Payment Gateway Industry

Shashank (C001) Neha (C008) Sneha (C034) Ayush (C043) Ankit (C046) Vaibhav (C062)
Ruchita (C049)
Introduction – Payment Gateways

 A payment gateway is a web service that authorizes credit card payments for businesses
 It is the equivalent of a physical point of sale terminal found in most retail outlets. It facilitates the transfer of information
between a payment portal and the Front End Processor or acquiring bank
 India is seeing a proliferation of mobile payment options (Mobile Wallets) led by the exponential rise in e-commerce
 Mobile wallets are essentially pre-paid payment instruments that have been launched by banks and non-banks

Major payment gateways in India No of Gateways Across Countries

 Payzippy  Billdesk Country No.of Gateways Merits Demerit
 CCAvenue  Techprocess US 40
 Citrus  Paytm UK 26 d into
 PayU  Ezetap ey is de
Money deppo sitteed
osi
lly
 EBS  MobiKwik Australia 18 account automatica
Germany 16 safe
 Direcpay  Klickpay Encrypted and thus
 Zaakpay  RuPay Singapore 14 transaction
 Atom  Google Wallet China 5 Charges/fees
 Paypal  Android Pay 24*7 availability
 EMVANTAGE   t Lack of trust by
Real time paymen some customers
sing
on and proces
validation

Recent announcements:
SBI, Axis & Yes Bank gear up to take on Paytm, Mobikwik
E- wallets-The new buzz !!!!!
bank
for bank
wallets
Mobile wallets
Benefit for

Opportunity to reach Help bank build their

Addresses customers Customers financial
Mobile

tech-savvy and saving brand by enabling

Benefit

pain point of carrying too behaviour could be

oriented customer targeted and relevant
many cards. known .
segment. offerings.

What all can mobile wallets do??

Types of Payment Gateways

Hosted Payment Gateways Pro/Self Hosted Payment Gateways API/ Non Hosted Payment Gateways
- Payments at Merchant’s Site

Eg: Paypal standard, Payza

Process:
User redirected to psp page
Customer fills payment data
Redirected to original website
Refund to be initiated at psp page
Eg : Paypal website payment
Process:
Payment details at our website
Data Collected at gateway url
Redirected to original website
Refund to be initiated at psp page
Eg: Stripe, Authorize.net
Process:
Full control on check out process
Credit/Debit card details on checkout
page
Process payments using APIs

• Security • Easy to customize • Flexibility

Pros • Simple Pros • Customer Experience Pros • Versatility

• No control of end to end • Security - Merchant has • Security – Voids PCI

Cons experience Cons to take care Cons • Service
Types of Payment Gateways

Local Bank Integration Direct Payment Gateway Platform Based Payment Gateway Solutions

Example: Bank Audi, Payseal Example:Payflow Pro Example: Blue Snap, Gate2shop

Process: Process: Process:

Works as hosted payment Create user profile Sell good directly from server
Customer fills payment details Deduct amount from credit card Users redirected to this platform
Redirected to original website System to enquire payment receive Purchase in preferred language &
Don’t support refund, cancellation Ask information on your website currency

• Simple • No redirection • Improved buyer conversion

Pros • Secure Pros • Payment happens on site Pros • Guaranteed Rate

• Don’t support refund and • More technical efforts • Separate Platform

Cons cancellation Cons • Service is not Cons • Can’t control user experience
• Manual work involved instantaneous
 Comparison of E- Payment Systems

Feature Credit Card E-Cash E-Cheque Smart card Debit card

Actual Payment Time Paid Later Prepaid Paid Later Prepaid Prepaid

Bank Account Credit Card account makes Account makes the Account makes the Account makes the
No Involvement
Involvement the payment payment payment payment

Anyone with a bank Anyone with a bank

Any legitimate credit card Anyone with a bank
Users user Anyone account account or credit card account or credit card
account account

Party to which payment

Distributing Bank Store Store Store Store
is made out

Allows stores to Transaction costs are low. Transaction costs are low.
accumulate debt Allows stores to Allows stores to
Transaction costs are high. Transaction costs
Small Payments Not suitable for small are low. Suitable for until it reaches a accumulate debt until it accumulate debt until it
limit before paying reaches a limit before reaches a limit before
payments small payments
for it. Suitable for paying for it. Suitable for paying for it. Suitable for
small payments. small payments. small payments.

