For an export oriented business its always good to have EEFC accounts because two reasons. 1. Better forex rates 2. if interested, one can monitor the market & earn some extra revenue.
Lets take case I
When a client makes a payment in USD, if we have a INR account with an Indian bank, during the wire / swift process, the conversion rate is optimised to make maximum profits for the bank. Say, we will be given lowest rate of the day etc. It gets worse if the transaction is above a threshold say 3K USD as manual intervention is kicked in & we end up getting even lower rate.
If the wire is redirected to a USD EEFC account, we can convert the same against the card rate or the negotiated special rate which will be often better than the floating rate.
Here the process involved is SWIFT and not ACH.
Closely monitor the forex markets & play the game to get the better rates. If we are really confident, like the sort that does butterfly analysis and stuff, we can go for a loan against the forex reserve and use it for OPEX & may end up making profit from the forex conversion, protection from inflation etc. Now this is for the biggies like infy i guess.
Now the question what is SBIePay, HDFC, Citi licenses do:
they are multi currency payment gateways approved by the RBI. Till now it was not possible for PGs like EBS, CCAvenue, payzippy etc to receive foreign currency & if we use the PGs of banks, they used to take the automated route thus ending up giving us lower rates.
Technically its very simple as all it takes is to receive forex & then deposit to the appropriate EEFC a/c.
But then there was a small catch, it needed RBI permission. And to get that we need to be the likes of CIAL who has say, 100K USD transaction per day.
We can use swift but if the amounts are less than 2000 USD (1920 USD as per a calculation I did few years ago), wire will not be cost effective as the cost for wire is something around 35-45 USD unless there is a special arrangement with the bank. In short for such transactions we end up using services like Paypal. Now they are very aggressive & we end up getting around INR 2.5 less than the market price / card rate per USD. Plus there is a service charge which also quite high. In anycase for 10K USD there will be a loss of INR 25000/- now if the USD is getting stronger against INR, say by 5 paise by the time the cash reaches our account, the loss increase further.
an example with paypal with 4K USD
Amount received will be 3823.70 after service charges.
-Rs.221,822.39 INR (equals -$3,823.70 USD)
1 US Dollar = 58.0125 Indian Rupees
The original amount the client paid was USD 4000. If we calculate at 1 USD = 60 INR, we were supposed to receive INR 2,40,000/- our loss is INR 18178/-
PS: today’s non-negotiated rate with SBT is 59.67 INR / USD.