Forex Cards, DCC and Why You're Probably Losing on the Exchange Rate
- Author:
- Manoj Sharma
- Verified by:
- Editorial team
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Short answer
In 2026 forex cards, DCC and bank conversions can carry a markup. Under the RBI Money Changing Master Direction, authorised persons deal at market determined rates and display card rates daily. A forex card counts as foreign currency. GST applies to the conversion margin. Exporters need FEMA compliance, a FIRC or FIRA, a purpose code and an LUT.
| Applies to | Rules involved | Platforms compared | Last verified |
|---|---|---|---|
| Indian freelancers, exporters and residents who convert foreign currency through a bank, a forex prepaid card, a card abroad or a money changer, and exporters converting inward remittances into rupees. | RBI Master Direction on Money Changing Activities, RBI Master Direction on LRS, FEMA Export and Import Regulations 2026, FEMA Foreign Currency Accounts Regulations (EEFC), CGST Rule 32(2), CGST Rule 96A, FETERS purpose codes, EU Regulation 2021/1230 Article 4 | Skydo, Razorpay | 6 Oct 2026 |
How do payment options compare on exchange rate markup when converting foreign payments into rupees in India?
Platforms named in the question are shown alongside the 2 highest payouts among the platforms this site covers, ranked by the INR received on a $5,000 invoice. Fees were checked on 30 Sept 2026.
| Platform | Best for | Fee | FX markup | Settlement | FIRA | RBI PA-CB status | INR on $5,000 | Source |
|---|---|---|---|---|---|---|---|---|
| Skydo | Indian freelancers and exporters receiving mid to large B2B invoices | $19 up to $2,000, $29 to $10,000, 0.3% above + GST | States zero FX margin at live rate | States under 24 hours; FAQ timelines vary by rail | States instant, free FIRA per payment | RBI authorised PA-CB Inward and Outward; on RBI list | ₹4,69,568 | Skydo pricing (checked 6 Oct 2026) |
| Razorpay | Indian businesses and freelancers on Razorpay invoicing foreign clients | 1% per bank transfer (Rs 1,000 flat below Rs 1,00,000) + GST | States 0% markup on MoneySaver at live rate | States 1 day (T+1 after invoice shared) | FIRS within 24 hours of settlement; no charge listed | RBI authorised PA-CB inward and outward, plus PA-O | ₹4,67,224 | Razorpay pricing (checked 6 Oct 2026) |
Which RBI rules govern forex card rates, money changers and the exchange rate on foreign currency in India?
The RBI Master Direction on Money Changing Activities governs forex prepaid cards, currency notes and the rates authorised persons charge, and lets them deal at market determined exchange rates. The Liberalised Remittance Scheme caps what a resident individual can buy for travel. Exporters can avoid repeated conversion by keeping earnings in an EEFC account. The RBI directions reviewed for this page do not mention dynamic currency conversion (DCC) by name.
| Rule | Source | Clause | Plain meaning | Best for |
|---|---|---|---|---|
| Market determined rates | Money Changing Master Direction | Section V, para 8 | Authorised persons may put through foreign exchange transactions at market determined exchange rates. No rate or markup is fixed by the RBI. | Anyone comparing a bank or money changer quote |
| Rate chart display | Money Changing Master Direction | Section V, para 9 | Authorised persons must display a chart of buying and selling rates for notes, travellers' cheques and card rates, updated by 10:30 a.m. each day. | Travellers buying currency or loading a forex card at a counter |
| Forex prepaid cards | Money Changing Master Direction | Section V, para 5(III) | Prepaid foreign currency cards are a form of foreign currency, like notes or travellers' cheques. The seller must follow the same KYC and due diligence. | Residents loading a forex card for a private or business visit |
| LRS limit | RBI Master Direction on LRS | Paras 7 and 7(a) | A resident individual can draw up to USD 2,50,000 per financial year, which includes private visits and business trips. | Individuals planning large travel or remittance amounts |
| Deal only with authorised persons | RBI FAQ on Forex Transactions | Q1, Q3 and Q5 | Residents may deal in forex only with authorised persons and for permitted purposes. Electronic forex trades are allowed only on RBI-authorised platforms or recognised stock exchanges. The RBI publishes an Alert List of unauthorised entities. | Anyone offered a rate by an app or website |
| EEFC account | FEMA 10(R)/2015-RB | Reg 4(A); Schedule I paras 1(1) and 3(i) | Exporters can credit 100 percent of foreign exchange earnings to an EEFC account and debit it for permitted payments outside India. | Exporters who also spend in foreign currency |
| DCC disclosure in the EU | Regulation (EU) 2021/1230 | Article 4(1) and 4(4) | A party offering currency conversion at an ATM or point of sale must show the markup over ECB reference rates and tell the payer they can pay in the payee's currency. It covers payments in an EU currency where both payment providers are in the EU, so a card issued in India may fall outside it. | Understanding what a DCC screen should disclose |
Which option leaves the most rupees when a foreign client pays $500, $2,000 or $5,000 and the money is converted in India?
