Implementing Payments in Your Web or Mobile App as a Startup in India

Choose wisely

The most fundamental factor in the life-cycle of a start-up: Money. 💰

Not just in the general scheme of fund-raising or making profits but especially if your company relies on online payments for your product to sell. For eg. An event ticketing portal, selling pickle online etc.

Having a smooth payment interface is a basic necessity in such cases.

Think of it, you’ve spent all your money developing a killer product that your potential customer gets really excited about buying only to turn them off at the last step: Paying for it. 😿 So let’s dig into how you can effectively implement digital payments.

Here’s what you should be thinking about.

Universal Instrument Support

Broadly ensure that your payment gateway supports all common existing methods such as UPI, Net Banking, Debit Cards, Credit Cards (including International) as well as a majority of Indian wallets, namely Paytm, PhonePe, Ola Money, MobiKwik and Freecharge.

Well, maybe not all.

Two important things to especially ensure:

• Your gateway supports UPI, and has direct connectivity to Google Pay. This is because UPI has a large share of online payments in India due to it’s easy usability and these two are the kings of the UPI market in India. 👑
• Your gateway supports wallets (especially Paytm) since it’s become an important part of the Indian Payment Ecosystem. In case your target audience is those from Tier 2–3–4 cities and beyond look for direct Paytm support since these audiences love using Paytm.

Costs and Transaction Fees

Now that you’ve narrowed down your choices on the basis of instrument support you must filter with respect to your budget. Categorising by fee plans there are basically two types of gateways:

• Those that charge a set-up fee + a transaction fee.
• Those that charge only a transaction fee.

Little costs add up at scale!

Start-ups should prefer the latter option as it’s pointless to invest in a high one-time set up/maintenance fee due to the uncertainties of usage and scale.

Most gateways charge you a percentage of the transaction (1%–4%, depending on the instrument) and / or a fixed fee per transaction.

I’ve collected links to the pricing of a trusted payment gateways in India :

Paytm

PayU

Razorpay

Instamojo

Cashfree

Features That Matter!

You should look out for features such as

• Payment Links
• Subscription / Recurring Payments
• Easy Payouts & Refunds
• Settlements for multiple vendors

The key feature that you as a startup need to have in place is Good Customer Support.

Said no one ever

To avoid major losses in terms of money as well as reputation you need excellent customer support to prevent sudden issues from turning into disputes. Users hate pending payments and often dispute such transactions if there is no immediate resolution. 😰

This is what happens if they do that:-

• When your customer disputes a transaction, the customer’s bank allows them to file a complaint and demand for a refund from you (the merchant).
• Your bank will debit the disputed funds from your account and place these funds on hold, pending the outcome of the case.
• Your customer’s bank will then initiate an investigation into the transaction and if the dispute is found to be legitimate, the held funds will be credited to your customer’s account.
• If the customer’s claims are discovered to be without merit, the held funds will be reversed to the merchant’s account.The process of filing a dispute is called a chargeback.

You can imagine how damaging chargebacks can be not just in terms of time and money but also your startup’s reputation, hence the emphasis on good customer support.

Update: Do check for Gateway’s Merchant Bank and make sure it is backed by a trusted Banking Partner to avoid any loss of users and business. Recently, A major Payment App in India (I don’t want to name it) was down for 24 hours because Reserve Bank Of India had placed their Merchant Bank in a Moratorium period.

I hope you’ve gained some clarity from this article and are now better equipped to choose your ideal gateway. I will be covering new developments in the Indian payments space (LazyPay!) in upcoming posts, stay tuned! 😄

Gunish Matta [LinkedIn Facebook Github]

Thanks to Mahima Samant, Sumukha Nadig, Mashayikh Shaikh for edits and reviews of the draft