What are the RBI guidelines for payment gateways in India?

How do we
get a license for the same?
In India only a bank can make a payment gateway. All the others can
borrow their infrastructure and become a payment aggregator like EBS,
PayU, PayTM Payments to name a few. This is what has been mandated by
RBI.
So now to answer your question. You don't want to be a payment gateway
in India but rather a payment aggregator in India like the companies I
have mentioned above.
If that is indeed what you want to become then you don't need a RBI
license. What you need to do is negotiate with the bank whose service you
are going to piggy back and meet their requirements.
A few notes of advice - don't try and tie up only with one bank use
multiple. You don't know when the service of one bank will fail resulting in
you not able to complete a transactions. And check for fraud and
chargebacks.
What is the procedure for getting a license for a pre-paid payment
gateway from RBI? How can one start a pre-paid payment gateway system
in India?
A pre-paid payment system are of varied types, viz. Close, Semi-Closed,
Semi-Open, Open. Did you mean Pre Paid Payment Instruments (PPI)? If
yes, then an overview. There are 4 type of pre-paid payment instruments
which is controlled by RBI.
Closed System Payment Instruments: These payment instruments are
generally issued by business establishment for use within their premises
only. They do not permit cash withdrawal. The max limit is Rs. 5000/Example- Coupons issued by corporates to employees for use within the
establishment.
Semi-Closed System Payment Instruments: These payment
instruments are redeemable at clearly identifiable merchants/locations
which are in contract with the issuer to accept the payment instrument.
These do not permit cash withdrawal. Example - Paytm.
Semi-Open System Payment Instruments: These are payment
instruments which can be used for purchase of goods and services at any
merchant/locations which accepts cards (POS terminals). These do not
permit cash withdrawal or redemption.
Open System Payment Instruments: These are payment instruments
which can be used for purchase of goods and services. They also permit
cash withdrawal at ATMs.

Banks and NBFCs (who fulfill all eligibility criteria) are allowed to issue all
categories of payment instruments. Other entities (having minimum net
worth Rs. 10 Lakhs) would be permitted to issue only closed system
prepaid payment instruments and semi-closed system prepaid payment
instruments.
You need to apply to RBI in the prescribed format for the license. You can
proceed only after grant of license.
For any open prepaid payment system you need to have a partnership
with one of the banks capable of providing you a ledger account, which
would give you a capability of creating wallet like feature for your users.
Most popular banks providing these services are Ratnakar Bank (RBL), Yes
Bank, ICICI, HDFC, Axis, and Federal Bank.
What steps are required to build a payment gateway like CCAvenue in
India and what are the functions of a payment gateway?
CC Avenue isn't a real payment gateway, they are the aggregators. What
this means is, they tie up with the "real payment gateway" and route
transactions coming in from merchants to the real payment gateway
behind the scenes. The aggregators may sometimes tie up with multiple
payment gateways.
First of all, CCAvenue is a plugin developed by one of the most well-known mobile app
builders SIMICART that allows mobile customers to make payment easily and safely right
on the mobile shopping app. It means that with Simicart, your Magento shopping app can
adopt this special plugin to simplify the payment process.
Greatest functions of CCAvenue
Like other payment gateways such as PayPal, CCAvenue is like the intermediary party to
allow customers make payment on a credit card and then deliver money back to the sellers.
Besides, CCAvenue got a list of features:

Simple to install

Support Android and iOS

Allow payment with credit/debit card

Connect with CCAvenue

Easy to configure

If you want to build an aggregator, its not complex from a technical

standpoint. It involves some basic steps:
1. Develop an interface (web service / proprietary) to accept request from
merchants. The request may contain standard elements such as credit

