payment gateway e-merchant academy

The Role of a Strong Payment Gateway in eCommerce

Shakir AliCEOE-Merchant Digital Solutions Pvt. Ltd.shakir@the-emerchant.com

We love movies …

So what’s the best part of a movie?

And the climax in an online sales process is?

Why a Payment Gateway?

• When it comes to running online business, the most important question is …

“How will my customer pay me?”• If you don’t have an answer to that question, then

you may as well as pack up and go home.• All the hard work of building your online enterprise

will be in vain…

So how to choose a good payment gateway?

1. Payment Options:What payment options does the PG process?

“I accept just credit cards on my website and that is good enough for me …”

“Sure …but be prepared to cater to a shrinking customer base.”

Why ?

• Indians are uncomfortable about owing money!• So `non-credit’ based payment options are popular• Any safe method of debiting the bank account directly

is welcome … Debit Cards/ Net Banking etc• New payment options like Cash Cards, Phone Payments

are growing exponentially.

So when the choice of payment options are in a state of flux… which payment gateway to choose?

Simple … do what millions of Indians do …

Choose the payment gateway that gives customers the full Thali!

It has something for everyone …

Choose the payment gateway that gives customers the full Thali!

It has something for everyone …

Choose the payment gateway that gives customers the full Thali!

A strong PG will provide the merchant with a wide array of payment options so that no transaction is lost because the

customer doesn’t hold a suitable payment option.

2. Transaction Enhancing Tools: Does the PG reflect the ground realities of doing

business online? Do it provide the merchant with features that will

expand the scope of his business?

So how to choose a good payment gateway?

Say hello to my force multipliers

Built-in Shopping

Cart

Collect Invoice Facility

VirtualTerminal

SMS Order Alert

Transaction Failure

Collection

AuctionCollection

Feature

IVRS Payments

Co-marketing through Bank

MallsP2P

Payments

3. Risk Management & Fraud Protection:

How well is the merchant protected by the PG company's risk management teams?

Do they have the right processes, tools and the experience?

Do they charge the merchant for these services?

So how to choose a good payment gateway?

Never meant for online use …

• Credit cards as they are now were never meant for online use.

• Two factor authentication was almost useless.• Merchants have lost crores due to credit card fraud.• Banks have been dilly dallying about implementing

the new third factor of authentication: VBV, MSC and AVS to offer merchants additional protection.

• RBI had to step and make it compulsory for the banks to implement it by 1st Aug 2009.

2003

Safe, really?

Risk Management Processes

• Negative Database mapping• High Risk Global IP Address Verification• Velocity Checks• Issuing Bank BIN number mapping• Zip Code and Telephone Validity Checks• Keystroke speed recording.

Risk Management Processes

• Data Security : Payment Card Industry Data Security Standards (PCI-DSS)

• VeriSign SCG enabled SSL Encryption• McAfee Hacker Safe Daily Audit of Sites.• Servers with Intrusion Detections and Prevention

Systems

A strong PG will give risk management and fraud containment activities the due importance it deserves and

work to keep up with the changing environment.

4. Fair Pricing:

So how to choose a good payment gateway?

What is the pricing structure of the payment gateway?Do they have a flexible pricing structure that adapts to the evolving business metrics and the merchant’s business model?

Some online merchants make a common but simple mistake … one that could prove to be fatal to their online business …

“Lower the price, better the value”

Cash On Delivery Options in India for e-Commerce Merchants

If you want to sell physical products through the internet in India, you need a good payment solution. Finding a suitable online payment gateway in India is a challenge in itself.

However, no payment gateway can beat the convenience of cash on delivery. Indians like to pay cash while receiving the item for the following reasons:

They don’t have a netbanking account or credit cardThey don’t trust the seller, so they want to pay only if the item is deliveredEven if people use netbanking it is not as convenient as a credit card on file, often they forget their passwords for netbanking accounts and sometimes banks will send them one time passwords (OTP) and they will not have their mobile phone by their side.

Cash on Delivery Payment Options in India

Courier companies are the only ones who can offer this option because the cash has to be collected while delivering the goods. The following companies offer COD options in India

BlueDart

AFL (India’s FedEx)

Aramex

ExpressIT

First Flight

Problems with COD – Cash On Delivery Option

People will order the items but will change their mind later. As much as 30-40% of the orders may get returned. Reasons include: wife said no, no one at home to receive the order, changed buying decision and some more silly ones.

High transaction charges

Minimum order volume needed to work with private courier companies.

Delay in getting the cash means low operating balance which puts pressure on the finances.

Undelivered goods can either be destroyed or returned to seller’s address for an extra shipping fee.

Documents Required for Setting up Payment Gateway in India (for Sole Proprietorship)

Documents Required for Sole Proprietorship Company:PAN Card copy Photocopy of full page size}

Sole Proprietor Letter On Letter Head

Government Issued Certificate for proof of establishment

Landline/Electricity Bill

Bank Verification Letter for Signature

Address Proof: Voter ID, License or Passport

Consent Letter

Last Audited P/L or Balance Sheet or 12 month Bank statement

Previous Payment Gateway Statement 3 months if any.

Pay Peanuts, Get …

The Hidden Costs in a Cheap PG

Bad risk management = monetary and reputational loss

• Limited payment options = you lose real customers … monetary loss as well

• Poor PG software and low end hardware and people-ware = downtime of PG = monetary loss and lost customers

• Bad, unresponsive, non reachable support staff at PG partner = you get ulcers handling irate customers and from suffering business loss. Remember your health is priceless.

Ground Realities for a new merchant

• Over 50 payment options in India today … and growing.

• That many systems to integrate, manage, reconcile accounts and manage processes.

• There are huge challenges to running things perfectly.• There is a clear need for a specialist to handle this. • How responsive is your PG partner to tackle these

challenges.• How well connected are they to the key stakeholders

in the ecosystem such as banks, card companies, etc.

Who is watching your back?

• You have a lot to lose by choosing a bad PG partner. • The PG business is challenging • Maintaining uptime and keeping up the quality of

service costs money. Pay fair and demand the best. No one wants to lose a merchant who pays fairly.

• So choose your PG partner carefully. After all, what is the difference between success and failure? It all comes down to the climax … isn’t it?

Jo jeeta wohi sikandar …baaki sab …

Thank youShakir AliCEOE-Merchant Digital Solutions Pvt. Ltd.shakir@the-emerchant.com