Though currently the e-commerce market in India is around $ 10 billion, a recent report, ‘E-commerce: A boon for the current economic downturn’ by First Data Corporation and ICICI Merchant Services, has pegged a few interesting numbers on the E-Commerce picture in India. It says:
• The domestic market in India has the potential to grow between $ 125 billion and $ 260 billion by 2024-25
• About 150 million internet users or around 75 million households that are ‘ready’ for e-commerce
• Almost 57 per cent of e-commerce sales come from small towns, while the 8 metros account for the remainder.
These are encouraging numbers for an industry that has been plagued with a sceptic outlook so far what with ‘mode-of-payment’ problems threatening to bring it down. In this article, we will take a look at the payment gateways that are available to small e-com ventures in India and how to read the finer prints before singing up a contract on payment with a vendor.
Types of Payment Gateways: Payment Gateways are of two types in India: One, the Bank itself which provides its own payment gateway and the other, are the third-party services which tie up with many banks to provide a gateway.
• Banks: Many banks provide merchant services to businesses to use their payment gateway that enables organisations to accept secure online payments over the Internet. Chief among them are:
o ICICI Payseal
o HDFC Payment Gateway
o Citibank Payment Gateway
o AXIS Bank Payment Gateway
Contact the Merchant Services division of the banks to get a quote/more info on your requirements.
• Third-Party Payment Gateway Providers:
• CCAvenue : CCAvenue’s payment gateway solution offers eMerchants with real time, multi-currency, multiple payment options online payment processing services including all types of credit-card processing through multiple banks and card associations, debit-card processing, direct debit to bank accounts of Indian, Chinese Banks and Singapore Banks.
o EBS: With its TranSafe solutions, EBS plans to meet the increasing E-commerce demand by businesses for every payment solution. Probably most suited to small businesses, it’s plans are cheaper compared to most payment gateways.
o DirecPay: Another integrated online payment gateway solution for Indian merchants, DirecPay offers a suite of services. It’s low fees make it desirable with new businesses or start-ups
o Paypal: Though a big player, it doesn’t support transactions in Indian Currency, and hence it adds a currency conversion fee on the credit card. This has turned out to be quite deterrence for Indian businesses.
Remember these: The following fine points will help you decide which payment gateway provider to select:
• Banks often offer competitive rates towards set-up fees and transaction costs (called TDRs of approx. 3%) for high-volume businesses. However, for low-volume businesses or start-ups, they can prove to be expensive. While, most third-party providers offer low start-up fees (sometimes as low as INR 5000) to smaller businesses but can charge exorbitant transaction fees (as high as 7% per transaction in comparison to about 2.5 -3 % in banks). Make a good assessment of the volumes you expect to have in order to make the right choice
• Considerable paperwork is often required in order to get the payment-relationship get started. However, if you have an existing relationship with the bank, you may use the same account to receive payments.
• The integration time is usually more in banks compared to the third-party players. But banks have the advantage of offering automatic upgrades and scalability.
A complete market research and a thorough business assessment with regard to volumes, requirements will help you decide which type of payment gateway provider is best suited for your venture. And finally, your negotiation skills will give you the perfect plan you are looking for.
Market Research is the process of obtaining information about markets, products or competitors. All business strategies, whether for new ventures or existing operations, should be backed by a well-done market research. It is also a very effective tool to deal with competition.