card number, expiry date, CVV2 (on the back of the card), customer
name, billing address at a minimum.
2. Develop another interface to communicate with the real payment
gateway's that reside on the bank side. The transactions acquired from
merchants would be routed to banks.
3. You would also need an auxiliary system to do the settlement to pay the
merchants based on discounts / commissions setup for them.
4. Security - The most important aspect. You have to be PCI compliant.
This topic is like an ocean, you just need to read more about PCI and
application security concepts (SQL Injection, CSS attacks etc).
The above information is just the tip of the iceberg but good enough to
start
with.
If you want to build a real payment gateway, its a bit more complex. You
need to interface with the banking servers such as acquirers (financial
switch). Its a complex subject and cannot be covered in this post, sorry
about that.
Also, google more about 3D Secure / VBV (Verified By Visa).
Function of a payment gateway: Consider you buy (say) clothes from a
store and decide to pay by a credit card. The person on the checkout
counter swipes your card on his POS and waits for few seconds. Successful
message on his POS confirms that the transaction did go through. There
are a lot of things that happen during those few seconds. The POS
connects to banking system (financial switch), the switch determines if
the card belongs to the same bank. If yes, sends it to an authorizing
server (host), the host does the trick of subtracting amount from your
account and responds back, which in turn is responded to POS.
Now imagine the virtual world. You purchase something on a website and
decide to pay. The merchant server is like the person at the checkout
counter, it collects your credit card details and sends it to the payment
gateway, just like he swipes on POS. The payment gateway in turn
connects to the financial switch at the bank and pretty much the same
process takes place. You can imagine payment gateway to be somewhat
like a POS with the only difference that it lives on the internet. Instead of
physically swiping the card on this POS, credit card details are sent over
the internet to this POS.
List of Best Payment Gateways in India for Online Business
Looking for the best payment gateway for your business in India? Choosing the perfect
payment gateway for your business is a critical task. Here is a list and comparison of payment

processing companies which are the best in market. Some of these companies offer service
with no setup fee. Such options are good for startup businesses that are still testing the waters.
Last month, I was working on a new project. The work involved implementation of a
payment gateway. So, before implementation, the obvious task was to find out which are the
best payment gateways in India. I did some research on this subject. And here are a few
answers and pointers.
The first thing you need to understand in this regard is that there is nothing like THE best
payment gateway. All the options available out there in the market have there own advantages
and disadvantages. So, the term best payment gateway applies with respect to your particular
requirements. Now lets dig deeper!
What is a Payment Gateway?
In simple terms, payment gateway is a service that authorizes the credit card or other forms of
electronic payments like online banking, debit cards, cash cards etc. Such a facility is not
only important for huge and well established businesses but also these are useful for home
based online entrepreneurs.
Payment gateway acts as a middleman between the bank and the merchants website or
mobile application. When a user wishes to make a payment, the merchants website sends the
encrypted credit card information to the payment gateway. Then the payment gateway
confirms the validity of these details with the bank and the required amount of money gets
transferred from users account to the merchants account.
Flowchart given below shows how a typical transaction takes place through a payment
gateway.

Functioning of a payment gateway

Best Payment Gateways in India

Following are the best payment gateway service providers in India. These gateways have
been selected on the basis of their market share, commission charges and reputation of
promoters etc. Please note that these payment gateways are not given in any particular order.
To stay in competition, these companies keep on revising their commission fee and also make
discount offers from time to time. It is advisable that you visit their websites to get to know
the on-going discount offers.
InstaMojo
If youre a startup entrepreneur or a freelancer which sells digital products like eBooks,
music, videos, tutorials etc. then InstaMojo is a very good choice for you.
InstaMojo is an Indian startup company setup by Aditya Sengupta, Akash Gehani, Harshad
Sharma and Sampad Swain in 2012. They offer seamless payment collection facility at
attractive rates. InstaMojo can host your digital content and you can provide a Buy Now
button on your website. On clicking this button, the customer will be able to buy your product
without even leaving your website!
Instamojo charges 1.9% of the successful transactions. If you want to host your content on
their website, they will charge 5% of the transaction. InstaMojo will collect the money on
your behalf and send the amount in your bank account within 3 business days. For example,
if you price a song at Rs. 100 and sell it through InstaMojo, you will get Rs. 97.83 in your
bank account. InstaMojo will deduct Rs. 1.9 as their fee and Rs. 0.27 as service tax.
InstaMojo does not charge any setup fee.
PayU India
PayU India is a subsidiary of the global firm PayU. It was launched in 2011 by Ibibo, which
is co-owned by Naspers and the Chinese Internet service portal Tencent. PayU also has
presence in countries like South Africa, Hungary, Poland and Russia among others. PayU can
process payments with Visa, MasterCard and Diners credit cards; debit cards of more than 50
banks; and online banking for banks including ICICI, HDFC, SBI, and Axis Bank. Here is the
rate list of PayU India:

Debit Cards
o Rs. 2000 or less: PayU will take 0.75% commission
o More than Rs. 2000: PayU will take 1% commission

