So when all the ‘sarkari’ work was over, I thought we were done with all of those frustrating situations where you feel totally helpless with the system. I was wrong…
It was when we started deciding on the payment gateways that we were in for a surprise. In general, if you are running a business with high margin and your individual transactions are of large value, you may not have to bother about it. One of the costlier, but reliable gateway or something like paypal would work fine for you.
But if you are relying on having a low margin, high volume business, targeted at Indian audience, you are in for a trouble! The reliable Indian payment gateways, are super costly and you will either have to increase the prices accordingly or see you margins being wiped out. And these also have high setup costs. Those which seem to have more reliable rates have scary reviews on the Internet.
Some of the international gateways like Paypal and Moneybookers are good, service-wise and also from the point of view that there are no upfront costs. But there are other things to be considered.
Firstly whether they deal with Indian Rupees or not. Now, when a gateway supports “Indian Currency”, it may mean two things. First and more common one is that they will send you the money in Indian Rupees. This is what Paypal and Worldpay do. But you have to pass on your prices to the gateway in USD, which at some point even your customers will see. Their cards will be charged in USD and are subject to exchange rate volatility as well as any service fees their bank/CC company may charge for foreign transaction. Then when you get the money from them, again exchange rate uncertainties come into picture, because they will convert USD to INR before sending it to you.
Moneybookers is better for businesses targeted at Indian audience because it supports INR in a broader sense. It deals directly in Indian Rupees. So, prices, credit card charges and remittance to you are all in INR. No forex business. So you know exactly what is being charged to your customers and what you will be getting. They don’t even have any setup cost. But there is another caveat. Their charges per transaction is 3.5% of the transaction value+ 0.29 Euro. Now this 0.29, which looks so innocuous expressed in Euros, turns out to be equivalent to 20 INR approx. Not a good thing for selling low value items!
As of now, we have one Indian Payment Gateway provider which looks okay from all perspectives. Let’s hope that it works out soon. Our store opening is kind of stuck on this.