Why there is need for a Better Payment Gateway in India ?
06 June 2011
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Payment gateways in India suck. It is not just me but many people who have planned/implemented an e-commerce application would agree with me. There are many reasons as to why I arrived at this conclusion about Indian Payment Gateways.
Firstly, none of the big players support recurring payments. No recurring payments means you cannot have subscription based services. That means SaaS applications, membership portals, member clubs etc will have to live with the hassle of making customers to pay every once in a while. This makes you to convince/lure the customer each and every time you want them to pay. So, customer acquisition costs rise.
Setup charges are high for Indian Payment Gateways. Their global counterparts like Paypal, Alertpay etc., do not charge any setup costs. Indian Payment Gateways are thriving because players like Paypal don't support Indian Rupee and Indian debit cards directly. A startup has to shell out anywhere between 10,000 to 50,000 INR to get their accounts setup. Add to it the costs of e-commerce website development, integration with the payment gateway APIs etc., which makes it not a simple deal to start an e-commerce website. This rules out the possibility of selling online for a small-time seller.
From my experience, no Indian Payment Gateway is secure. By now, everyone might have known got to know about CC Avenue hacked Fiasco. Whatever the truth is, it is now known that CC Avenue stores the user passwords unencrypted. It is now become a defacto industry standard that all passwords have to be hashed such that they cannot be retrieved. But here India's top payment gateway stores passwords in retrievable format. That makes the already averse Indian customer to keep away from online purchases.
The way in which accounts are setup is not handled seemlessly. I hear reports from many entrepreneurs who claim that once the payment is done, the account setup process is not done properly. The Payment Gateways are clueless as to what papers to submit, which type of businesses are supported etc. Apparently, customer support also has showed a difference before and after payment. The paperwork related problems may be not due to bad handling of Payment gateways but due to unorganized structure among banks. But there could surely be an improvement in the customer support part.
Taking the above information, I feel there is scope for a good payment gateway to come up in India. Though it may appear CC Avenue has already acquired the market, if the above problems are addressed, I am sure that the new entrant can quickly grab the market. Any payment gateway which supports recurring payments, low/no setup fees and is highly secure can dethrone current payment gateways and make its way to the top.
Setup charges are high for Indian Payment Gateways. Their global counterparts like Paypal, Alertpay etc., do not charge any setup costs. Indian Payment Gateways are thriving because players like Paypal don't support Indian Rupee and Indian debit cards directly. A startup has to shell out anywhere between 10,000 to 50,000 INR to get their accounts setup. Add to it the costs of e-commerce website development, integration with the payment gateway APIs etc., which makes it not a simple deal to start an e-commerce website. This rules out the possibility of selling online for a small-time seller.
From my experience, no Indian Payment Gateway is secure. By now, everyone might have known got to know about CC Avenue hacked Fiasco. Whatever the truth is, it is now known that CC Avenue stores the user passwords unencrypted. It is now become a defacto industry standard that all passwords have to be hashed such that they cannot be retrieved. But here India's top payment gateway stores passwords in retrievable format. That makes the already averse Indian customer to keep away from online purchases.
The way in which accounts are setup is not handled seemlessly. I hear reports from many entrepreneurs who claim that once the payment is done, the account setup process is not done properly. The Payment Gateways are clueless as to what papers to submit, which type of businesses are supported etc. Apparently, customer support also has showed a difference before and after payment. The paperwork related problems may be not due to bad handling of Payment gateways but due to unorganized structure among banks. But there could surely be an improvement in the customer support part.
Taking the above information, I feel there is scope for a good payment gateway to come up in India. Though it may appear CC Avenue has already acquired the market, if the above problems are addressed, I am sure that the new entrant can quickly grab the market. Any payment gateway which supports recurring payments, low/no setup fees and is highly secure can dethrone current payment gateways and make its way to the top.
