The at traditional brick and motor stores; payment gateway

The Indian e-commerce industry has been on an upward growth trajectory and is expected to grow at a Compound Annual Growth Rate (CAGR) of 28% from 2016-20 to touch US$ 63.7 billion by 2020 and overtake the US by 2034.1 The sector reached US$ 14.5 billion in 2016. Much growth of the industry has been triggered by increasing internet and smartphone penetration.  To catch up with this new age customer base, most of the new start-ups and existing companies are coming up with E–commerce based business models. A payment gateway enables an E–commerce website to receive payments from customers over the internet. It can loosely be compared with the point-of-sale terminals we see at traditional brick and motor stores; payment gateway is like its virtual counterpart. An E–commerce site will be incomplete without a payment gateway. Hence here comes the question for companies, as to which payment gateway to choose from the available options.In this paper, we will explain about the payment gateway, how it works, how to choose a payment gateway for your business and in the end, we will explain about the major payment gateways which are available in the Indian market and what they offer.PAYMENT GATEWAYA payment Gateway acts as a channel between an E-commerce website and the financial institutions those process the transaction. The payment details are authenticated and routed in an extremely secure environment between various parties and related banks by Payment Gateways. In essence the Payment Gateways function as an “encrypted channel”. Payment Gateways send a message from the credit card processor to the customer, which lets the customer know the transaction has been authorized or not. The main job of a payment gateway is to validate your customer’s credit card details securely, make sure the necessary funds are available for the payment and get you paid. Following are the other benefits which are offered by payment gateways? Rapid and efficient transaction processing? Multiple payment options? Multi-currency support? Stringent security measures to gain customer and merchant trust? Value-added services like payment analytics.A customer swipes his/her card through credit card swipe, over the phone or virtually once he/she is done with purchasing.Through a secured connection, the credit card transaction is transmitted to the payment server. First, the credit information is encrypted and then it is forwarded to the payment gateway.The payment gateway now forwards the transaction information to the card association. The card association now forwards the transaction to the cardholder’s card issuing bank.Once the bank receives authorization request, a response is sent to the processor with a response code. Response code helps in identifying the reason as to why a particular transaction failed.The processor now forwards the response to the payment gateway.The payment gateway receives the response, and forwards it on to the system or website where it is interpreted as a relevant response then relayed back to the cardholder and the merchant.1. Hosted: This type of payment gateways will take the end user off from your site’s checkout page. Once the end user clicks on the pay button on your checkout page, he/she will be redirected to payment service provider (PSP) page. On this page the end user needs to fill the payment details, once the payment is done, the end user will be redirected back to your website. Pros:Security ? Sensitive data of the customer will be secured by the payment gatewaySimple ? As the whole process will be taken care by the payment gateway merchant doesn’t really need to worry about the process. Cons:Customer Experience ? The merchant can’t do anything about customer experience.Process Time ? Process time will increase a bit.: Unlike in hosted case, here the whole payment process will happen at merchant’s checkout page itself. Whenever the merchant wants full control over the payment process and doesn’t want to redirect customers to another page, can opt for non –  hosted payment gateways. Pros: Flexibility: Merchant has the full control over the payment process.Customer Experience: Can customize the payments page’s UI according to merchant’s requirements. Process time will decrease.Cons:Security: Merchant will be responsible for security of customer data and should take care of PCI DSS compliance.Service: Merchant should purchase the SSL certificate for better security.KEY CONSIDERATIONS WHILE CHOOSING A PAYMENT GATEWAY1. Cost: Reducing costs is the major concern for any business. So, before choosing a payment gateway the company has to be fully aware of the gateway’s fee structure. Typically, a payment gateway prices consists of set-up fee, transaction fee, multi-currency fee and admin costs. The transaction fee varies with debit and credit card. There will be extra fee charged for chargebacks.If the company is a start-up or a small company which deals with low volume online payments, they should try to avoid high set-up and admin costs.2. Payment Settlement: Though the payment has been approved typically it will take few days for the settlement to happen. Settlement timings vary from provider to provider. Some providers may settle the funds on set days. So, a company should look for a provider who settles as early as possible. 3. Supports International Payments: If a company deals with international payments, it should look whether the payment gateway allows for international and multi-currency settlements. As few companies need multi-lingual interface they should look whether the gateway provider is offering it. In the end company needs to check whether there are any extra fees associated with international payments.4. Security:   As online payments deal with the sensitive customer information; companies should choose a provider who enables secure transactions while safeguarding the customer information. To choose such a provider, a company must be aware of the standards such as Payment Card Industry Data Security Standard (PCI DSS) and Payment Application Data Security Standard (PA DSS). Companies must make sure to use level 1 compliant with the PCI DSS. Along with level 1 compliant, companies must also see the other fraud protection and screening tools offered by payment gateways. 5. Service and Support: Thumb Rule for Companies is to check for 24/7 and 365 days support from the provider. Company should make sure that whenever a problem occurs the provider should be able to track down and resolve it. Companies should also check what kind of support a provider offers when a problem occurs i.e. do they offer support through emails or offer a range of support. Finally, companies should see whether there are any extra charges associated with respect to support. 