Limit on transfer Depends on the limit of Depends on how No Limit Depends on how much Depends on how much
the credit card much is prepaid money is saved money is saved
Mobility Yes No No Yes Yes
Indian Payment Gateway Market

Overview Growth Drivers

Market Size : INR 8172.7 billion Technological advancements
Y-o-Y growth rate : 147.6% High rate of adoption of smart phones
CAGR – 25% from FY’15-FY’19 Increase in internet penetration in urban and rural India
Past 5 years : leap from 100 to 30K crores Start-up providing cost-effectiveness services

CC Avenues EBS Paypal PayU Money

• Multi currency and multi
payment
• Payment from Indian, Chinese
and Singapore Bank
• Levy transaction charges
• Inability to accept master card
• Compact, genuine with discount
offers
• Covers all types of payment
solutions
• Lesser transaction charges are
levied
• Transactions are basically bank
oriented
• Eminent player at global level
• Most targeted gateway in India
• Currency conversation facility
available
• Merchants are quite reluctant
towards this
• Internet based wallet provider
• Tie-ups with online grocery
stores, phone recharge
• Low transaction charges
• Support from Ratnakar Bank to
facilitate transactions
Payment Portal Terms
Key Trends in India For Payment Portals

Debit to • Migration from Credit to Debit

Credit • In the past cards were used more for discretionary expense, now the trend is towards non-discretionary

Mobile • India has 900m mobile phones and 300m smartphones, growing to 500m
Revolution • People prefer to shop on their mobile rather than using their laptops or PCs

RuPay • Growth of our local network, RuPay

Evolution • RuPay has issued a huge number of cards and will play a very important role

• Online grocery shopping is expected to see the highest number of electronic transactions, after mobile recharge
Hyperlocal • Web portals like Big Basket, Grofers, Grocermax have cumulatively raised over USD 65 million to expand their
Stores business
Payment Transaction Mechanism & Regulations
Online Payment Transaction Mechanism
Regulations Pertaining to Modes of Payment
• Visitor places order on merchant website in SSL encrypted format
Order

• Transaction details are forwarded to payment gateway from where it Pre- Paid Payment System
P.G is forwarded to merchant acquired bank • Facilitate purchase of goods and services against the
Comm.
value stored on these instruments
• Merchant acquiring bank forwards transaction to payee’s bank which • Under PSS Act, cross border transaction not
Bank responds back through payment gateway with approval status permitted
Comm.

Customer
• Merchant Server also informs customer of the status of the request Mobile Banking System
Customer
Comm.
Comm. • Banks which are licensed, supervised and have
physical presence in India
• Entire process takes less than 5 sec. At end of day the acquiring bank • Enable the development of inter-operable standards
Settlem deposits day’s collection into merchant’s nominated account
ent so as to facilitate funds transfer irrespective of n/w

ATMs/ POS Terminals

• Re-crediting of such failed transactions within 12
working day and mandated compensation for delays
• Transactions should be additionally authenticated
based on information not available on the card
Regulations & Uber Payment Portal Evolution
National Payments Corporation of India
NPCI is expected to bring greater efficiency by way of uniformity
and standardization in retail payments and expanding and
extending the reach of both existing and innovative payment
products for greater customer convenience
Oversight of Payment and Settlement Systems
Oversight of the payment and settlement systems is a central
bank function. The Payment and Settlement Systems Act, 2007
and the Payment and Settlement Systems Regulations, 2008
framed thereunder, provide the necessary statutory backing to
the RBI for undertaking the Oversight function over the payment
and settlement systems in the country
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.
Uber Example
Old Method
Credit cards of Uber users were automatically charged at the end
of the journey, a cashless payment method that had to be stopped
after the Reserve Bank of India (RBI) insisted on a two-step
authentication process for all card transactions
New Method
• Download the mobile app and sign up for an Uber account on
your GPS-enabled smartphone
• Save your credit card details on Uber's mobile app
• Use the app to locate an Uber cab closest to you. 
• At end of ride, make a payment using the saved credit card data.
• Use your online banking PIN number or a one-time payment
code sent to your phone to authenticate the payment.
Key clients and Customers

• Emergence of E-commerce – Reliance on gateways

• Payments made via credit/debit cards
• Several high profile clients across multiple industries
• Service providers willing to give queue free mode of paying bills – IRCTC
• Banks and commercial institutes – Source or Destination of every online payment transactions
• Digital payment portals in India crossed the Rs. 1.2 trillion mark in December 2014 – 40% YOY increase
• CAGR 0f 10% between 2010 and 2013 – Payment made through digital medium
• Feb 2014 RBI report - 350 million debit cards as compared to 19 million credit cards
• 60% of the total value of transactions came from online travel, while financial services and online retail stood at 23% and 12% respectively
Future

• Stiff competition driven by contactless payment technology, multicurrency cards, changes in regulations, and the advancement of
Internet retailing and mobile banking

• Evolving consumer needs - Demand for greater choice and more personalization of services

• Increased overseas spending trends on e-commerce, education and travel – Preference to pay in home currency

• Majorly driven by transactions through mobile point of sale terminals and mobile banking – Growth recorded of 147.6% from the
revenues generated by the industry

• New competitors pose little threat to acquirer and processor relationships with their large merchants – Likely to employ new, cloud-
based POS solutions

• Small and medium-size merchants, unburdened by legacy enterprise technology, are more likely to leverage new solutions
Which mobile wallet strategy is best for your business?

Horizontal Wallet Vertical Wallet

• The provider of a • Wallet provider is the

wallet integrates service supplier itself
services from third- and integrates only its
party suppliers own services within
the wallet.
Thank You