Cross-Border Payments in India: A Comprehensive Narrative, Industry Insights, Funding Landscape, and Future Outlook | Episode 50

One of the segments which is bound to get disrupted by new age fintechs.

India, the global leader in inward remittances with an estimated USD 83 billion annually, has long wrestled with the inefficiencies of cross-border payments—exorbitant fees, prolonged settlement times, and labyrinthine regulatory requirements. Historically dominated by banks and legacy systems like SWIFT, these transactions were often mired in delays, opaque pricing, and cumbersome documentation. Fintechs, with their agility, technological prowess, and customer-centric approach, are dismantling these barriers, trying to create a new era of seamless, cost-effective, and transparent cross-border payments.

India’s position as a financial powerhouse is unique. As the world’s largest remittance recipient, it accounts for roughly 15% of global flows, with funds primarily streaming from the Middle East (UAE, Saudi Arabia), the USA, and the UK, while outward remittances support economies in Nepal, Bangladesh, and Sri Lanka. Since 2016, remittances have grown at a compound annual growth rate (CAGR) of 8%, driven by a globalized Indian diaspora, expanding international trade, and a dynamic workforce. Small and medium-sized businesses (SMBs), freelancers, and exporters increasingly rely on cross-border payments to fuel global commerce, yet high costs—often 5–7% per transaction—and delays of 3–5 days have persisted.

Fintechs have seized this opportunity, leveraging technologies like Unified Payments Interface (UPI), blockchain, and artificial intelligence (AI) to redefine the landscape, making payments faster, cheaper, and more inclusive.

The Cross-Border Payments Industry in India: A Deep Dive

The cross-border payments industry in India is a vibrant ecosystem, intersecting financial services, technology, and global trade. It encompasses remittances (inward and outward), trade payments (imports and exports), and B2B transactions, serving individuals, SMBs, and corporates. India’s market is shaped by several key dynamics:

India’s remittance market, valued at USD 83 billion in 2022, is projected to reach USD 100 billion by 2027, growing at a CAGR of 3–5%. The broader cross-border payments market, including trade and B2B flows, is significantly larger, with India’s export sector alone generating USD 450 billion in 2023. The global cross-border payments market, valued at USD 181.9 trillion in 2022, is expected to reach USD 356.5 trillion by 2032, with India playing a pivotal role due to its trade and remittance volumes.

The industry comprises banks (e.g., HDFC, ICICI), traditional money transfer operators (e.g., Western Union, MoneyGram), fintech startups, payment aggregators, and global players like PayPal and Wise. Fintechs are gaining market share, capturing 20–25% of the remittance market and growing rapidly in trade payments.

Some of the the key pain points in the current remittances ecosystem are - high fees (up to 7% for remittances), slow processing (2–5 days), and complex compliance requirements under India’s Foreign Exchange Management Act (FEMA). Small-value transactions, critical for SMBs and freelancers, are often uneconomical due to fixed fees. Transparency is another issue, with hidden exchange rate markups eroding value.

Fintechs are addressing these challenges through real-time payment rails, blockchain for transparency, and AI for fraud detection. The integration of UPI with global systems and the adoption of ISO 20022 standards are enhancing interoperability and efficiency.

Cross-border payments fuel India’s economy, supporting 30 million migrant workers abroad and 50 million MSMEs, which contribute 30% to GDP and 45% to exports. Efficient payment systems are critical for India’s ambition to become a USD 5 trillion economy by 2027.

The market is highly competitive, with fintechs challenging banks’ 60–70% market share in remittances. Global players like Wise offer low-cost solutions, while local fintechs leverage India-specific innovations like UPI. Partnerships between fintechs, banks, and e-commerce platforms (e.g., Amazon, Flipkart) are reshaping the ecosystem.

The industry’s growth is underpinned by India’s digital infrastructure—1.2 billion mobile users, 700 million internet users, and UPI’s dominance, processing 10 billion transactions monthly. Government initiatives like Digital India and Startup India, coupled with the Reserve Bank of India’s (RBI) Payments Vision 2025, have created a fertile ground for fintech innovation.

