Why Is It So Hard to Pay Vendors in India? (And What You Can Do About It)

You’ve probably heard about India’s digital wave: UPI payments that clear in seconds, work across banks, merchants, and individuals, and are so seamless they’ve become a global benchmark. India’s internal payments infrastructure is fast, simple, and wildly efficient.

So, you’d be forgiven for thinking cross-border payments work just as smoothly.

Spoiler: they don’t. Not even close.

Unless you’re sending small peer-to-peer amounts from one of a dozen approved countries, chances are you’ll hit a wall. And if you’re a company trying to pay a freelancer or vendor in India, you’re in for a maze of regulatory confusion, hidden fees, and endless form-filling — all just to clear a simple invoice.

For Indian freelancers and vendors, the process isn’t any easier. Once you’ve landed a global client, the next big hurdle is getting paid properly, fully, and on time.

A bank transfer might seem like the obvious choice. But in reality? It’s expensive, slow, and often unreliable. Payments are tightly regulated by the Reserve Bank of India (RBI) under FEMA (Foreign Exchange Management Act), which means:

• Every incoming foreign payment must be declared as an export of services

• It has to route through an Authorized Dealer (AD), usually a bank

• Freelancers often need to provide documentation and fill out multiple forms

And even after all that, the bank takes its cut.

Banks rarely give freelancers a fair exchange rate. Instead of using the mid-market rate (the one you see on Google), they apply a steep markup. Add in service charges, conversion costs, and various hidden fees, and freelancers could easily lose 5–10% of their income with every transaction. Not to mention, there’s absolutely no clarity on when the payment will actually reach their bank account. 

And it doesn’t stop there.

For clients, it’s not just about clicking ‘send.’

You face high fees, compliance hurdles, and tax implications, especially if you’re paying frequently or in large amounts. What starts as a straightforward vendor relationship can quickly turn into a compliance headache.

A one-off payment? Maybe manageable.

A second time? It starts getting frustrating.

Anything more than that, and it begins to eat into your time, your margin, and your team’s workload and mental energy.

You could try PayPal. But it’s widely known for high fees, unfavorable exchange rates, and holding payments without much explanation. In India, PayPal users aren’t even allowed to hold balances. Payments are automatically withdrawn to a local bank account (if they’re not ‘on hold’ for some reason or the other). Again, no clarity on when the payment will clear, so it’s not exactly user-friendly. 

The reality is simple: freelancers want to get paid, and clients want to pay them, without jumping through hoops or losing money in the process.

When your go-to options involve juggling multiple platforms and what’s seemingly an assured 10% in losses for someone, something’s broken.

Now imagine doing this at scale: paying dozens or hundreds of contractors every month. That doesn’t sound like a productive use of your company’s time or resources at all. 

According to Deel, “Most organizations use an average of five payroll providers, which increases as a company expands worldwide. It’s common for organizations operating in 30+ countries to use nine or more.”

Is There A Smarter Way to Pay Vendors in India?

We’re glad you asked.

We’ve been where you are, trying to pay freelancers, contractors, and vendors in India from the EU. We decided to fix it and build a solution ourselves by building Bluerails, a payments infrastructure that simplifies cross-border payouts for both global companies and individual freelancers. Bluerails lets you make payments using stablecoins like USDC without giving up compliance, control, or transparency.

Here’s how it works:

• Once you’ve created your account, you can begin testing payments almost immediately while we verify KYC and compliance.

• After approval, you can send INR (fiat) payments directly to your freelancer or vendor’s local Indian bank account.

• Or you can send USDC payments to their digital wallet.
  
  

Everything is trackable, programmable, and scalable, whether you use the dashboard or integrate via API. It’s simple to use, but powerful enough to support complex, cross-border payment operations.

Why Stablecoin Payments Make Sense

For those unfamiliar, here’s a quick primer: Stablecoins like USDC are pegged 1:1 to the US dollar. This gives you the benefits of blockchain technology (speed, low cost, transparency) without the volatility. Plus, you get to avoid the complexity of legacy international banking systems.

Unlike traditional providers, Bluerails gives recipients a clear choice: they can receive the full payment in digital dollars (like USDC), which offers faster settlement, better control, and often more favourable conversion rates, or they can opt for INR payouts directly to their local bank account. 

For example, if you want to pay a freelancer €500, traditional methods like PayPal or wire transfers might leave them with €450-475 after deductions. With Bluerails, they receive the full amount and can either convert it to INR themselves at competitive rates or choose to receive INR directly, whichever works best for them.

For freelancers, this means faster payments, fewer losses to fees, and more control over how they receive and manage their income.

For teams managing multiple vendors, Bluerails helps automate payouts, streamline compliance, and eliminate the hassle of juggling multiple payment systems.

You get full visibility into each transaction. Payments can be structured with built-in AML and KYC checks. Freelancers receive clean, auditable records of income, and companies get payment logs they can use for reconciliation and reporting.

The creator economy is global. Talent is everywhere. But the systems built to pay that talent are outdated, expensive, and needlessly complicated across countries (and especially so in India). 

If you’re tired of losing time and money on fees, delays, or workarounds, there’s a better option. Bluerails gives you a compliant, programmable, and scalable way to pay freelancers in India using modern, borderless infrastructure.

We’d love to show you how it works so you can make an informed choice and see how much simpler global payments can be for yourself: Book a demo to see Bluerails in action (here)!

FAQs about paying Indian vendors from the EU:

1. Can Indian freelancers/contractors legally accept USDC or stablecoin payments?

Yes. Receiving stablecoins for services is not illegal in India. However, freelancers are required to declare this income and pay taxes on it. Bluerails helps ensure payments are clearly recorded and structured as export-of-service income, which makes it easier for freelancers to stay compliant.

2. How can vendors convert stablecoins to INR?

There are several options:

• Indian exchanges like CoinDCX, WazirX, and Koinex

• OTC (over-the-counter) desks that support stablecoin-to-INR conversion

3. Do vendors need a wallet?

Yes, to receive USDC or other stablecoins, a freelancer will need a compatible wallet. However, wallets are free and easy to set up, and we can support you with more information on that!

4. What if I want to send INR directly to the freelancer?

You can. Bluerails allows you to fund your account in stablecoins and convert them on the backend into INR payouts. Freelancers receive the amount directly in their bank accounts, if that’s preferred.

5. Is this only for big companies?

No. While Bluerails scales well for enterprises, it’s equally useful for startups, agencies, and platforms that pay even a handful of freelancers in India (or anywhere else). You don’t need a dev team to get started, and you can scale up as your needs grow.