Monday, October 10, 2011

Comparision of Payment Gateways in India

    It all begin when a friend asked me about the possibility of setting up a ecom site for his traditional business.Since it involved both B2B and B2C segments, one of the areas of interest was online payment ie) user purchasing a commodity in his site and paying via credit card/debit card/NetBanking online. Though i have used this facility as a consumer almost on a daily basis , i wasn't aware of the underlying business model and hence decided to explore it. As usual, armed with Google, digged through  the net and following is the overall summary

Service Provider Charges 
( Initial Setup Cost +Yearly Charges + Transaction Charges)
CC Avenues 7,500, 1200, 7% / 40,000,3600 , 3% Industry Leader.Most widely used . No 1 Player ( Axis Bank ) 30,000,2400,3.25% No 2 Player NIL,2500 + 3.99% / 25000,4500,2.99% Integration into webpage seems to be easy. Not sure of quality of service
HDFC Info not in public domain
ICICI Payseal Info not in public domain Seems they dont care about startups & smaller companies
PayPal NIL,NIL,3.4% + .3USD Cannot Receive payment in INR. Many international currencies supported. Apt for US faced ecom sites.Can take delivery in INR in Indian Bank Account

Few points to note
  •   Irrespective of using CreditCard , DebitCard or NetBanking transaction overhead seems to be same.
  •   At least 3% transaction charges
    •   This point intrigues me a lot. When i pay Rs200 for a book in flipkart someone is getting Rs6 . Hmm I guess this is very high for waffer thin margin business like retail. I can understand if the underlying mechanism is credit card ,then the charges imposed by card issuing agency ( MasterCard , Visa,Amex ) will also be added to PG's cost of service.But if NetBanking is used and amount is immediatly debited from consumers bank account , what's the need for extra charges. Is banks imposing charges similar to card issuing agencies ?
    • At a point when Govt wants to push cash less transactions for the purpose of transparency and eradicating black money ,this ( high charges ) is definitely a road blocker in this direction.  
  •   Cost of service seems to be uniform even in matured market like US . Paypal asking prince is above 3% . But quality of service seems to be better there.
  •   Mostly merchants are not happy with current model of business
    • Domain is so large that there is ample scope for more players   
Wish List
  RBI should come up with a common platform , inline with NEFT, atleast for NetBanking ,where money transfers from consumers to merchants with least overhead and that could be easily tracked , monitored and audited.

If anyone reading has first hand feedback on any of the service provider please leave it in the comment section ,so that benefits everyone.