The gig economy in India is booming and shows no signs of slowing down. In fact, one in every four freelancers globally is based in India. The top services provided are web/mobile development, web design, data entry and Internet research. Today, there are an estimated 15 million freelancers in India working online, and some experts believe the number of freelancers in India could double every five years until 2035. Most of these freelance jobs are posted by companies in the U.S. and Europe, according to the Online Labour Index.
All of those statistics add up to one important fact: India is a market that demands the attention of U.S.-based marketplaces who want to cultivate a healthy base of marketplace participants. Providing efficient and effective ways to pay those India-based freelancers must be a priority. To learn what U.S.-based marketplaces need to know about efficiently and cost-effectively paying their India-based recipients, we interviewed Renjith Alex, Head of Operations in India for Transfast, the operator of Transpay, and Ashutosh Raje, Transfast’s Director of Business Development for India.
Q. What do you see in India in terms of the way marketplace recipients (for example, freelancers working on a marketplace like Upwork, or sellers doing business on an e-commerce marketplace like Amazon) prefer to receive funds from U.S. companies?
The government’s efforts toward demonetization, and an overall aim of promoting digital money, began in 2016 and since then, people have been encouraged by the government to obtain bank accounts. So far, it’s been a success, and as a result, many freelancers like to be paid via Local Bank Transfer, direct into their bank account. In addition, because freelancers tend to be well educated, they are quite well informed about transfer fees and foreign exchange costs. And since freelancers are self-employed, they are open to looking for opportunities to work for marketplaces where they have the capacity to earn more, by minimum transfer fees and maximum foreign exchange gain.
Q. Is there a clear preference for having funds sent directly to the recipient’s bank account via Local Bank Transfers? What about other payment forms, such as e-wallets?
Yes, having funds sent directly to a bank account is a preference. E-wallet payments are also popular, but unlike bank accounts, many e-wallets have restrictions on the amount of funds you can accumulate, which is a limitation. In addition, freelancers appreciate the customer support afforded by Local Bank Transfers and the ability to track the status of their payments.
Q. What changes to the country’s payment system do you anticipate in the coming months?
There is certainly change ahead in India’s payment system. The Reserve Bank of India, which is the Central Bank, continues to make changes to the country’s payment and settlement systems in the effort to move toward “a highly digital and cash-lite society," which is discussed further in this recent article in Indian business publication Business Today.
Q. Would you characterize the local currency as stable or volatile and is it a preference to be paid in rupees, or U.S. dollars?
Yes, the Indian rupee is a stable currency, and as such, getting paid in rupees tends to be the preference.
Q. What is the process of ensuring that funds sent to India are compliant?
Funds sent internationally are subject to a number of regulatory and compliance standards, beginning in the originating market, then to the landing country - in this case, India - and ultimately the end recipient. Because cross-border payments by nature involve multiple layers of multinational regulatory requirements, Transfast is licensed in more than 70 jurisdictions worldwide, including with The Reserve Bank of India. Our regulatory and compliance function does the work to maintain those licenses. Rigorous AML/KYC efforts, implemented by our compliance team, coupled with the latest tools and monitoring systems, are at the core of our best-in-class compliance and risk management offering.
Q. What are the service levels we offer in India?
Transfast operates end-to-end API integration with all partner banks in India, and as such, we are able to credit funds to all the banks in India. Our instant product capabilities allow us to credit to more than 30 banks instantly, 24x7, including holidays. For the remainder of the banks in India, Transfast can credit funds during business working hours within 30 minutes.
Want to learn more about adding Local Bank Transfers to your payouts offerings? Check out our Ultimate Guide to Local Bank Transfers.