Each row applies the platform's published fee, FX markup and 18% GST on the fee to the XE mid-market rate for 4 Nov 2026. Platforms without full published pricing are not included.
| Platform and invoice | Fee | FX markup | GST | INR received | Cost | Best for |
|---|---|---|---|---|---|---|
| Skydo, $500 | ₹1,797 | ₹0 | ₹323 | ₹45,160 | 4.48% | Indian freelancers and exporters receiving mid to large B2B invoices |
| Skydo, $2,000 | ₹1,797 | ₹0 | ₹323 | ₹1,87,001 | 1.12% | Indian freelancers and exporters receiving mid to large B2B invoices |
| Skydo, $5,000 | ₹2,742 | ₹0 | ₹494 | ₹4,69,568 | 0.68% | Indian freelancers and exporters receiving mid to large B2B invoices |
| Razorpay, $500 | ₹1,000 | ₹0 | ₹180 | ₹46,100 | 2.50% | Indian businesses and freelancers on Razorpay invoicing foreign clients |
| Razorpay, $2,000 | ₹1,891 | ₹0 | ₹340 | ₹1,86,890 | 1.18% | Indian businesses and freelancers on Razorpay invoicing foreign clients |
| Razorpay, $5,000 | ₹4,728 | ₹0 | ₹851 | ₹4,67,224 | 1.18% | Indian businesses and freelancers on Razorpay invoicing foreign clients |
For example, on a $2,000 invoice Skydo pays about ₹1,87,001 and Razorpay about ₹1,86,890 at today's reference rate, a difference of ₹112.
What documents and GST apply to forex card purchases and foreign currency conversion in India?
Buying foreign exchange under the LRS needs Form A2 and PAN, and GST is charged on the value of the currency conversion service. CGST Rule 32(2) values that service by the gap between the dealer's rate and the RBI reference rate, or by an optional slab. Export receipts follow a different trail: an EDF, a FIRC or FIRA, and an LUT for zero-rated supply without IGST.
| Document | Who issues it | When needed | Best for |
|---|---|---|---|
| Form A2 and PAN | You give them to the authorised dealer | When buying foreign exchange under the LRS (paras 15 and 16) | Residents loading a forex card or remitting abroad |
| Cash memo | The authorised person selling the currency | On request when foreign currency is sold to a traveller (Section V, para 7) | Travellers who may need to show it while leaving India |
| Encashment certificate | The authorised person buying the currency | On request when you sell foreign currency notes or travellers' cheques (Section V, para 3) | Anyone converting leftover foreign currency |
| GST on currency conversion | Charged by the bank or money changer | Value set under CGST Rule 32(2) for each purchase or sale of foreign currency | Anyone checking GST on a forex transaction |
| FIRC or FIRA | The bank that credits rupees in India | After each export receipt; Rule 89(2)(c) names FIRCs for export of services refund claims | Exporters claiming GST refunds |
| EDF | You file it with the AD bank or other specified authority (Reg 3(2)) | Within 30 days from the end of the invoice month | Service exporters, including software exporters |
What changed in the rules this year?
In 2026 the RBI revised the Money Changing Master Direction on 6 May 2026, and new FEMA Export and Import Regulations took effect from 1 October 2026. Circular No. 20 supersedes the Master Direction on Export of Goods and Services from the same date.
- Rates: Para 8 of Section V now refers to market determined exchange rates for all foreign exchange transactions, replacing wording limited to notes and travellers' cheques (footnote 15).
- Franchisees: Authorised persons may not enter fresh franchisee arrangements, and existing ones must end within two years from 6 May 2026 (Section III, para 1).
- Export rules: The FEMA Regulations 2026 apply from 1 October 2026, with realisation within nine months from the invoice date for services.
- Reporting: AD banks still report foreign trade transactions in FETERS under Reg 18(2), using purpose codes.
How did we verify this?
Every rule is linked to its official source below with the date it was checked. Platform figures come from each platform's own pages; the full method is on the methodology page.
