Comparison of payment gateways in India

If you are an Indian startup and you have an e-commerce component to your application, you will need to review, evaluate and shortlist a payment gateway that can handle online payments via credit and debit cards.  And most likely this will not be an easy or fast process.  In its current form, there are just a handful of payment gateway service providers in India. Access to information related to a few them is non-existent on the web.

I’m hoping that this post will help folks to do an easy and quick comparison between the various service providers.

Before we move on to the comparison, let’s consider some of the criteria that are important while evaluating a payment gateway:

1) Cost:
All payment gateways have an intial setup cost and then charge a small percentage of the transaction. Few have an annual maintainence cost (AMC) as well. The initial setup cost is a one time charge only and is mostly non-refundable. The annual maintainence cost is an annually recurring charge. The transaction cost (TDR)  is charge per transaction and is generally anywhere between 4-7% of the transaction amount. The higher the volume, the more you can negotiate the transaction cost.

2) Support:
How helpful and responsive is the service provider when you run into a problem ? Do they provide off hours support ?

3) Chargeback policy and disputes:
What is the policy for chargebacks and refunds ? What is the policy for disputes ?

4) Ease of Integration:
Does the service provider provide an easy way to integrate the gateway into your app ? Do they provide alternate means for integration if tomorrow your architecture changes for some reason ?

Beyond these basic criteria, you’ll also need to consider additional factors (depending on your requirements) like – what credit cards / banks are supported by the payment gateway ? Do they provide mobile banking option ? What is their rate of successful transactions etc ?

One often raised point is why not use PayPal as your payment gateway ? After all, they provide a great API for integration, there are plenty of code samples already available and their rates are quite competitive.

Well, the reason why PayPal may not suit everyone’s requirements is because they do not provide you the option to charge customers in Indian Rupees. If using one of the PayPal supported currencies meets the requirements of your app, great. If not, you’ll need to consider using a payment gateway that will allow payments in Indian Rupees.

So, here’s a comparison of the major Indian online payment gateways (had to publish as a PDF since the spreadsheet wont fit on the blog).  The list includes a comparison of CCAvenue, DirecPay (operated by TimesMoney group), EBS (collaboration with Axis bank), ABC Payments (operated by IndiaMart), HDFC, ICICI Payseal and Transecute.

The troublesome part of it was trying to locate the correct pricing plans for the various payment gateways, especially for DirecPay, HDFC and ICICI. DirecPay, HDFC and ICICI for whatever stupid reason choose not to list their pricing plans on their websites. You need to contact them via email or snail mail (ICICI) with your business details and only then, based on the nature of your business, transaction volume etc. do they send you a pricing plan. Sheer incovenience — I mean, so much ground work to simply get info on their pricing plans ? Its been 3-4 days since I emailed DirecPay and HDFC for details about their plans and am yet to hear back from them.  I fail to see why they dont provide a simple price info on their website rather than to go through this archaic process.

The comparison document is by no means complete just due to the sheer difficulty in locating correct information on the web. I’m keeping this document ‘live’ – in the sense that if you have any input / update suggestions to add any additional payment gateway to the list or to update info related to any of the ones already listed in the document, please send them in to me and I will continue updating the document.

So which payment gateway should an Indian startup use ?
To begin with, you should obviously analyse the various payment gateways on some of the criteria that I listed above. On top of that, if you need to review data related to the success rate, average time to refund etc. for some of these gateways, I would suggest reviewing the statistics revealed by IRCTC – India’s biggest e-commerce site. They release monthly data related to transactions and payments, which includes how much each payment gateway contributed in terms of number of transactions, the amount contributed by each as well as the number of days to refund etc. For instance, only 53% of the transactions using the HDFC gateway completed successfully while ICICI gateway handled 17% of all the transactions that were done on the IRCTC website. The data also provides great insight into what are some of the main banks / debit cards being used by customers. For instance, 8.10% of all net banking transactions were attempted by ICICI customers while only 0.32% of all transactions were done by Bank of India customers.

Based on my research, if I were to use an Indian payment gateway today, I would personally go with either CCAvenue or EBS – for the simple reason that they make it very easy to get the needed information, have good online documentation and support wide range of credit/debit cards. In case of the other providers, its like a black hole – you try to seek out information and become a customer — and they try to make it that much harder to access that information.