The Fintech Pioneers: Key Players in India’s Cross-Border Payments Space

A diverse cohort of fintechs is driving innovation in India’s cross-border payments sector, each addressing specific needs with tailored solutions. Here are the leading players:

• Skydo: Founded in 2022 in Bengaluru by Movin Jain and Srivatsan Sridhar, Skydo empowers SMBs, freelancers, and exporters with virtual foreign accounts to simplify international payments. By minimizing foreign exchange costs, Skydo processes USD 250 million in annual export payments for over 12,000 exporters. In January 2025, it received in-principle RBI authorization as a Payment Aggregator-Cross Border (PA-CB) entity and secured Payment Service Provider (PSP) approval from Amazon for its Global Selling program. Skydo’s flat-fee model and integration with platforms like Amazon make it a preferred choice for exporters.

• Xflow: Xflow builds API-driven infrastructure to make cross-border payments as seamless as domestic ones. Targeting startups, growth companies, and enterprises, it simplifies payments for demand, supply, or labor, enabling global market access. Its developer-friendly platform is gaining traction among businesses scaling internationally.

• BRISKPE: Mumbai-based BRISKPE focuses on MSMEs, offering cost-effective international payment solutions. In 2024, it raised USD 5 million in seed funding from PayU, signaling strong investor confidence in its mission to empower small businesses in global trade.

• Salt: A neo-banking platform, Salt streamlines cross-border payments by digitizing and automating business banking processes. It caters to businesses seeking efficiency in international transactions and compliance.

• iPiD: Singapore-based with a strong India focus, iPiD launched in India in 2022 to reduce errors in international transactions by eliminating complex codes. Its platform enhances reliability and user experience for cross-border payments.

• PayGlocal: PayGlocal simplifies cross-border payments for Indian merchants, processing INR 22 billion in transactions across 181 countries for over 1,300 merchants. Its platform is tailored for seamless global trade, particularly for e-commerce and SaaS businesses.

• BillDesk, Amazon Pay, Adyen, and Cashfree Payments: In 2024, these fintechs secured RBI PA-CB licenses to process import and export transactions. Cashfree Payments raised USD 53 million in a Series C round in March 2025, led by KRAFTON, to bolster its cross-border offerings.

• HiWiPay: Specializing in trade and education remittances, HiWiPay raised USD 2 million in a seed round led by Unicorn India Ventures in February 2025 to scale its platform and expand its reach.

These fintechs operate on two primary models: building independent payment rails or integrating with legacy systems. Some maintain local currency accounts globally, managed by treasury teams, while others leverage UPI and faster payment rails in countries like Singapore and Thailand for real-time, low-cost transfers. Their focus on SMBs, freelancers, and exporters aligns with India’s growing digital economy and export ambitions.

The Funding Landscape

India’s fintech sector, particularly in cross-border payments, is a hotspot for global investors, driven by a robust digital economy, supportive policies, and a young, tech-savvy population. As of Q1 2025, India hosts 28 fintech unicorns, ranking third globally with a collective valuation of USD 125 billion and annual revenue of USD 20 billion. Payments and lending dominate, capturing 85% of fintech capital raised.

Here’s a detailed funding snapshot for key cross-border payment fintechs:

Source: Internet

The Technological Edge: How Fintechs Are Transforming Cross-Border Payments

Fintechs are leveraging advanced technologies to address the inefficiencies of cross-border payments:

• UPI Integration: UPI’s integration with faster payment systems in Singapore (PayNow), Thailand, and the UAE, using proxy identifiers like mobile numbers, enables real-time, low-cost transfers. Skydo and PayPal’s Xoom leverage UPI for inter-bank transactions, reducing fees and delays. The National Payments Corporation of India (NPCI) is expanding UPI’s global reach, with 10 countries linked by 2025.

• Blockchain and Distributed Ledger Technology (DLT): Blockchain ensures secure, transparent remittances, reducing intermediaries and costs. Bidirectional messaging and settlement components validate transactions, gaining traction among SMBs. Hitachi Payments’ investment in blockchain startup Spydra and Ripple’s partnerships with Indian banks highlight this trend.

• Web3 Innovations: Web3 technologies enable decentralized, secure payments. Standard Chartered’s Hong Kong division partnered with Animoca Brands for a stablecoin, while UBS piloted “UBS Digital Cash” for multi-currency settlements. Indian fintechs like Skydo may adopt similar solutions to enhance transparency and speed.

• AI and Automation: AI streamlines fraud detection, compliance, and customer support. Fintechs have saved USD 7.3 billion in operational costs using chatbots, reducing customer interaction time by 826 million hours. AI-driven analytics also optimize currency conversion and predict transaction risks.

