Why This Example?
India is an important trading partner for many German mid‑market companies. Technically, the country is connected via the SWIFT network. In practice, however, companies often report delays, inconsistent fees and limited transparency for payments to India.
The key point is that these effects are usually not “mistakes” by individual banks, but the result of how cross‑border payments are structured – correspondent banks (Nostro/Vostro), time zones, local regulatory checks and currency conversion. This example shows what happens between “payment order sent” and “funds credited to the supplier” – and why fintech networks and blockchain‑based approaches are trying to improve this.
How Does a Classic Cross‑Border Transfer Work?
Our starting point is a €50,000 payment from a German company to an Indian supplier. Typically, this is processed as a classic bank transfer over SWIFT. The payer submits a cross‑border payment order including beneficiary, amount, currency, fee split (e.g. OUR/SHA/BEN) and payment reference.
The participating banks exchange SWIFT messages – historically in MT format, increasingly using ISO 20022. If the sending and receiving banks have no direct relationship, at least one correspondent bank is involved that maintains accounts for both sides (Nostro/Vostro). At each step, sanctions, AML and KYC checks are performed – partly automated, partly with manual review. Follow‑up questions and document requests are typically a consequence of these controls rather than “random hassle”.
If the supplier is to receive INR, an FX conversion (EUR→INR or possibly EUR→USD→INR) is performed at a rate including a spread over a mid‑market reference. On the Indian side, local crediting and value‑dating rules apply, often via NEFT / RTGS / IMPS (India). Banks may have their own cut‑off times and post‑processing rules which can easily shift a payment by a day.
Timing & All‑in Costs
In practice, end‑to‑end processing often takes T+2 to T+5 calendar days due to cut‑off times, time zones, intermediaries and manual reviews. All‑in costs consist of bank fees (originator/correspondent/beneficiary) plus FX spread and are usually only roughly predictable in advance. Tracking has improved with SWIFT GPI but remains within the banking channel.
AWV Reporting Obligation (DE)
In Germany, cross‑border payments generally require a report from €12,500 upwards (with some exceptions). For €50,000, an AWV report is typically required. Banks may also ask for additional purpose information and supporting documents to fulfil their compliance obligations.
What Do Fintech Networks Do Differently?
Providers such as Wise often use local pay‑in/pay‑out networks. In practice, the company funds a local EUR account in Europe, while the provider pays out local INR via NEFT / RTGS / IMPS (India) to the beneficiary. Funds are mirrored locally rather than moving through a long chain of correspondent banks.
The result is often faster (from minutes to same‑day), more predictable due to clear status updates and more transparent on cost, as fees and FX spread are made explicit. Limitations include transaction size limits, country coverage and very large tickets where individual terms and enhanced KYC/AML checks apply.
What Do Blockchain‑Based Payments (Stablecoins) Offer?
The basic idea is to transfer money as a digital token instead of moving account balances through correspondent banks. This enables payments with 24/7 availability and – depending on the design – possible T+0 finality. For the “Germany → India” corridor, two basic patterns apply.
(1) End‑to‑end on‑chain with INR off‑ramp: The payer converts EUR→euro stablecoin (or USD stablecoin) and sends it on‑chain to the beneficiary, who uses an on/off‑ramp provider to convert into INR and receive a local credit. Benefits are speed and transparency; risks lie in the availability and quality of on/off‑ramps, the regulatory environment and the choice of reputable partners.
(2) On‑chain settlement with classic payout: Contracting parties use stablecoins to settle obligations on‑chain, while actual fiat payout still runs via established bank rails. This reduces value‑date and liquidity risk while reusing established FX, reporting and payout processes.
Transparency, Traceability & Cost Structure
Technically, stablecoin transfers can settle within minutes. Costs are driven by network fees and provider charges and are often competitive versus SWIFT chains. Public transaction IDs make flows auditable. KYC/AML controls are handled by banks and on/off‑ramp providers rather than by the blockchain itself – governance and documentation need to reflect this.
Operational Implications for ERP & Finance
For CFOs and finance teams the key question is how to embed stablecoin payments into existing processes. A pragmatic entry point is not a big‑bang change but a carefully scoped pilot: a clearly defined supplier or supplier cluster, manageable volume and a 30–90‑day window to compare classic payments with fintech and stablecoin approaches.
Operationally the work can be grouped into four areas: (1) choosing corridor and partners, (2) defining roles, approvals and limits, (3) mapping into accounting and reporting and (4) governance and exit scenarios. The following outline describes one possible path.
Step‑by‑Step Pilot: Stablecoins for Payments to India
- Define corridor & scope: Select one or a few Indian suppliers, define the types of payments (e.g. recurring service fees) and set a pilot volume (number of payments, time frame).
- Check regulatory framework: Together with tax/legal and possibly the house bank, clarify whether stablecoin payments qualify as cross‑border transfers, which AWV reports are needed and how KYC /AML will be fulfilled.
- Select on/off‑ramp provider: Choose a regulated provider with EU licence, SEPA in/out (ideally SEPA Instant) and solid API documentation. Clarify whether the provider supports payouts to India directly or via local partners.
- Define roles, approvals and limits: In both ERP and provider set who can initiate payments, who approves and which limits apply per payment/day. Ideally enforce a four‑eyes principle and use an address whitelist for known beneficiaries.
- Define booking & accounting logic: Decide in the chart of accounts how stablecoins and EUR balances at the provider are mapped (e.g. a dedicated wallet account). For each payment define how FX effects and fees are booked.
- Connect pilot technically: Start with a manual process (file uploads, manual matching to invoices in ERP) and only in a second phase build API‑based integration (webhooks, reference fields, status updates).
- Run a 30–90‑day benchmark: Measure classic bank transfers, fintech payments and stablecoin payments in parallel: settlement time (T+?), all‑in cost, number of enquiries and reconciliation effort. Document results systematically.
- Decision & scaling: Based on the data decide whether to extend stablecoin usage to more suppliers or corridors. Define governance rules (e.g. annual provider review, limit adjustments).
Frequently Asked Questions
Do I have to report a €50,000 payment?
Yes. In Germany, an AWV report is generally required from €12,500upwards (with some exceptions). The bank may also ask for purpose details and supporting documents.
Can I pay in EUR while the supplier receives INR?
Yes. With banks or fintechs, FX conversion happens as part of the process; on‑chain it is handled by the off‑ramp. For the company the order remains in EUR, while the supplier receives the agreed currency.
Conclusion
The evolution is moving from opaque correspondent‑bank chains via transparent fintech networks towards blockchain‑based settlements with 24/7 availability and T+0 capability. For mid‑market companies this means: improving classic rails, actively using fintech options and building stablecoin know‑how with small, well‑governed pilots. This is where the time and cost advantages arise that matter in day‑to‑day business.
Sources & As‑of Date
Selected Sources:
- •SWIFT gpi – Überblick über Funktionen und Tracking‑Möglichkeiten für grenzüberschreitende Zahlungen.
- •Deutsche Bundesbank – AWV‑Meldepflicht (Merkblätter, FAQ und Meldeportal).
- •Reserve Bank of India (RBI) – Informationen und Regelwerke zu NEFT / RTGS / IMPS (Indien).
- •FEMA – Foreign Exchange Management Act (Indien) – Devisen‑ und Zweckcode‑Regelungen.
- •Wise Business – Funktionsweise lokaler Auszahlungen und Preismodelle.
- •BIS / CPMI – Cross‑border payments Programme – Berichte zu Geschwindigkeit, Kosten und Transparenz.
As of: 26. Oktober 2025.