Selecting a Payment Gateway for Indian E-commerce

I recently noticed some Google search traffic coming my Blog’s way with people looking for “payment gateways used by Flipkart and other e-commerce players in India”. So I thought I could talk about this topic for the benefit of folks trying to work with a gateway or researching a gateway to plug into their e-commerce website.

I did a tad bit of research while trying to identify which payment gateway is best for an e-commerce business when I was responsible for integrating them at I used good old Google to find places seldom visited. I scoured blogs and forums where people discussed such topics. I was trying to understand who the players are, what they offer and finally, who is better. I shall talk about how you can understand these gateways better, what they do and how to evaluate them for your company. There is a lot more information to consider when picking a payment gateway, but I hope this information will be helpful for someone trying to pick and chose a payment gateway provider.

The following are the parameters that I think are very important in identifying a good payment gateway for your business. While the answers to some of these questions will not come directly from the payment gateway, there are industry sources (friends, competitors etc.) who can throw some light on it during your research.

    • Transaction rate or processing rate or fee
      • Yes, while I it isn’t the single reason for choosing a gateway, it is a fairly important parameter to look at. You don’t want to end up paying a significant portion of your sales to a 3rd party processor especially in a low-margin e-commerce business.
      • the lowest I have seen is 1.5% (there is no point mentioning who offers this as all rates are on a per-case basis in this muddled business). The highest I have seen is 3%. Like fine-print, there are some hidden assumptions around what card (Visa vs Amex) or bank (Citi vs HDFC) we are talking about when the rates are being offered.
    • Gateway unannounced down-time
      • While gateways that frequently announce down-time cannot be spared either, unannounced down-times kill an e-commerce business irrespective of the lame but valid reason as to why it happened – bank server down, maintenance issues, connectivity with bank lost but it’s not our fault etc.
      • While gateways always give a rosy picture on this front (obviously!), it is good to check from friends or contacts in other places who have used the different gateways. CCavenue has been accused of not doing a great job here while none of the other aggregators are exemplary either.
    • Transaction success rate (%)
      • The success rate of transactions that were transferred from the merchant website to the gateway is an indication of how effective the gateway is in completing the sale for the merchant. Low rates here are indicative of the poor quality of the payment gateway.
      • This is also an elusive data to get directly from the payment gateway. CCavenue and Tpsl bear the brunt of negative reviews with their success rate somewhere between 60-65%. However, claims made by other gateways that they are better and around 75-80% has also been refuted by companies that have used them. EBS and PayU seem to be relatively better in this area, but overall the best way to measure this sometimes is to unfortunately integrate and test the gateway out.
      • Another variation of this parameter is to look at how many customers have dropped while they are transferred from a website to a payment gateway to begin with. Surprisingly enough, there is a drop off rate even at this stage before the transaction reaches the gateway. The problem is that this loss is in no man’s land as the gateway does not consider this in their success/failure rate calculations and neither can they. As a result, the e-commerce merchant should devise a way to capture such failures and re-invite the customer to transact again by saving their cart or session. A smart team member of mine was able to identify this loss and come up with a simple and clean solution to invite customers to transact again on the website.
    • Retry option for failed payments (works better in a redirect option)
      • Transactions at a payment gateway fail for various reasons. In some cases  it is prudent to allow the customer to retry the transaction rather than make them exit the checkout experience. This feature can be provided either by the e-commerce merchant (on the website when checkout fails) or by the payment gateway on their page (in a non-API integration scenario or if better even with API integration).
      • PayU and EBS are capable of providing the retry option to customers when such an issue occurs during payment. A retry option in itself does not guarantee a successful transaction as the payment may fail again. But, at least providing that option can capture a small percentage of the previously failed transaction.
    • T+1 or T+2 or T+n days for transfer of funds
      • Payments gateways take a little time before they transfer captured funds to the merchant’s bank account. This may or may nor matter depending on the number of transactions you generate as a merchant.
      • ICICI can process payments in T+1 days whereas most other aggregators do it in T+2 days.
    • Real-time fraud detection
      • Real-time fraud detection is very important to the success of an e-commerce business. Suspicious transactions have to be flagged immediately by a payment gateway so that necessary action can be taken to prevent an order from being shipped out or being unrecoverable.
      • While an e-commerce business can invest in its own fraud detection mechanism either through internally developed features or a separate 3rd party integration, a start-up firm cannot afford the high cost of setting up a robust fraud handling mechanism. Manual review of fraud issues is necessary to take meaningful decisions and this in turn means additional costs for the company.
      • Payment gateways like EBS provide the best available fraud detection and alert mechanisms by leveraging the benefits offered by its standalone RMS (Risk Management System) that uses velocity checks, device fingerprinting, Nexus network, blacklist database and so on to trap fraudulent or suspect transactions. They also do it in near real-time. Most other gateways mostly offer only velocity checks or limited set of fraud detection capabilities. CCavenue and ICICI don’t have real-time capabilities although they do get back to the customer in a 6hr to 48 hr window.
    • Reports or dashboards for viewing payment success/failure analytics
      • While all payment gateways have a dashboard for general maintenance of transactions, very few offer some good reports or charts that depict where transactions are failing or at what point the customer is lost while completing a transaction. This is tremendously valuable information to help an e-commerce merchant determine where the leakage is in and how it can be plugged to not lose customers.
      • EBS and PayU offer such capabilities while most other gateways don’t have this information (never collected) or cannot share this information (no way to present or share).
    • Netbanking banks offered
      • Surprisingly, not all payment gateways offer the same number or list of banks as part of the netbanking option. Netbanking can represent about 20-30% of prepaid sales for an e-commerce business as the payment transaction is within a bank’s four walls (online banking) and hence deemed safe and convenient by some customers.
      • CCavenue and Billdesk have the most banks (about 40-50 or so) while EBS, PayU are catching up. ICICI offers netbanking exclusively through Citrus payments but the number of banks is not high enough. However, having a high number of banks isn’t a deal breaker as SBI, ICICI, HDFC, Citibank, Standard Chartered and Axis bank are offered by most and probably cover about 90% of all netbanking transactions.
    • Add-on benefits like EMI (monthly installments) or other packaged offerings provided by the payment gateway  + Support
      • ICICI offers the largest suite of EMI option with multiple banks (outside of a 3rd party player Innoviti that seems to be exclusively the best option for all EMI under a single roof). The rest of the payment gateways offer one or more banks as EMI options plugged into a single gateway offering.
      • Most aggregators have a good support infrastructure for handling issues although things may vary on a case-case basis based on complexity of issue and solution provided. EBS, PayU, BillDesk are all good on the support front.

