Challenges faced by Payment Processing Business
The task of the payment gateway is to enable businesses to receive online payments through various possible options and features.
Payment gateways and aggregators deal with the monies and funds of third parties, that is the customers of the others who got linked with a payment gateway just because the seller or merchant decided to receive the online payments with it. So basically, the customers will first need to entrust their money with it while making the payment. On the other side, there are a few basic expectations from the sellers and merchants as well that they receive their funds fast and in a safe manner.
Payment Gateway Companies, a part of the FinTech World, has boosted further the digital revolution that has spread enormously in India. No doubt it is a boon for all kinds of businesses but it is difficult for themselves as there are a few major challenges that they have to survive through to thrive and provide the services.
Security Measures (theft and hacking)
The whole online environment is prone to various kinds of dangers from theft and hackers. Especially, at the places where the payments are exchanged and relevant sensitive confidential information is passed, those areas can always gain the attention of the online thefts. This is about outsiders stealing.
Well, for this there, of course, is a solution that is made compulsory by the RBI for all the FinTech companies who makes it necessary to enter the Card Details or any other sensitive details for making the payments. They need to get themselves Payment Card Industry Data Security Standard (PCI DSS) compliant and also enact other necessary security measures.
The Payment Card Industry Data Security Standard (PCI DSS) is established by 5 international payment card brands (VISA, MasterCard, JCB, AMEX, and Discover). It is the standard for cardholder data security to instil control and minimize the frauds of card data.
Fraudsters
Now, there are the acting sellers (merchants) too (actually the fraudsters), those who sign up for the payment gateway with the intention of taking away others money without providing any selling or services. These are more dangerous because the ultimate responsibility of the customer’s money is of the Payment Gateway as they act as mediators. Thus, once the amount is settled by the payment gateways to the sellers, it is the payment gateways’ risk if the merchant does not provide the services and thus the whole reimbursement will need to be done by the payment gateways (or else their reputation would be at stake).
This would require the payment gateways to handle the onboardings with utmost care. Challenge is that the merchants require a fast activation of the merchant account, along with fulfilling that expectation the payment gateway companies also have to take care that they do not give away the access to receive the payments nationally or even globally from any con man. For the same reason, the supporting documents and details need to be collected and proper verification has to be undergone.
However, there are always frauds, disputes and chargebacks existing in the business of the payment gateways.
Demanding Online Payment Options
With the advancement of the digital payment system, so many categories and subcategories under the online payment options have come up. For example, the payments through Mobile Wallets. Different customers would prefer different method and so the merchant would want all of the maxima of them so that they can give all of the options and their customers would not go back without paying. This pressure of getting and providing the maximum options in the checkout lies upon the payment gateway companies. For this, they have to go approach and go through various tie-ups and wait for the approvals from each and every payment service provider in question.
Demanding Online Payment Features
With the technical advancement, there are also various payment systems and features available. The merchants demand these as per their requirements and the payment gateways have to make these available.
Client and their Customer Support
Payment Gateways being a middle-segment, both the merchants and clients would need assistance and issue-solving. Clients (merchants) with regard to onboarding, settlement, integration, etc. And customers for the service/product not received payments, refunds, etc. For the same, ready-to-help support team need to be available for both parties.
Technical Integration Requirements
The payment gateways are supposed to be used on the website if they are not used as the payment links, for example, an eCommerce website would need a checkout from their Cart or a blogger would need an embedded payment button on their website. For this, the payment gateway needs to be integrated into the websites. Now, there are various platforms available and so all different SDKs and Plugins need to be made available. With more development and availability, the merchants expect the easy integration services and so the technical area of the payment gateways need to be ready in that manner and make available the easy plugins for all major available platforms. Being one step ahead by providing in-house integration services.
International Gateway Challenges
The online payment system has one big advantage and that is acceptance of the payments from any corner of the world and simultaneously to provide the services likewise. Within a country, getting various payment options and systems integrated would not be that difficult as it would be to do that at an international level. Various standards, measures and compliance related to security, payments and technology need to be put in place and integration and tie-ups with various international banks and financial options need to be done. It may also be possible to incur a penalty if the strict compliances are not followed. At the same time, the whole checkout experience needs to be seamless and fast too. With the option that the international customer can make the payment in their own currency and the merchant can convert the same in their country’s currency.
Prices and Charges
Deciding the competitive transaction discount rate (TDR) is a challenging aspect too. This needs to be done considering both the rates offered by the competitors as well as the payment gateway’s own overall outgoings like taxes, third party charges, for example, the specific payment charge (commission) from the respective service provider of Cards, Wallets, etc. TDR can be offered fixed or even customised as per the amount of the transaction/turnover. Many times the payment gateway also have to decide upon charging the setup fees and the maintenance fees.
