Friday, July 19, 2013

Payment Gateways in India

One of the key parts of an Ecommerce store is a Payment Gateway. In the west, payment solutions have made it very simple for vendors to integrate a gateway to their stores - for e.g integrating with a paypal is a breeze. However, it is extremely painful to onboard a payment gateway especially if you are a small player. This is primarily because of two reasons :

1) Paperwork - For enabling payments, each bank has its own set of procedures and it takes upwards of two months to get your netbanking, debit and credit card payments approved by the leading banks. The usual reason is regulation and RBI guidelines but the moot point is it all takes quite a bit of time.

2) Charges based on size - Typically Indian payment gateways charge an initial fee and annual maintenance fee. If you pay a higher amount, you get a lower commission charge and so on - typically if you a very small vendor, the charges are very high - mostly 5% and annual AMC separately. The question is why cant they take a one time charge for the paperwork and have a 2% commission for all transactions ?

We have had a good experience with our payment gateways so far but the charges are still extremely high. Flipkart has recently started its own service called Payzippy and they seem to have gotten rid of all the strange charges and made it more democratic - Hopefully this will shake the market a bit and things will become a bit more reasonable. Fingers crossed.