Credit Cards, Online Banking or Multi-bank EMI

o Upto Rs. 4,900: Commission is 3.90%
o Upto Rs. 9,900: Commission is 3.25%
o Upto Rs. 19,900: Commission is 2.90%

o Upto Rs. 29,900: Commission is 2.50%

Amex, Cash Cards and PayUMoney

o Upto Rs. 4,900: Commission is 3.90%
o Upto Rs. 9,900: Commission is 3.25%
o Upto Rs. 19,900: Commission is 3.25%
o Upto Rs. 29,900: Commission is 3.25%

They claim to offer you a conversion rate of over 12% as they deploy features like 1-click
checkout, dynamic switching, retry framework and recommendations. PayU Indias system
can store card details for customer and the subsequently purchases can just be a 1-click affair.
Customer will have to enter only the CVV and 3-D secure password when doing the next
transaction.
Setup fee of PayU India
PayU India charges from Rs. 6,000 to Rs. 36,000 as setup fee. Fee varies on the basis of
various plans that they offer:
1. Setup fee for Economy plan: Rs. 6,000
2. Setup fee for Silver plan: Rs. 12,000
3. Setup fee for Gold plan: Rs. 24,000
4. Setup fee for Platinum plan: Rs. 36,000
PayU also charges a flat annual maintenance fee of Rs. 2400 on all plans.
Citrus Pay
CitrusPay has an interesting commission scheme, they charge a flat 1.99% + Rs. 3 for every
transaction made through them. CitrusPay charges Rs. 1,200 towards annual maintenance fee.
They claim to be able to capture EVERY single payment and therefore have a very high
conversion rate. Citrus is also known for the good levels of security through transaction
process. Their technology is world class.

Features of Citrus Payment Gateway.

Needless to say, Citrus also provides API for your developers to seamlessly integrate the
payment gateway features into your websites structure and requirements.
If you decide to use Citrus as your payment gateway, you wouldnt have to worry much. An
easy sign-up will give you the code to embed payment form from Citrus in your website.
After sign-up, you can send the required documents in two weeks time. Once your documents
are received and verified by Citrus, your payment gateway will begin to function.
CitrusPay was incorporated in 2011 by Satyen Kothari and Jitendra Gupta. Now it has a great
market reputation and an enviable list of clients.

CCAvenue
CCAvenue is the biggest payment gateway in India with over 80% of e-commerce merchants
in Indian market are using their services. They offer a large number of payment options:

7 Credit Cards (MasterCard, Visa, American Express, JCB, Discover, Diners Club,
eZeClick)

73+ Debit Cards (All MasterCard / Visa / Maestro / RuPay)

Amex eZeClick

48+ Net Banking

8 Prepaid Cards / Wallets

7 Bank EMI

Features of CCAvenue Payment Gateway.

CCAvenue helps you to take your business international! They allow you to accept payment
in 27 major currencies (including USD, GBP, Euro, Yen, Yuan etc.)
Another great feature that CCAvenue offers is the multilingual check-out page. Majority of
Indian e-merchants dont yet recognize the importance of languages other than English, but
trust me, regional languages are extremely important. Not everybody is comfortable with
English in India. CCAvenue allows customer to see the check-out page in the language that
they understand the best. They offer interface in 18 major Indian and International languages.
Now here are the commission rates that CCAvenue charges:

1. Popular Plan of CC Avenue

1. Setup fee = Rs. 0
2. Annual Maintenance Fee = Rs. 1,200
3. MasterCard / Visa / Diners Club Credit Cards: CCAvenue will charge 3.5%
4. Debit Cards: 1.25% commission
5. Net-banking: 4.0% commission
6. American Express / JCB Cards: 5.0% commission
7. Cash Cards: 5.0% commission
2. Privilege Plan of CC Avenue
1. Setup fee = Rs. 30,000
2. Annual Maintenance Fee = Rs. 3,600
3. MasterCard / Visa / Diners Club Credit Cards: CCAvenue will charge 2.25%
4. Debit Cards: 1.25% commission
5. Net-banking: 2.5% commission
6. American Express / JCB Cards: 3.6% commission
7. Cash Cards: 3.6% commission
As we can see, CCAvenues commission rates are much higher than competitors in the
industry. But they claim that they make it all up by provide the best payment gateway
available in India. Have you used CCAvenue? What has been your experience?
EBS Payment Gateway
EBS is a company owned by France-based Ingenico Group, which is a global leader in the
payment processing and services. EBS has offices in Delhi, Mumbai, Kolkata, Chennai and
Bangalore. They have several plans for you to choose from and commission rates for netbanking and credit cards range from 2.75% to 3.75%. For debit cards EBS takes 1.25% to
1.50% commission.
A minimum setup fee of Rs. 11,999 and annual maintenance fee of Rs. 2,400 is also to be
paid. EBS gets mixed reviews from users about their quality of service.
PayPal Payment Gateway

