When a foreign client pays an Indian exporter, the money doesn't just move from one bank account to another. It passes through a chain of institutions, systems, and checkpoints. Understanding this chain is the first step to understanding why things go wrong -and at which stage.

Here's the flow, broken down into six stages.

Stage 1: Invoice and Contract:
It starts with you. You deliver the work, raise an invoice in the agreed currency (usually USD, EUR, or GBP), and share it with your client. The invoice includes your banking details -your bank's SWIFT/BIC code, your account number, and sometimes an intermediary bank's details if your bank doesn't have a direct correspondent relationship in the client's country.

This seems simple, but errors here -a wrong SWIFT code, a missing intermediary bank detail, an incorrect purpose description -cascade into delays downstream. The invoice is also the anchor document for your EDPMS or SOFTEX entry and eventual FIRA, so getting it right matters for compliance too.

Businesses using an international payment gateway in India or an RBI authorised cross border payment aggregator should ensure invoice information aligns with RBI and FEMA requirements to avoid unnecessary processing delays.

Stage 2: Payment Initiation:

Your client instructs their bank (or payment platform) to send the money. How they send it depends on the corridor and the amount. For large B2B payments, it's typically a SWIFT wire transfer. For smaller amounts or platform-based work, it might go through PayPal, Wise, Payoneer, or a local ACH/SEPA transfer to a virtual collection account.

At this stage, the client's bank debits their account and places the payment instruction onto the network. The client may also choose a fee-sharing arrangement -OUR (sender pays all fees), SHA (shared), or BEN (recipient pays all). This choice directly affects how much you receive at the other end.

Stage 3: Correspondent Banking and Routing:

This is where things get opaque. Most Indian banks don't have direct relationships with most foreign banks. So the payment gets routed through one or more intermediary (correspondent) banks. Each intermediary receives the SWIFT message, processes it, and forwards it along the chain.

Each correspondent bank in the chain can deduct a handling fee -typically $10 to $30 per bank. A payment routed through two intermediaries can lose $20 to $60 before it even reaches India. These deductions happen silently: there is no advance notification of how many hops the payment will take or what each bank will charge. The money simply arrives lighter than expected.

This stage is also where most delays occur. Correspondent banks process payments in batches, operate across different time zones, and may hold payments for additional compliance screening -especially for first-time transfers, large amounts, or payments from certain jurisdictions.

This lack of visibility is one of the reasons many exporters today prefer modern international payment gateway platforms or an RBI authorised cross border payment aggregator, which can provide better payment tracking, greater transparency, and more predictable settlement experiences.

Stage 4: Arrival at the AD Bank:

The payment reaches your Authorised Dealer (AD) Category-I bank in India. Under FEMA, all foreign exchange transactions must flow through AD banks licensed by the RBI. The bank receives the inward remittance message (IRM) and logs the payment into the EDPMS -the Export Data Processing and Monitoring System or SOFTEX (Software Exports maintained by STPI) that tracks every export transaction from shipping bill (or invoice, for services/softwares/digital goods and services) through to payment realisation.

At this point, the money is in India but not yet in your account.

Stage 5: Compliance, Verification, and Conversion:

The AD bank now verifies the payment. This involves checking: the purpose code (e.g., P0802 for software services, P1007 for consulting) matches the nature of the transaction; the KYC on your account is current; the payment can be matched to an existing EDPMS entry or a new one is created; and there are no red flags from a sanctions or AML screening perspective.

Once cleared, the bank converts the foreign currency to INR. This is where the FX markup lives -banks typically apply a spread of 1% to 3% over the mid-market (interbank) rate, depending on the bank, the currency pair, and your relationship. This spread is rarely disclosed explicitly. You see the credited INR amount, not the rate at which it was converted compared to the market rate at that moment. For a $10,000 payment, a 2% spread means you're losing about ₹17,000 compared to the mid-market rate -and that's on top of the SWIFT fees already deducted.

Stage 6: Settlement and FIRA:

The INR amount hits your bank account. The bank is supposed to issue a FIRA -a Foreign Inward Remittance Advice (sometimes called eFIRA in its electronic form) -confirming the receipt. The FIRA is not optional paperwork. You need it to claim GST zero-rating on export income, to file your income tax return correctly, to close your EDPMS / SOFTEX entry and get your e-BRC (Electronic Bank Realisation Certificate), and to claim any export incentives you're eligible for.

In theory, this should be automatic. In practice, banks often take days to weeks to issue the FIRA. Some charge ₹250 to ₹1,000 per certificate. Some require you to visit a branch or submit a written request. If you're receiving multiple small payments from different clients, the administrative burden compounds quickly.