[Guest article by Manish Kumar, Founder of Friends Of Books]
We often get queries from people who are thinking of setting up an online business about online payment processing and payment gateways in India. Queries range from which payment gateway is the best, to what needs to be done to accept payments online. “Its different strokes for different folks”, so it is difficult to answer which payment gateway would be the best one. However, it is certainly possible to put together some guiding principles for choosing a payment gateway.
Here a list of top ten questions that I have put together, that you must ask yourself and your payment gateway in India before you sign up. These are based on my experience of using online payment processing at Friends Of Books over the past two years.
1) Paperwork – What is the paperwork required to setup the account? It may seem daunting at first, but is not an issue normally with EBS/CCAvenue. They ask for an agreement to be printed and signed on a stamp paper to be sent to them. They will provide you with the agreement.
2) Setup Fee – What is the one time setup fee, and what are the annual maintenance charges? Payment gateways charge an initial amount that can range from Rs. 5000 to Rs. 40000. They also charge an annual maintenance fee that is deducted from your account each year.
3) TDR Rate – This is the amount that is deducted from each transaction, and can vary for credit cards/debit cards and net banking transactions. Also ask if they charge more for American Express (or any other card/bank) as this will not be revealed initially.
4) Site Integration – Do not forget to get into site integration details. Is enough documentation available? Is particular environment (Java only) required? Which language is used and is support available incase you need it? In my experience, documentation is parse, and sometimes outdated. On a side note, if you need help in this, do let me know.
5) Transaction failure – Every now and then there are transaction failures due to server issues at the Payment gateway or the bank. This is important as this can lead to revenue loss, and your customers going to the competitor. Indian Railways website provides an excellent resource on their site (http://www.irctc.co.in), see the statistics link towards the bottom), which lists success rates for various banks.
6) Cancellation – There will be times when you have to cancel an order (cannot be fulfilled, customer request for cancellation etc). Ask how cancellation of transaction works. Will fee be charged if transaction is cancelled? In my experience, fee is not charged for credit cards, but full fee is charged for debit card, net banking even if you cancel a transaction. So basically you are losing money on cancelled transaction. So analyze this based on how many orders you estimate you may have to cancel.
7) Chargebacks – Check what the policy is on chargebacks. It seems third party Payment Gateways do not want to confront the banks, and end up favoring the customer even when customer is claiming a false chargeback. So get details on their chargeback policy. Also ask about the hold period for chargeback.
8) Fraud alert – Some times unnecessary fraud alerts will lead to order cancellation as required documentation may not be available with the customer (or is just too cumbersome to get). Try to find out how fraud alerts are handled by the gateway, as too much documentation requirement may drive off customers.
9) Payments – Ask how and when do they payout, via NEFT or cheque and choose the option that works for you. Also check if there is fee for each NEFT or courier charges for the check.
10) Customer Service – Do they have an active customer service department? You will definitely need to contact them from time to time to resolve issues related to transactions. Check if they have a toll free number for customer service? How long is the wait time? You may end up spending lot of time and money just waiting for your call to be answered.
This checklist is based on my experiences and will hopefully help in avoiding future surprises. As and when I find more suitable information, I will update this post. If you have any questions, please add them to the comments section and I will try to answer them. Please feel free to leave comments.