• ISO 20022 Standards: The adoption of ISO 20022, a global messaging standard, enhances data richness and interoperability, improving transparency and compliance in cross-border payments.

These technologies enable fintechs to offer fees as low as 1–2% (versus 5–7% for banks), settlement times of minutes (versus days), and enhanced user experiences, making small-value transactions viable for SMBs, freelancers, and exporters.

Regulatory Landscape: The RBI’s Balancing Act

When it comes to fintech, you cannot not talk about regulations.

The RBI is both a catalyst and gatekeeper in India’s cross-border payments sector. Its Payments Vision 2025 aims to triple digital payment transactions and increase mobile-based transaction users by 50% CAGR by 2025. The October 2023 circular mandated direct regulation of cross-border payment aggregators, requiring registration with the Financial Intelligence Unit-India (FIU-IND) and a minimum net worth of INR 15 crore (USD 1.8 million), rising to INR 25 crore (USD 2.9 million) by March 2026. Skydo’s PA-CB authorization in January 2025 reflects compliance with these standards.

The RBI’s participation in Project Nexus, a Bank for International Settlements initiative linking ASEAN and Indian payment systems, aims to create a multilateral payment network by 2026. Bilateral agreements with countries like Singapore and the UAE further UPI’s global integration. The RBI’s Fintech Department, established in 2020, focuses on blockchain adoption, data privacy, and consumer protection, while sandbox programs test innovations like CBDCs (e.g., Digital Rupee).

However, stringent regulations pose challenges. Compliance costs, anti-money laundering (AML) requirements, and FEMA guidelines strain smaller fintechs. The RBI’s cautious approach to cryptocurrency and stablecoins limits Web3 adoption, though pilot projects like the Digital Rupee signal openness to innovation. Consistent opening up and development of the segment is need of the hour.

Challenges Facing the Industry

The cross-border payments industry in India faces a complex array of challenges that could impact its growth trajectory:

• Regulatory Complexity and Compliance Costs: Navigating India’s regulatory landscape, governed by FEMA and RBI guidelines, is a significant hurdle. The October 2023 PA-CB framework requires fintechs to maintain substantial net worth (INR 15 crore, rising to INR 25 crore by March 2026) and comply with stringent AML/KYC norms. These requirements increase operational costs, particularly for early-stage startups with limited capital. Additionally, the RBI’s rigorous scrutiny to prevent money laundering and terrorist financing adds layers of reporting and due diligence, delaying transaction processing and straining resources. Non-compliance risks hefty fines or license revocation, as seen in past RBI actions against non-compliant payment firms.

• Cybersecurity and Fraud Risks: The shift to digital and blockchain-based payments heightens cybersecurity threats. The global fintech industry loses USD 5 billion annually to cyberattacks, with India being a prime target due to its high transaction volumes. Data breaches, phishing, and ransomware attacks threaten customer trust and financial stability. Blockchain and Web3 solutions, while secure, are vulnerable to smart contract exploits and wallet hacks, requiring fintechs to invest heavily in encryption, multi-factor authentication, and real-time monitoring. For instance, a 2024 cyberattack on a major Indian payment platform exposed sensitive user data, underscoring the need for robust defenses.

• Geopolitical and Economic Uncertainties: Geopolitical tensions, such as strained India-Pakistan trade relations or US-China trade wars, disrupt remittance and trade flows. For example, restrictions on cross-border trade with certain countries limit payment corridors, affecting fintechs’ scalability. Global economic uncertainties, including inflation and currency volatility, impact exchange rates and transaction costs, squeezing margins for fintechs like Skydo that rely on low-fee models. A potential slowdown in remittances from the Middle East, driven by oil price fluctuations, could reduce inflows, challenging growth projections.

• Intense Competition and Market Saturation: The cross-border payments market is crowded, with global giants like Wise, PayPal, and Revolut competing alongside local fintechs and modernizing banks. Wise’s transparent pricing and PayPal’s global network pose formidable challenges to startups like BRISKPE and HiWiPay. Banks, leveraging partnerships with fintechs (e.g., ICICI’s collaboration with Ripple) and digital platforms like UPI, are reclaiming market share. The influx of new entrants risks market saturation, potentially leading to price wars that erode profitability, especially for smaller players with limited scale.

