Payment gateway options for Indian merchants

Introduction

The electronic payment of cash has almost replaced the physical cash transaction with the introduction of online payment gateways. Many businesses today provide products and services online and payment via electronic mode has reduced the hassles related to physical handling of money. Many banks have come up with facilities to businesses to make money online with the use of Credit card/ Debit card/ netbanking facilitating easy money transfer through a secured connection. Many banks offer a 26 bit encrypted SSL for security purposes though some come in 18-20 bit secure SSL encryption.

How does it work??

The customer logs on the website and chooses the products and places order by using the “order” or similar radio button and enters the card details. The website then encrypts the information in a SSL environment and establishes link between the customer’s browser and the merchant’s counterpart, thus initiating the payment.

The whole transaction starting from placing the order till the settlement of funds between bank, merchant and service provider typically takes 2-3 days time. However, the customer will know the status of the transaction instantly.

Payment Gateway(s) are equipped with the technology to debit the user and credit the merchant/ service provider in no time. With the click of a mouse, the monies are transferred across the geographical boundaries and the recipient can instantly check the success of the transaction in no time. Third party merchants like CCAVenue, (Indian company name) or Paypal (international Company name) provide the electronic payment services by charging the users (also called commission). To avail a payment gateway service, initially, the user should have a website, with facilities such as:

  • Terms and conditions for chargeback and refund policies
  • Site integration to facilitate the online payments

The costs to have a payment gateway set up varies from merchant to merchant and varies according to the up gradation charges, transaction failures, volume of transactions and the like. For a start up business in India, Paypal services may appear costly with their charges as compared to the ICICI direct pay and CCAvenues.

In case of transaction failures, speedy resolution of the failure should be addressed while availing a payment gateway service. The paper work may be high for the first time while availing such service, but care must be taken to go through each and every sentence before signing the terms and conditions. The payment settlement cycles also should be considered; like whether the settlement is on daily basis or weekly basis or so. The facilities provided by Payment Gateway Merchant varies from providing a chat, weekly report or a shopping cart which should be integrated for speedy disposal of transactions in queue. Any delay in integration of all these services will delay the payment resulting in a frustrated customer and negative feedbacks.

Some providers also offer discounts if the revenues exceed a specified threshold limit. Also the password recovery policies are stringent in some cases.

The Payment Gateway has not assumed high importance in Indian industries and it takes some time for many more merchants to come into this line of business before, Indian businessmen can provide world class payment gateway services. Especially it's high costs and pricing are deterrent to new merchants.

The salient features are:

  • If one plan to provide a product or service online, he will definitely need a payment gateway whether directly through the Bank or via a third party service. Authorise.net is one such service provider which enables businesses to process and receive payments using the credit card. The card processor facility is fast and the down time is very less in this.
  • Echeck payments are other similar service which allows accepting echecks at a comparatively high cost. This replaces a paper check which usually takes 7-10 days for funds to be cleared. Echeck on the other hand takes less than 3 days when the payer wants to float the purchase for 2-3 days.
  • Address Verification service provided by some merchants allows verification of credit card addresses with the pin code furnished at the time of making payments.
  • Online shopping carts are a feature requiring website design to provide good shopping experience to the customer. Online shopping cart software enables payment of numerous items at one go.