Fintech Challenges Banks in Cross-Border Transactions

Large Indian banks are experiencing pressure as the Reserve Bank of India (RBI) opens the cross-border payment landscape to regulated non-bank platforms. Companies previously reliant on traditional banks for foreign exchange transactions are now benefiting from faster processing and greater transparency offered by Payment Aggregators for Cross-Border (PA-CBs).

Businesses like Azul Arc and Purple Cliq Ventures have reported significant improvements, moving from multi-day bank transfers to within-a-day settlements with PA-CBs. This shift addresses long-standing issues of delays, fluctuating rates, and a lack of transparency that impacted exporters. The RBI's recent circulars, including one from April 9, 2026, aim to ensure timely credit to beneficiary accounts and mandate digital interfaces for monitoring forex transactions.

The RBI's recognition of non-banking technology startups as PA-CBs since November 1, 2023, has been a catalyst. As of March 12, 2026, numerous PA-CBs have secured licenses, processing substantial transaction values and onboarding thousands of merchants. These new players are disrupting the traditional revenue streams of banks, which include fees from SWIFT communications and profit on exchange transactions.

PA-CBs are differentiating themselves by tackling the last-mile issues in remittances, offering upfront documentation, transparent forex conversion rates, and innovative mechanisms like foreign currency virtual account numbers. This allows overseas customers to make payments more cost-effectively and faster using local methods. The enhanced competition is compelling India's largest banks to improve their cross-border services or risk losing a profitable revenue source amidst rising exports.