Startups! Are Payment Gateways Giving You a Bumpy Ride?

The Internet boom and the ensuing eCommerce blast in India have led to a huge space for enablers in this area to capitalize upon.Payment gateway providers are one of the most critical links when it comes to enabling eCommerce. There is no dearth of payment gateway but is it a case of picking one half-heartedly? We’ve been hearing from a lot of startups about their woes regarding payment gateways:
  • Inflated Initial Setup costs
  • Poor customer support
  • Lack of information
  • High payment failure rates

Apart from the gateways provided by banks like ICICI, which has a minimum requirement of being in existence for two years, CCAvenue, Paypal and EBS remain the major players in terms of number of customers. The likes of PayU, DirecPay, ZaakPay and CitrusPay, however, are playing strong cards to take a bite off the pie. Talking to entrepreneurs and business owners has led me to believe that EBS is the preferred choice right now but newer horizons are being explored and startups are more than open to move on to newer payment gateways for a better value proposition.

There are many factors that are to be looked upon while selecting a payment gateway:

  • Setup Cost
  • Transaction Cut
  • Security
  • Support
  • Ease of Integration
  • Physical office proximity and
  • Chargeback policies

(More on the guidelines here and you can download our ebook on Payment Gateways as well)

"The first criteria for selecting a paymentgateway is definitely security,” says Krithika Nelson, Founder at “We did a lot of research and zeroed in on EBS mainly because we found them to be very prompt and had good rates as well. We’ve had a pretty pleasant experience up till now,” she adds. On the other hand, Hari Rastogi, the founder at Laptopwale, who have a relatively high ticket size for their transactions also chose EBS over others but haven’t had a very good experience. “Initially, we found EBS to have both competitive rates and decent support but off late we’ve had some very bad experiences. For instance, we’ve four examples wherein the payment has been returned to the customer and the item has also been shipped! This puts us in a very big fix and we’re planning to move to other service providers. The customer support has also been bordering onto being farcical,” says Hari.

Settling upon a payment gateway, as you might know is not an easy task if you don’t have deep pockets and more than a few ounces of patience; it involves a lot of haggling and waiting. “The rates mentioned on the sites are highly inflated, it all comes down to negotiation and believe me, it’s an art worth cultivating,” says Hari Rastogi. Having a backup in terms of investors and also a big ticket size might have enabled a huge discount for Laptopwale but negotiating is a very big part of the game.

Players with a smaller ticket size, for instance have also gone for EBS but it is the secondary gateway for them now. “I chose EBS because they were present in Delhi but have moved to PayU now as it gives a wider feature set and also due to the ease of integration,” says Rana Atheya, Founder at DogSpot. CCAvenue is used by the eCommerce giant Flipkart but the new smaller players have been reluctant mainly because of the cost involved and the fact that their records have been hacked once. But one can definitely not discount them as it is currently the biggest player in India and startups to a certain extent would crave to have a CCAvenue gateway. “CCAvenue is an established player in the market. Initially, it’s an uphill task but once you have quotes from a few other PGs, you might want to go to CCAveneus," says Vishal Gupta, Founder at Sports365, a startup eCommerce venture backed by Mahesh Bhupati.

Newer players like Zaakpay are pushing aggressively to capture this market. With a 100% paperless signup and competitive rates for setting up the payment gateway, value added products like a mobile optimized payment page are some of the features with which the envelope is being pushed. “Our APIs are open to test and integrate before signing up. Also, we’ve built the product from scratch and we have a better payment success rate.” says Upasana Taku, Founder, Zaakpay.

It boils down to trust at the end and the physical interaction between the client and the payment gateways plays a very important role in a client's decision. So, do you have a startup or are you planning to startup soon? What are your views on payment gateways and how has the experience been if you’re using one? Please share your experiences with us so we can all learn and make more informed choices.

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