Online Payments: The Way To Go?

Published Date
01 - Feb - 2006
| Last Updated
01 - Feb - 2006
Online Payments: The Way To Go?
What about charges, charge-backs, fraud, and the Indian reaction? We asked five business heads about their needs and experiences. Here are their responses

Bhavin Chandarana, Founder and managing director, Indialinks Web Hosting Pvt Ltd

We set up our online payment gateway primarily for our overseas customers, but of late, the Indian market has started adapting to this new method of payment. Today, about 25 per cent of our Indian clients use the online mode of payment.

Our gateway providers are Worldpay, ICICI and CCAvenue. With ICICI, the entire process is electronic, right up to the bank account credit stage, while the other gateway providers give us cheques after a week, or in some cases four weeks, since they hold back money as a security.

Our experience with our providers has been satisfactory-charge-backs (cancellations of purchases) have occurred only in about 2 per cent of all transactions. We have a verification process, especially for new clients, before we process orders.

I'd say the trend of using online payment gateways is on the rise.

Farid Khan, Chairman and CEO, InteleCorp Software (I) Pvt Ltd

We provide a variety of e-commerce solutions, and our clientele is entirely outside of the country. Payment gateways have been the means for all our client transactions right since 1999.

We worked with Canada-based PaySystems for a long time, but have now moved to an Indian provider. There was concern as to how our customers would react on seeing a conversion to INR, but there seems to be increased acceptability.

By and large, our experience with the payment gateway method has been very good. Our transactions have brought us over $200,000 (Rs 90 lakh) a month in turnover for a site that was selling phone cards in the Caribbean, and up to Rs 12 crore per year for our other e-commerce sites.

A major disadvantage is the extreme retail orientation that card companies such as Visa, MasterCard or American Express have. If a customer disowns a transaction, the entire onus of proving fraud is on the merchant. I have had charge-backs, and in some cases the goods have not been returned. There is no recourse to legal redress because the customer is offshore.

These are, however, stray cases. And such experiences have comprised perhaps 2 per cent of all our transactions.

The Indian customer has still not adapted to the online method of payment. Even when I personally purchase something from an e-commerce site, I still prefer the Cash on Delivery (COD) option! But I believe the card payment mode will pick up.

Senthil T, Managing partner,

We are primarily silk merchants. We do very little advertising, but still clock a few online sales every month. We decided to explore the online payment avenue with our Web site.

Installing the gateway cost us Rs 25,000, and we incur a commission on every sale. This is as an investment towards our customers' convenience. Until it becomes commercially viable, I guess we have to take solace in the brand value it adds to our site.

Also, we expect an increase in sales from abroad. The risk of loss due to charge-backs comes upon us, but thus far, no untoward incidents have taken place.

Sunny Shah, Founder,

The nature of our business involves monthly payments. Some among the 350-odd subscribers we have for our service, providing tips on the securities market, demanded the ease of card payments. Also, I was thinking of expanding my customer base beyond Vadodara to the rest of the country. A Web site was the obvious solution, and payment gateways seemed the most convenient mode of payment.

The initial charges came to Rs 8,000. Bank debit cards are charged a 7 per cent commission, while credit cards are charged at 4 per cent. We have not yet encountered fraud or negative experiences of any kind.

Kailash Katkar, CEO, Cat Computer Services

We set up a payment gateway seven years ago through a company called Digital River, primarily for the benefit of our customers abroad. Back then, costs were quite high-about 22 per cent of the transaction value. Later on, we moved to Element 5, a Germany-based secure server, and costs came down to less than 10 per cent.

Although 80 per cent of our anti-virus solutions business comes from India, we never considered the option of an online gateway for this market because our customers didn't really need it. But since we have now tied up with Microsoft, who require their associates to be payment gateway enabled, we've started an online payment option.

I had a tough time trying to install a gateway from one of the bigger players such as ICICI, HDFC and Citibank, so we had to go with CCAvenue. We are satisfied with their service.

I don't see much risk associated with this mode of payment-the entire process is transparent, and the statements provided are accurate.

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