A Beginner's Guide to Payment Gateway in India : Part 1

January 16 , 2017

Payment gateways are the most crucial elements while building an e-commerce website for your store. Well, reasons being obvious - safety concerns while transacting online and paying money. With growing security concerns, shoppers are bound to be wary and hesitant while disclosing their bank account details online. But, a holistic payment gateway service that provides secure fund transfer, immediate integration and hassle free service is what ups the trust quotient between you and your consumers.

Payment Gateway is a service that allows credit card, debit card or any other electronic money transfer governed by sophisticated internet security protocols, between the shopper and the merchant.

How does it work?

Payment gateway acts as the middleman between the shopper and the merchant. When a shopper wishes to make a payment, the merchant’s website sends encrypted credit card, debit card or any other payment mode information to the payment gateway. Payment gateway then validates these shopper-fed details with the bank and authorizes the transfer of the bill amount from the shopper’s account to the merchant admin’s account.

Payment Gateways in India

Based on what type of transactions will take place on your website, the payment gateway providers charge a flat fee on each transaction to the merchant. This is known as TDR or Transaction Discount Rate.

There are multiple payment gateway service providers in India. TDR, or the rate charged per transaction on your website will be the primary metric you need to consider while zeroing in on a vendor. The lower the TDR, the better. Another parameter to consider is the type of transactions that will take place more frequently on your website, say low amount transactions via Debit Cards or EMI Based transactions as in case of lifestyle products website. Based on these, here are the Top 11 PG service providers compiled below.

1. PayU Biz / PayUIndia

PayUBiz, also known as PayU India is the most popular payment gateway service provider in India and boasts of a lowest Debit Card Pricing. PayU, although priced higher, provides lower TDR and a reasonable processing fee as you pay higher for the packages. Plus an annual maintenance fee of Rs. 2400 associated with each of their plans. It supports 35 + banks under NetBanking.

2. Citrus Pay

CitrusPay’s transparent and flat rate of 1.99%+ INR 3 across all transactions is a steal deal for e-commerce merchants. Citrus pay is compatible across all devices and platforms viz. iOS, Android and Windows. It’s partnership with over 30+ banks and 2 step integration process makes Citrus one of the top favorites among e-commerce merchants. Add to that a maintenance cost of just INR 4900 a year.

3. PayU Money

PayU Money is the subsidiary of PayU India and specifically targets small businesses and startups. Apart from being efficient, safe and easy to integrate, what gives PayUMoney the brownie points is that this service is absolutely FREE with ZERO installation costs except a flat 2% TDR on every transaction.

4. CCAvenue

CCAvenue is the most widely used payment gateway India. They offer a flat TDR with ZERO setup fee across multiple payment options like Credit cards, debit cards, netbanking(53+ banks), cash cards, wallets and also in multiple currencies(27 foreign currencies) for the basic plan and a customized optimum plan for the pro members.

5. Paypal

Paypal entered the markets as a relief for people to send money across boundaries easily through email. For small businesses who cannot afford to have a payment gateway, can use this option. Selling is 4.4% + $0.30 USD per sale, or lower without any hidden fees. They support more than 200 different foreign currencies.

6. EBS

EBS is one of the oldest players in India. They are pretty accommodating & have a modest pricing. Recently their services have been falling but they still rule among the top 5 payment gateway services in India supporting net-banking to transfer money across 35 different companies in India.

7. Pay with Amazon / Amazon payments

Fairly new in Indian markets but rapidly picking up pace is the online payments services by Amazon. Through an easy set up process and integrated order management and payments, 'Pay with Amazon' helps sellers completely outsource their transactional needs, focus on the core business of sourcing and generate higher return on investment. They currently charge a flat fee of 1.95% per transaction (valid till March’16 post which standard charges of 3% apply), without any set up costs making it an amazing choice for merchants.

8. PayTM payment gateway

Relatively new player in the market, PayTM is doing good with respect to its platform and services. Inspite of lagging a step behind the market leaders, PayTM’s success on their own website using their payment gateway is a testimony to their up to mark services.

9. Direcpay

DirecPay, by TimesofMoney offers a wide range of affordable payment options. An assurance of 48 working hours’ settlement cycle is a cherry on the cake. It also has an option of Multi Bank EMI, wherein all major banks like HDFC, Citibank and 35+ more banks are supported for EMI conversion. Dropped transaction tracking, automated reconciliation, real time MIS and on demand analysis & reporting tools are some stellar add-ons!

10. Zaakpay

The portal offers both mobile (Mpay) and web (Webpay) based payment gateway services. Mpay provides in – app payments facility for Android and iPhone applications and requires no additional fee. Also, it charges a fixed one time setup fee and annual maintenance charges. However, TDR is dependent on monthly transaction volume.

11. Instamojo

An amazing product for those who are bootstrapping, self employed and in a testing phase. No extra fees, no heaps of documents. 2 step sign up and a flat rate of 1.9% is as delicious as it could get!

Comparison of the Top 5 Payment Gateways in India

Criteria
Setup Fees Economy:4900
Silver: 9900
Gold: 19,900
Platinum:29,900
Zero Economy:4900
Silver: 9900
Gold: 19,900
Platinum: 29,900
Economy:4799
Starter: 9599
Standard: 15,999
Premium: 23,999
Zero for Popular and 30000 for privilege customers
TDR Debit Cards: 0.75% - 1%
Credit Card: 2.50% - 3.9%
Amex Cards: 3.25% - 3.90%
PayUMoney: 2.50%-3.90%
Flat rate 1.99%+ INR 3 Flat rate of 2% Flat rate of 3.75% Flat rate of 1.99% + INR 3.00
Net banking banks supported 35+ Banks supported 30+ Banks 28 + Nationalized and private banks supported 50+ Banks supported 53+ Banks supported
Settlement period     Upto 48 working hours    
Time to          

About the Author

Hrishikesh Jobanputra

Hrishikesh Jobanputra is an author and marketing advisor to forward thinking entrepreneurs. He has 16+ years of experience in marketing, strategy and consulting. Hrishikesh helps businesses of all sizes gain an unfair competitive advantage using the power of inbound marketing.

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