subject to strict conditions designed to prevent money laundering while facilitating legitimate trade.
Regulations have evolved from mandatory tripartite agreements to conditional documentary evidence. This shift accommodates modern trade practices while maintaining regulatory oversight.
Condition 1: Documentary Evidence and Tripartite Agreements
RBI originally required formal tripartite agreements between exporter, buyer, and payer, creating bottlenecks for legitimate transactions. Current rules let AD banks accept payments without these agreements if valid documentary evidence is provided, including:
- Third party’s name mentioned in the export order as payer
- Commercial invoice clearly stating “Payment by [Third Party Name]”
- Email correspondence confirming payment arrangement
- Purchase order indicating bill-to party differs from ship-to party
AD banks must satisfy themselves about the bona fides of transactions.
Condition 2: FATF-Compliant Jurisdictions
Third-party payments must originate from countries that are Financial Action Task Force (FATF) compliant. This requirement prevents money laundering and terror financing through export transactions.
FATF compliance ensures the payer’s jurisdiction maintains adequate anti-money laundering controls. Payments from high-risk jurisdictions must be routed through approved intermediary countries.
Pro Tip: Check FATF’s website for grey-list and black-list countries before accepting third-party payments. Banks will reject transactions from non-compliant jurisdictions regardless of the quality of the documentation.
Condition 3: Banking Channels and EDF Declaration
All third-party payments must be routed through authorised banking channels, such as SWIFT. Cash, hawala, or cryptocurrency transfers violate RBI rules. Exporters must declare remittance details in the Export Declaration Form (EDF), including:
- Complete the third-party name and address in EDF
- Clear notation of payment arrangement
- Matching details between the shipping bill and the bank receipt
- Proper purpose code selection for transaction type
The exporter remains legally responsible for realising full export value, regardless of payer. Non-realisation attracts penalties even if a third party defaults.
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Step-by-Step Process to Receive Third-Party Payments
With regulations clarified, here’s the practical process. Following these steps ensures compliant receipt of third-party payments, with specific documentation required at each stage.
Step 1: Negotiation
Agree with the buyer on third-party payer details during contract finalisation. Verify the payer operates from a FATF-compliant country. Document this arrangement in a purchase order or contract.
Step 2: Documentation
Draft proforma invoice and commercial invoice stating: “Payment to be made by [Third Party Name] on behalf of [Buyer Name]”. Include complete payer details, including address and tax ID.
Step 3: Shipping Bill Filing
Ensure shipping bill captures third-party details or remains consistent with the invoice. Customs systems now allow payer information to be separate from consignee details.
Step 4: Bank Submission
Submit export documents to the AD bank with an instruction sheet highlighting third-party payment. Include email trails or contracts explaining the arrangement.
Step 5: e-BRC Generation
Monitor the generation of the Electronic Bank Realisation Certificate (e-BRC). Verify it reflects payment correctly to close the EDPMS entry. Report discrepancies immediately.
GST Refunds and FIRC Importance
Third-party payments are ineffective if GST refunds are delayed. Refunds require proof of export realisation through FIRC documentation. When the remitter name on the FIRC differs from the buyer’s name on the shipping bill, GST authorities often raise queries, delaying refund processing.
Did You Know?
Over 40% of GST refund rejections stem from mismatches between FIRC and shipping documents. Simple documentation errors cost exporters months of working capital.
The solution is to ensure the FIRC clearly states “Payment for Export Invoice No. X, on behalf of Buyer Y.” Banks often omit this unless specifically requested. Third-party payments remain eligible for zero-rated supply benefits, but documentation must clearly establish the export and payment trail. Always request annotated FIRCs with the purpose code, invoice reference, and on-behalf notation, as standard FIRCs often lead to GST portal rejections.
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Traditional banking channels complicate compliance with third-party payment requirements. Razorpay’s MoneySaver Export Account simplifies this by providing local collection accounts in the US, UK, and Europe that are fully compliant with RBI’s OPGSP guidelines.
The platform generates digital FIRCs automatically for every transaction. This eliminates bank visits and ensures GST-compliant documentation without manual follow-ups. Each FIRC includes required third-party notations.
Cost efficiency improves dramatically with up to 50% savings on forex fees compared to SWIFT transfers. This makes third-party agent payments viable even for smaller transactions.
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Compliant local accounts, auto FIRC with required notations, and lower forex costs—so
even smaller third-party agent payments stay viable and GST-ready.
Conclusion
Third-party payments offer legitimate solutions for complex global trade relationships. Success requires precise documentation, FATF compliance verification, and proper EDPMS reporting. The November 2025 extension of realisation periods to 15 months provides additional flexibility.
Digital payment platforms now automate FIRC generation and compliance tracking, eliminating the delays of traditional banking. Audit your current invoices to ensure explicit third-party payer identification before your next third-party payment for export transactions.
FAQs
1. Is a tripartite agreement mandatory for third-party payments?
No. While it was earlier mandatory, the RBI now allows banks to accept third-party payments based on documentary evidence, such as invoices or irrevocable orders that mention the third party. Banks may still request agreements for unusual or high-risk transactions.
2. Can export payments be received from a buyer’s relative?
Yes, provided the payment originates from a FATF-compliant country via proper banking channels and the third party is declared in the export documents. Banks apply higher due diligence to differentiate such payments from personal remittances.
3. What is the difference between third-party exports and third-party payments?
Third-party exports involve manufacturers using merchant exporters to manage orders. Third-party payments are payments for export proceeds received from an entity other than the invoice buyer, while you remain the exporter.
4. Is a specific FIRC required for third-party payments?
Yes. A Foreign Inward Remittance Certificate must clearly reflect the remitter’s details and transaction purpose. This is essential for GST refunds and regulatory compliance, as standard FIRCs may not include the required annotations.
5. Is there a limit on the amount for third-party export payments?
No specific monetary cap is prescribed under the Master Directions for exports, provided the full value is realised within 15 months (previously 9 months). However, any limits set by your AD bank must be followed.
6. Are third-party payments allowed from restricted countries?
For exports involving Group II Restricted Cover Countries, payments must be routed through FATF-compliant Open Cover Countries. Direct payments from restricted jurisdictions are typically rejected, regardless of the quality of the documentation.