PayPal is not just any other payment gateway! When it started, it was a revolutionary idea of
sending money through email. For small online businesses, PayPal is a great option. Those
who can not afford other means of payment processing, PayPal provides them a simple and
inexpensive way of doing business. I have written an article on how PayPal works, you can
read
it
to
get
a
better
understanding.

Functioning of PayPal
If youre selling any service or product on your website, PayPal can bring payment from your
buyer into your bank account and PayPal takes 4.4% + $0.30 USD commission for this. If
youre selling through eBay, then PayPal charges only 3.9% + $0.03 USD.
If youre earning from online business, you can request payment from your buyer through
PayPal. You can also send money through this service. Its easy, simple and effective.
PayZippy
Update: Flipkart has shutdown PayZippy and instead they are now investing money in
ngpay.
This new kid of the block has been developed by Flipkart the leader in the Indian ecommerce industry. PayZippy offers you easy interface for integration into your website.
They have plug-ins for several popular platforms, including WordPress, Magento, OpenCart,
ZenCart, PrestaShop etc. SDKs are available for PHP and Java.
If you want to integrate PayZippy into your mobile app, they have made ensured that you will
not have to toil much on the development. An extensive PayZippy API will ensure that you
can do seamless integration of payment gateway in your mobile app.
Here is the list of PayZippy charges:

VISA, Mastercard and Maestro Debit Card Pricing

o Rs. 2000 or less: PayZippy commission would be 0.75%

o More than Rs. 2000: PayZippy commission would be 1%

VISA and Mastercard Credit Card / Net-Banking Pricing

o Rs. 0-5 lakhs: PayZippy commission would be 3.50%
o Rs. 5-10 lakhs: PayZippy commission would be 3.25%
o Rs. 10-25 lakhs: PayZippy commission would be 3.00%
o Rs. 25-100 lakhs: PayZippy commission would be 2.50%
o Rs. 1 Cr or above: Contact PayZippy to get rates

American Express Cards

o PayZippy commission would be 3.50%

International Credit/Debit Card Pricing

o Domestic fee + 1.50% over and above that

Please note that the above rates do not include service tax (which has recently been increased
from 12.36% to 14%). PayZippy deploys extensive security checks for all the transactions
taking place through it. They also send Email and SMS alerts for all the transactions to keep
you informed of how your business is doing.
PayZippy can optionally save customers card details so that the next time he can swiftly
make payments. PayZippy APIs allow you to integrate card details form right in your own
website.
I hope this list of best payment gateways in India will help you in selecting a suitable
payment gateway for your business. Selecting the right payment gateway is an important
decision to make. So, I would advise you to take your time, do your research and then make
an intelligent decision.
Should you have any questions in this regard, please feel free to ask in the comments section
of this article. I will be happy to try and help you. Thank you for using TechWelkin.
Payment gateways are the first step in the online payment process, and they have been
crucial in helping e-commerce companies more easily accept online transactions.
These gateways serve as the online version of a payment terminal and front-end processor for
online and mobile sellers. They often sell bundled services that include payment acceptance,
data reporting, and fraud management.
BI Intelligence, Business Insider's premium research service, expects the U.S. online
processing market (from which gateways pull a chunk of their revenue), will be worth

approximately $10.7 billion in 2016 and will grow to $17.5 billion in 2020, thanks in large
part to a surge in online shopping.
Furthermore, merchants and consumers are both shifting to digital, which is giving gateways
more influence. BI Intelligence forecasts that US consumers will spend $385 billion through
online and mobile channels in 2016. By 2020, e-commerce sales will reach $632 billion, 45%
of which will derive from mobile.
Given these projections, it's understandable that more gateways will want to get a piece of the
pie. But as more companies pour into this space, it will create difficult decisions for
merchants. Which payments gateway provider should you use? What are the inherent
advantages and disadvantage of each?
Below, we've compiled a list of the industry's leading companies to help you decide. Keep in
mind that no one company or gateway has an overwhelming share of the market, and
competition among these companies remains strong.

