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 mustseeindia.com, 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.

Two great startup articles

Vikas Rana, Founder and CEO mustseeindia.com, has written a great article about our experiences at running a startup, focussing on what we did right. Do check it out here.

Prateek Dayal, Founder muziboo.com, writes about costs involved in a startup.

Both are great articles if you are a budding entrepreneur. Recommended read.

Which Web Hosting should I take?

Thats the most frequent query that I see in most startup forums. No wonder it is, as setting up a domain is the first thing that any tech startup needs to tackle. Hence I decided to write a post on this, giving my answers. This post will help you with the following:

• Registering a domain.
• Understanding different types of web hosting.
• Setting up email

Registering the Domain
While many hosting providers provide free domains, I believe it is always better to buy your primary domain individually rather than tied to any hosting plan. That ways even if you have to switch your hosting provider anytime, you need not worry about the domain. And with domains costing around $10/year, this is a pretty cheap investment.
There is not much of customer service needed from any Domain Registrar, so I simply looked for the cheapest I could find and registered the domains I needed. I used www.domainsearchindia.com, and while the website looks unprofessional and I had to call them to get things done, it got the job done at pretty much the cheapest prices I have seen so far. Lots of registrars would offer you Email Forwarding or Managed DNS hosting services, but you would not need them. The only thing you need after buying the domain name is an ability to change its nameserver to point to your hosting provider, and that comes for free.

Web Hosting
Web Hosting is a different beast. Here you need reliable servers, high uptime, good customer service and cheap prices on top of that. My first advice is to look for hosting in US. 2 reasons for that - first, bandwidth is cheaper in US and hence you can find a cheaper deal. Second, in general the reliability of US hosting providers and their customer care is better than the Indian ones.
There are 3 kinds of hosting - Shared Hosting, VPS Hosting and Dedicated Servers.

Shared Hosting - The cheapest option available and is around $5-10 per month. Basically the server hardware on which your website would reside would also have 400-500 other websites hosted. Such a setup is in general used for hosting blogs or simple sites with low traffic. The hosting provider would offer huge bandwidth and harddisk, however there would be no promises on website loading speed. You can start with this for initial testing as well as till your traffic is low. A lot of people recommend Dreamhost for this. We used Lunarpages, and their service wasn't all that great but it was kind of okay. One piece of advice - look for SSH access. The web admin interface they provide isn't meant for techies.

VPS (Virtual Private Server) Hosting - The server hardware is sliced into 4-5 virtual servers using a virtualization software. So effectively you have your own machine with root access. Internally all the slices still use the same hardware but there are some gurantees on your share of CPU and memory. My friend Prateek suggested an excellent VPS hosting provider VpsFarm. Check out his blog post on why he recommends it. This type of hosting costs around $40 per month and works of medium traffic. A lot of people recommend buying multiple VPS slices for horizontal scaling as your traffic grows.

Dedicated Hosting - You own the whole server hardware. Costs start around $160. We have been using SoftLayer and have been pretty satisfied with that. We moved directly from Shared hosting to Dedicated hosting, primarily because I didn't know abt VPS hosting at that time. My website on Indian Tourism serves quite a lot of static content and VPS may have worked out well for us.

Another advice - Most US sites give out discount coupons/special offers from time to time. Do look out for offers and you may be able to get a good deal.

Setting up Email
Use Google Apps for your domain. Thats free and simplest way to setup your own email@domain-name. You would need to put some CNAME records and MX records in the DNS entries of the Web Hosting provider. If you are on shared hosting, you would need to ask the customer support to do the same for you.

This should solve some of the basic pains of setting up your own domain. One thing to notice is that cost of initial setup is pretty low. A domain name with shared hosting would set you back around Rs. 3000 for an year. That would give you enough time to test your new idea :-)

Ideas are dime a dozen

Most people in startups or planning to startup have now dispelled the notion that one needs to come up with a great unique idea to succeed. What I believe is more important is whether you are solving a real pain point of a real customer and can you execute your idea to perfection.

For those who are still living in the idea world, here are 30 ideas that ycombinator would like to fund.