• Financial Inclusion and Infrastructure Gaps: Despite India’s digital strides, 20% of its rural population—roughly 180 million people—lacks access to digital payment systems due to low internet penetration and financial literacy. This limits the reach of cross-border solutions for small-scale remitters, such as migrant workers in rural areas. Infrastructure gaps, including unreliable internet connectivity in tier-2 and tier-3 cities, hinder seamless transaction processing. Fintechs must invest in offline or hybrid solutions to bridge this divide, increasing costs and complexity.

• Talent and Operational Scalability: The rapid growth of India’s fintech sector has created a talent crunch, with demand for skilled professionals in blockchain, AI, and compliance outstripping supply. Fintechs struggle to recruit and retain experts, driving up operational costs. Scaling operations globally while maintaining low fees and compliance across jurisdictions is another challenge, particularly for fintechs like Xflow and PayGlocal targeting multiple markets. Currency fluctuations and varying regulatory standards in countries like the EU or Africa add further complexity.

What’s next for the ecosystem?

India’s cross-border payments sector is poised for transformative growth over the next 12–24 months. I expect some, if not all, of the following will happen:

• Market Expansion and Consolidation: India’s remittance market will approach USD 100 billion by 2027, with trade payments growing as exports rise. Fintechs like Skydo aim to scale payment volumes tenfold, while larger players like PhonePe and Razorpay may acquire smaller fintechs like BRISKPE or HiWiPay to consolidate market share.

• UPI’s Global Dominance: UPI’s linkage with 10+ countries by 2026, via Project Nexus and bilateral agreements, will enable real-time, low-cost payments. Skydo, PayGlocal, and Xflow will lead adoption, boosting SMB competitiveness in global trade.

• Blockchain and Web3 Adoption: Blockchain-based remittances, like BRICS Pay and stablecoins, will capture 10–15% of the market by 2027. Fintechs leveraging DLT, including potential moves by Skydo, will dominate SMB and freelance payments. Investments in Web3 startups will surge, with India hosting 500+ blockchain firms by 2026.

• AI-Driven Efficiency: The AI in fintech market, projected to grow from USD 14.13 billion in 2024 to USD 17.79 billion in 2025, will enhance fraud prevention, compliance, and user experience. Platforms like Skydo and Cashfree will integrate AI for predictive analytics and cost optimization.

• Regulatory Evolution: The RBI’s framework will balance innovation and stability. The net worth requirement increase in March 2026 will spur M&A, with 5–10 fintechs merging or exiting. PA-CB license holders like Skydo will gain a competitive edge, processing 30% of cross-border flows by 2027.

• Funding Resilience: India’s fintech sector will attract USD 5–7 billion annually, with payments-focused startups dominating. Median deal sizes may exceed USD 4 million, with investors prioritizing scalable, compliant solutions like Skydo’s for SMBs and exporters.

• MSME Empowerment: Fintechs like Skydo, BRISKPE, and Salt will drive MSME growth, which accounts for 45% of exports. Simplified payments and global market access will help MSMEs double their export share by 2027, aligning with India’s economic goals.

• Consumer-Centric Innovation: Fintechs will offer transparent pricing, mobile-first solutions, and flexible payment options. With 233 million internet-connected households by 2026, demand for platforms like Skydo’s will soar, particularly among freelancers and e-commerce sellers.

• Sustainability and Inclusion: Fintechs will prioritize ESG principles, offering green payment solutions and targeting underserved rural remitters. Partnerships with NBFCs and cooperatives will bridge the digital divide.

India’s fintechs are at the vanguard of a global revolution in cross-border payments, blending technology, regulation, and innovation to empower businesses, freelancers, and individuals. From Skydo’s virtual accounts for exporters to Xflow’s API-driven infrastructure, these pioneers are breaking down barriers in a USD 83 billion remittance market and a burgeoning trade ecosystem. With a projected USD 150 billion fintech market by 2026, India is not just participating but leading the charge.

Over the next 12–24 months, UPI’s global expansion, blockchain adoption, and AI-driven efficiencies will reshape the industry, despite challenges like regulation, cybersecurity, and competition. As India aspires to become the world’s third-largest economy, its fintechs are building the digital rails for a future where money moves as freely as ambition, connecting India to the world with unprecedented ease and efficiency.

Disclaimer – The views presented here are my own and doesn’t reflect views of my employer in any way and it shouldn’t be construed as that in any way whatsoever.