Monday, August 31, 2009

Which Payment Gateway to use in India?

Every internet startup, sooner or later, faces this question - How do I charge money from my customer online? And there comes the ultimate question of which internet payment gateway to use on your website. This is a tricky question particularly in the Indian context, as payment gateways available in India do not come cheap and can have issues with reliability as well.

We were also faced with this ultimate question for, and we did our research.

There are 2 types of players in this field, one is a 3rd party service like ccavenue, ebs etc which ties up with many banks, and other is the bank itself providing its own payment gateway (like ICICI payseal). Broadly they are different in the following ways:

  • Both players accept all type of Mastercard and Visa credit cards. 3rd party players typically have more options than banks in terms of debit card acceptance, net banking options and other payments modes like cash card.
  • Banks are for high volume players. They have lower TDR (the % money they keep per transaction) plans and relatively lower setup fees than 3rd party providers, but if you have low volumes, they would turn out to be expensive.
  • 3rd party players have plans as cheap as Rs 5,000 setup fee, but the TDRs can go as high as 7%. They would never go below a TDR of 2.5% approx, which means that at higher volumes, you would need to switch to a bank to get a TDR below 2.5%
  • Banks need lots and lots of paperwork, and integration time is usually more than 2 weeks. 3rd party players typically have lesser requirements.

Here is my individual assessment of the players I contacted:
  • Paypal : I am starting with this as most people suggest it on internet. Biggest issue with paypal is that it doesn't support transactions in Indian Currency, and hence it adds a currency conversion fee on the credit card. Also, I feel that asking an indian consumer to pay in dollars would turn him away just because of the psychological impact.
  • CCAvenue : The biggest 3rd party player in India. Offers variety of payment options which no other player come even close. Heard that it is quite reliable too. They are also the most expensive in the industry. They don't offer any custom plan other than the ones mentioned on their site, and they don't negotiate either (atleast with small players)
  • EBS : Probably the second best player after ccavenue. The plans are cheaper compared to most payment gateways. They were very responsive when I dropped my phone no on their site and offered me multiple custom plans as well as some discounts. Somehow I didn't find too many existing clients for this.
  • ICICI Payseal : They are probably the only bank who offer to small enterprises as well. If you are willing to spend in excess of Rs 25,000 in setup fees than you would get a better deal here than any 3rd party player. However, 2 issues to note specific to them: Technology reqt of java in integrating their gateway and issues with downtime. I personally noticed their gateway being down for several hours on irctc as well as pvrcinemas recently.
  • Times of Money Direcpay : A relatively newer player in the market. One of its clients told me that they still face a few technical issues here and there. They responded pretty late when I dropped my contact no on their site and offered prices similar or higher than EBS.
  • We tried contacting to Citibank(Billdesk) but they didn't respond. We didn't talk to HDFC at all as we didn't get good reviews for them.
The final two we shortlist out of these for us were EBS and ICICI. Of these, we decided to go to EBS, because:
  • ICICI Payseal had technology dependency on Java. When discussed, they offered another gateway with no such limitation called Nix. But I couldn't find any documentation on that.
  • I believe that EBS should be more reliable than ICICI in terms of higher speed and lower downtime.
  • EBS offers more payment options than ICICI, though the difference is not that great for this to be the sole reason.
  • With EBS, even the plans with low setup costs like their silver plan has reasonable TDR for a small business. Once our volumes are high, we can upgrade to a better plan.