Worldpay: UK-based Worldpay is one of the longest-tenured online

payment platforms. The company provides several payment services for
both online and in-store channels. As of August 2016, the company had
400,000 merchant clients. In 2015, it handled 13 billion transactions valued
at more than $526 billion. Worldpay has increased volume mainly because
of early-mover advantages that have allowed it to build scale. It also offers
many different services across channels, which diversifies its revenue
streams.

PayPal: PayPal provides merchants with its own gateway for online
payments. Best known as an online processor, the company handled nearly
$300 billion in 2015, which made it the 10th-largest merchant acquirer in
the world. PayPal's major advantage is its merchant and customer bases.
As of August 2016, the company claimed more than 14 million
merchants and 184 million customers, which gives it a much wider network
than its competitors. Furthermore, PayPal placed an early bet on ecommerce, which also gave it an early-mover advantage. And finally, it
processes payments on eBay's marketplace, which has historically exposed
the platform to massive payment volumes.

Amazon Payments
Amazon's proprietary payment processor supports payments on its parent's
website, which gives it instantaneous access to high payment volume.
Furthermore, it has expanded by offering its platform to other merchant sites.
This is an attractive proposition for third-party merchants because Amazon
had 250 million customers with saved payment information as of August 2016,
and these shoppers may be more likely to complete a checkout. One
disadvantage, though, is that the gateway helps Amazon strengthen its brand,
which many e-commerce merchants must compete against. Amazon Payments'
processing volume soared 150% year-over-year in 2015.

Braintree: This PayPal-owned gateway supports payments for

mobile-centric merchants, and it benefits from its access to PayPal's
14 million sellers. Braintree has secured the business of some of the
world's largest digital merchants, such as Uber and Airbnb. Braintree
providers developers with an SDK with multiple features. The
firm had 219 million cards on file worldwide in Q4 2015, up 111%
from Q4 2014. It handled over $50 billion in payments in 2015, and
much of that success stems from its strategic focus on mobile, a
high-growth commerce channel.

Stripe: Stripe provides an API that merchants and web developers

can use to integrate payment processing into their websites. The
company charges a flat rate of 2.9% plus a 30-cent fee per
successful charge for companies that have less than $1 million in
volume each year. It also offers several free services (such as
refunds) for which PayPal charges fees. And finally, Stripe makes it
easy for merchants to update their payment platforms using just a
few lines of code. However, merchants must wait two business days
for their payments to deposit to an account, and some in higher-risk
industries must wait seven business days.

Vantiv: Vantiv has found success in its nearly error-free purchases,

authorizations, and captures. In May 2015, the processor successfully
completed 95% of these transactions, which beat out peers such as
Worldpay, PayPal, and Braintree. The company also has a
tremendous speed advantage, as it often processes payments data
in less than a second.

Adyen: Adyen offers e-commerce companies a payment platform

that includes gateway, risk management, and front-end processing
services. Much like Braintree, Adyen is a full-stack gateway and
counts prominent merchants like Facebook and Spotify as
clients. The company has attracted merchants with a single platform
that can support payments in any channel across 100 different
payment methods and 200 countries. The firm processed $50
billion in 2015, up 100% from $25 billion in 2014. It earned $350
million in revenue in 2015, and expects to break $500 million in
2016.

Payline: Payline's biggest strength is its competitive pricing that it

offers through two separate plans. However, its monthly fee is
slightly above average relative to its competitors. Payline offers a
simple and easy-to-use application and installation that merchants
can often have up and running inside of a day. And finally, it offers
24/7 customer service by phone and live chat.

Dharma Merchant Services: Dharma charges a $15 monthly fee,

which is slightly greater than the market average. But the company
makes up for it by not requiring a monthly min mum nor a PCI-

compliance fee. And while Dharma offers solid customer service, it

does not give merchants a dedicated account representative, as its
competitors often do.

Flagship Merchant Services: Flagship offers a great deal of

flexibility to its clients, who do not need to sign long-term deals with
the company. It also offers competitive pricing with multiple tiers and
has no cancellation fee should you decide to terminate your
agreement. Flagship offers next-day initial setup for accounts and
typically deposits funds within two business days.