6. Payment Options: Companies must decide as to what type of payment methods they are willing to accept. Then look for the gateways which supports those payment methods.For example: CCAvenue a payment gateway provider supports transactions through only two types of wallets i.e. Paytm and MobiKwik.  Suppose, a company wants to accept payments through freecharge wallet then CCAvenue is not the right choice. So, they should look for the provider which supports transactions through freecharge as well.   7. Hosted or Non-Hosted Payments:   As explained earlier a hosted payment gateway redirects the end user from the company’s website to a securely hosted payment page. This mitigates the risk in storing and transacting credit card information. Hosted payment gateways are suitable for companies which are small and medium sized. As this helps companies to accept the payments quickly and cost effectively in a secured manner. However, it also means adding an extra step to the transaction life cycle which might make end user to feel that the payment process is long. Unlike the hosted payment gateways, Non-Hosted gateways allows end user to complete the transaction in the company’s webpage itself. This makes the end user feel that the payment process is shorter. In order to have a non-hosted payment gateway a company typically needs an SSL Certificate and should comply with PCI requirements.8. Integrates with current system: A company should consider a payment gateway which integrates easily with the current billing, shopping cart and accounting solutions it is using. This reduces the development time and costs. 9. Reliability: High network availability is crucial. Companies might face the risk of losing the revenue when there is network outage. In addition to uninterrupted network availability, companies should see whether a gateway facilitates a backup data center. 10. Flexibility & Control: A payment gateway must provide the ability to connect with multiple processors and payment providers, it should also give the flexibility to switch amongst them quickly. A company should check whether the payment gateway offers the above-mentioned characteristics. In addition to the above-mentioned aspects, 1. The company should see whether a payment gateway offers a real-time comprehensive report. 2. How complex is the set-up process and time taken for it? 3. How much time will it take to set-up a merchant account?MAJOR PAYMENT GATEWAYS IN INDIAInstaMojoInstaMojo is very popular because of its reasonable prices. It has zero set-up fee and annual maintenance fee. Per transaction it charges flat 2% + Rs. 3. InstaMojo doesn’t support international and multi-currency payments, it only supports INR. After every three days settlement will happen. With InstaMojo merchants don’t need to wait too long to accept payments, immediately after signing up they can start accepting payments from end users. As of now mobile app integration is not available. It supports nearly 61 banks for net banking and 4 types of cards for card payments. It also supports payments through the following wallets, freecharge, mobikwik, olamoney and jio money. It supports UPI.CCAvenue It is the one of India’s largest payment gateway, which offers a wide range of payment options. It is the first payment gateway in India which the new PCI DSS 1.1 standards of compliance. CCAvenue offers 200+ payments options, which include 6 credit card options. It also supports 27 major currencies across the globe and provides multi lingual interface in 18 major languages. It supports UPI. CCAvenue has two set-up plans, one of them is a zero set-up fee plan and the other one charges Rs. 30,000. It charges Rs. 1200 as annual maintenance fee. Transaction fee for domestic credit & debit cards, mobile wallets, net banking, IMPS and UPI is flat 2%. Transaction fee for international credit cards is flat 3% and the transaction fee for multi-currency is flat 4.99%. The settlement happens on weekly basis. Initial set-up will take 3-4 days, only after that merchant will be able to receive the payments. CCAvenue supports the mobile app integration. Following are the popular wallets supported by CCAvenue, freecharge, jio money, paytm, mobikwik, SBI buddy and payzappOther than these CCAvenue offers a plethora of other value added services for free like, Smart Analytics, Marketing Tools, CCAvenue Checkout, CCAvenue Shopping Cart, Dynamic Event Notification, etc.E-Billing Solutions (EBS)EBS is one of the top payment gateways in India. Its USP lies in the level of security it offers, EBS is the first Indian payment gateway provider PCI DSS 3.0 standards of compliance. It is also certified by security and process adherence followed by ISO 27001-2013. These make EBS one of the secured payment gateway. EBS has two types of plans, the first one is called starter plan which is a readymade one and the second one is called premium plan which is tailor made based on the requirements of a particular merchant, this plan is highly customizable. In the basic plan, EBS charges flat 2% as transaction fee for Credit Cards, Debit Cards, Net Banking and IMPS & UPI. For e-wallets and International Credit Cards the transaction fee is flat 3%. Charges for premium plan varies based on the requirements of the customer. EBS charges Rs. 1200 as annual maintenance fee. It supports 11 currencies. With EBS settlement happens two days after the transaction day. It also supports mobile App integration.PayPalPayPal easily stands out as the market leader in payment platforms industry. It operates nearly in 200+ countries, this make PayPal one of the go to payment platform for merchants who operate on global scale. PayPal supports more than 100 currencies, withdrawal can be done in 57 currencies and merchants can hold their account balance in 26 currencies. With PayPal there won’t be any set-up and maintenance fees. One more advantage with PayPal is that settlements will happen on daily basis. PayPal has a great customer support system, which available 24/7. Initial set-up is easy with PayPal and immediately after completing the set-up process merchants can start receiving payments into their PayPal accounts. Mobile App integration is supported by PayPal. PayPal charges the transaction fee based on monthly sales, which varies from 3.4% + fixed fee to 4.4% + fixed fee. By using PayPal merchants can receive payments from a market place or from their own website.