There is a lot more to the payment gateways business in India and to the selection of the optimum gateway. But, a balanced decision can be made if all these parameters are also evaluated to arrive at the best choice. I’ve seen some well-heeled and well-educated (IIM/IIT pedigree) salesmen from payment gateways draw a rosy picture of what they offer compared to the competition. Going prepared for meetings with the gateway representatives is highly necessary to understand and identify the real stuff from the bluff.

Many Indian e-commerce companies prefer to go with multiple payment gateways primarily due to the confusion and dissatisfaction that each option provides. Many companies use industry references like the IRCTC database to build an in-house payment gateway algorithm that switches between multiple gateways based on payment type (netbanking vs card payments), payment transaction costs (transaction % rate) and payment gateway performance (success rate with a certain card-type, downtime etc.). With PCI certification in place, an e-commerce merchant will all the more see less use for an aggregator (or at least more than one aggregator) integrated with the website.


Google Analytics Solves a Great Need With Content Experiments

The Google Analytics team recently launched a feature called “content experiments” . I believe this feature is an amazing boon to a Product Manager struggling with the challenge of what design or layout to build for a particular improvement to a website page and prove that it works for the customer. This feature is extremely helpful for an e-commerce website and I almost feel that the Google Analytics team smartly identified this need and came up with a modified solution tailor made for e-commerce retailers (although it can literally work for anyone else).

Google Analytics is probably the most preferred start-up analytics tool as it is free and comes loaded with a lot of features that helps any business measure its performance effectively. Having used Omniture, WebTrekk and Google Analytics at different times in my career, I have come to respect Google Analytics as a very user-friendly tool. While top-notch analytics and highly insightful reports can be generated with a great degree of accuracy using Omniture or WebTrekk, those tools are highly expensive to purchase. They are also very complicated to use. Google on the other hand gives a whole bunch of standard reports that give the complete picture on the performance of a business. Any analytics tool is usually confusing to use and a lot of insights that are generated from metrics such as pageviews, bounce rate, exit rate, conversion rate and so on should only be interpreted to the extent that it is useful to make good business decisions. A lot of noise is generated in analytics and a Product Manager should not make brash decisions merely based on a certain metric they have analyzed.

Coming back to this new feature called “content experiments”, Google defines it as a A/B/n test that one can conduct on say a product page of an e-commerce website. The flexibility comes from the fact that one can test multiple options of the same page and at the same time, also test various combination of components displayed in those pages. This, in my mind, is a combination of both a A/B test and a multi-variate test. The blog world is still confused with what content experiments can really allow with many accusing Google that they no longer will be able to conduct multivariate testing!. I believe that content experiments may not be exactly similar to a multivariate test, but the option to conduct an experiment with five variations of a single page allows a smart tester to come up with the right amount of changes that can be effectively tested with the customers. Google is doing away with Website Optimizer and slowly integrating content experiments into Google Analytics as the future of testing for its users.

While recently working on some new variations of a product page, the design process with the UI team led to the realization that subjectively speaking, there was more than one ideal variation of the product page that people liked in the company. This is a very common situation that a product manager faces in any organization. My team of Product Managers smartly came up with the idea of having specific event-based tracking across various CTA, buttons, content and links on the product page. This, we hoped, will allow us to use Google Analytics, look up under Events and track how each of the various components in the product page performed. This could then help us determine what components (or images or content or features) was widely used or accepted by a customer. This is a powerful tool for Product Managers to shut highly opinionated HIPPOs and other noisy characters in an organization from talking out of turn. Because, we now have data (however accurately representative it may be of the absolute truth) to silence the critics.

However, we were still left with one particular challenge. We had glaringly different design approaches that we couldn’t nail down for the product page. So, an A/B test was finalized with two different versions of the product page. If we had content experiments available, we could have actually used the various combinations we came up with and tested more than two combinations of the product page in one go. Given that we can randomly display these variations of the product page to different segments of visitors, we would have easily determined which version of the product is the winner.  In fact, testing different designs and layouts of banners on a website (in home page, category page etc.) can also now be achieved in a very effective manner.

Now, content experiments in itself cannot be called as a game changer as it is not introducing anything new in the analytics market that doesn’t exist today. In fact, Google’s website optimizer can help one achieve almost similar results.  But, Content Experiments is going to make Google Analytics a one-stop shop for all needs that an internal analytics or Product team in a company has by making it easy to create experiments helpful in making data-driven decisions on website changes.