Dear Payment Gateways, This Startup Needs Approval [And Explanation]

[Editorial notes: The article was sent by an entrepreneur building ecommerce company. His application has been consistently rejected by payment gateways (PGs), though businesses of similar nature are enjoying support from PGs. We found it surprising that this startups’ application has been approved by banks, but not by payment gateways. And that too without any explanation. Read on for more details. ]

Internet Payment Gateways in India have been a complete let down (from my experience) who are now working akin to governmental agencies! And I am not the first one. Even today’s biggest successes like had to face them in their early start-up stage.

While internet start-ups are mushrooming by the day, there is a dearth in the supply of internet payment gateways in India who are now dictating their own terms. It’s also ironic to note that getting a VC or angel investor is easy now in India! But the basics like internet payment gateway is a hell-ride experience!

And here is what I learnt from my experience:

My site launched last year, still in its start-up stage, was doing 6 digit business per month via online sales. Our refund ration was <1%, and charge-backs 0%, which, by industry standards is pretty good. While we are also ethical in running our business and comply to all statutory requirements sets by payment gateways.

However, trouble began when our existing payment gateway provider (India’s 2nd largest Internet payment gateway provider) ‘suddenly’ discovered that we do not fit in their accepted business models and disconnected the gateway to our site without prior notice.

Beaten and bruised, we approached other payment gateways and here is what we got from them:

CCAvenue (India’s largest payment gateway provider) “Your website has been declined because our Risk Assessment Team does not approve this.”

On further contacting over phone, they change their entire version saying, “Our bankers are denying a gateway to your nature of business.”

I then reminded them that one of my competitor is using their service and I am no different. To which they replied, “They are our old customers. And bankers do not have problems with them”.

Stupid as it may sound, bankers follow RBI guidelines and if rules are for me, rules are for everyone.

End result: No progress till date. My bankers, who do not have any issue with it, are still trying to convince them because CCAvenue is their aggregator.

Techprocess “We do not support your style of business”. And when you ask why, they have no answer.
Direcpay (Times of India) “There is one particular feature on your site which is not acceptable to us. We will not give you the gateway if you keep that feature on the site”. And when I reminded that there are dozen other sites with the same damn thing, they stopped responding to my calls. So, will these payment gateways dictate terms to businesses to change their style of business?
Atom Technologies Sent them my request. They haven’t revered back till date neither they pick my call. Trying to get in touch with their other offices.
Payu “We will not be able to provide you a payment gateway. However, we can provide you net banking”. When I asked them that I am ok with it, they still did not respond with the net banking list nor approvals.
Whizpay Sent them my request, they sent me the proposal but after that they seem to have disappeared.
ICICI Bank Approved our business model. Their compliance team is finishing the formalities. Will take 20 days to integrate.
Federal Bank In process.
Axis Bank Approved. Wanted a Rs. 5 lac deposit. When I said I was an Axis customer for 10 years, they reduced it to 3 lacs!
HDFC Bank Approved. In process.

Now, do let me know if I missed out contacting any Indian payment gateway! So I have a few questions here which doubt the basic intention of these ‘private players’ or ‘aggregators’?

  • Are they too busy to respond to potential customers?
  • Do they intentionally do not respond because we are start-ups or because their coffers are filled?
  • When banks are directly approving payment gateways, why are private players shying away? Are they worried about their image? Or want to please their loyal customers by not accepting competitors?
  • When banks have outsourced the job of payment gateway processing to private players, why are they acting monopolistic?


These circumstances leave a very wide gap of questions unanswered:

  • What is the future for start-ups if they are meted out such treatment?
  • Why is it so difficult to convince these private players to accept your business model who have no time to listen to you?
  • Where will start-ups go if they are meted our such treatment?
  • What can a start-up do when they face such a situation? When their only source to accept payments is denied without valid reason?
  • Are not these start-ups being nipped in the bud by such egoistic private players?


I am sure I am just one of those untold stories of start-ups who had such experience with Indian payment gateways.


PS: Due to sensitive nature of this issue, we have decided not to publish the company name. However, if you are one of the companies listed here and would like to speak to the company, please connect with us.

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