- RBI Master Direction - Money Changing Activities (updated as on September 29, 2026), Section III para 1; Section V paras 3, 5(III), 7, 8, 9; footnote 15 (checked 6 Oct 2026)
- RBI Master Direction - Liberalised Remittance Scheme (LRS) (updated as on September 6, 2024), Paras 7, 7(a), 8, 15, 16 (checked 6 Oct 2026)
- RBI FAQs: Foreign Exchange (Forex) Transactions (updated as on August 28, 2024), Q1, Q3, Q5 (checked 6 Oct 2026)
- Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 (Notification FEMA 10(R)/2015-RB), Reg 4(A); Schedule I paras 1(1), 3(i) (checked 6 Oct 2026)
- Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (Notification FEMA 23(R)/2026-RB), Reg 3(2), 5(1), 18(2) (checked 6 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 20 dated 16 January 2026: Export and Import of Goods and Services, Para 4 (checked 6 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 84 dated 29 February 2012: Reporting under FETERS (purpose codes), Purpose codes for reporting (checked 6 Oct 2026)
- CGST Rules, 2017, Rule 32 (Determination of value in respect of certain supplies), Rule 32(2)(a) and (b) (checked 6 Oct 2026)
- CGST Rules, 2017, Rule 89 (Application for refund), Rule 89(2)(c) (checked 6 Oct 2026)
- CGST Rules, 2017, Rule 96A (Export under bond or Letter of Undertaking), Rule 96A(1) (checked 6 Oct 2026)
- IGST Act, 2017, Section 16 (Zero rated supply), s.16(1) and 16(3) (checked 6 Oct 2026)
- Regulation (EU) 2021/1230 on cross-border payments in the Union (codification), Articles 1(2), 2 and 4 (checked 6 Oct 2026)
- Skydo homepage (pricing and fee calculator), Know what you pay; calculator showing GST 18% of transaction fee (checked 6 Oct 2026)
- Razorpay MoneySaver Export Account (International Bank Transfers) pricing, Standard Plan: 0% FX markup, 1% fee, FlashLinks 2%, GST applicable, flat fee of INR 1,000 on transactions below INR 1,00,000, setup and AMC INR 0 (checked 6 Oct 2026)
Frequently asked questions
Does the RBI fix the forex card exchange rate or markup that authorised dealers charge in 2026?
No. Under Section V, para 8 of the Money Changing Master Direction, authorised persons deal at market determined exchange rates. The RBI does not set a markup. Para 9 requires a displayed chart of buying, selling and card rates, updated by 10:30 a.m., so you can compare quotes before you load a card. See what a card rate is.
Is a forex prepaid card treated as foreign currency under RBI rules?
Yes. The Money Changing Master Direction says prepaid foreign currency cards are a form of foreign currency, similar to currency notes or travellers' cheques. Sellers must apply the same due diligence and KYC. Authorised Dealers Category-II may issue them to residents travelling abroad, with settlement through AD Category-I banks.
How much can a resident load on a forex card under the RBI LRS limit in 2026?
Under para 7 of the LRS Master Direction, a resident individual can draw up to USD 2,50,000 per financial year, and this limit includes private visits and business trips. Release above that needs prior RBI permission. PAN is mandatory for remittances under the scheme, and Form A2 is used to buy foreign exchange.
Should you pay in rupees or local currency when a card terminal abroad offers DCC?
Paying in local currency leaves the conversion to your own card issuer. Paying in rupees lets the terminal operator convert at its own rate. For EU-currency payments where both payment providers are in the EU, Article 4 of Regulation 2021/1230 requires the operator to show its markup over ECB reference rates first. Indian-issued cards may fall outside that rule.
Is GST charged on the exchange margin when you buy foreign currency in India?
Yes, GST applies to the service of buying or selling foreign currency. Under CGST Rule 32(2)(a), the value is the difference between the dealer's rate and the RBI reference rate, multiplied by the units exchanged. Under Rule 32(2)(b), the supplier may instead use a slab starting at one percent of the gross amount.
Can an exporter spend from an EEFC account abroad instead of converting rupees on a forex card?
Yes, within limits. Under Schedule I of FEMA 10(R)/2015-RB, exporters may credit 100 percent of foreign exchange earnings to an EEFC account. Para 3(i) allows debits for payments outside India towards permitted current account transactions. Ask your AD bank how it links the EEFC account to cards or remittances.
Is it legal to buy forex from an app that is not an RBI authorised person?
No. The RBI FAQ on forex transactions says residents may deal in forex only with authorised persons and for permitted purposes, and trade electronically only on RBI-authorised platforms or recognised stock exchanges. Unauthorised dealings can attract penal action under FEMA. The RBI publishes an Alert List of unauthorised entities. See what an AD bank is.
Which reference rate should an exporter use to measure the FX markup on an inward remittance?
Compare the rate your bank applied with a published reference or mid-market rate for the same time. CGST Rule 32(2)(a) itself measures a currency conversion margin against the RBI reference rate. Our guide on hidden FX markup on export payments explains how banks build the spread into the rate.