Best Payment Gateway in India – How to choose? (Updated 2020)

While starting an e-commerce store or building a product, choosing the best payment gateway in India is one of the first critical business decision that needs to be made. 

What is a payment gateway? 

A payment gateway is a platform that makes it simple for customers to pay you the way they want and helps you manage a large number of payments with ease as your business grows.

Payment gateways and settlements systems have become integral for businesses and brands to differentiate their products and create customer loyalty, and it has allowed merchants running an online business no longer establish direct relations with acquiring banks.

Below are some of the most common businesses and platforms that use payment solutions to power their business –

  • eCommerce Platforms – Platforms such as Shopify and Magento, which helps individuals and businesses sell physical goods online. As well as other eCommerce brands like Amazon, Flipkart and more have a payment settlement system in place in order to run their business smoothly.
  • On-Demand ServicesA range of services provided via a mobile app or website, fall into this category, including ride-sharing apps (Uber, Ola), in-house assistance (UrbanClap, HouseJoy), F&B delivery services (Swiggy, Zomato) and others.
  • Travel and HospitalityTravel and tourism marketplaces come in this category, brands like MakeMyTrip, ClearTrip, and others. 
  • Booking PlatformPlatforms like BookMyShow, Insider India and others which offer customers a way to book movie, event and other entertainment-related tickets fall under this category.
  • Logistic Services – Organization that offer logistic solutions to individuals as well as business across India, fall into this category. Some of the prominent examples would be proprietary services like eKart, Delhivery as well as the more traditional giants – DHL, FedEx and more.
  • SaaS businessesOnline platforms that provide various business-based solutions like CRMs (Pipedrive, LeadSquared), ERPs (Microsoft Dynamics, SAP), helpdesks (FreshDesk, Zendesk) and more.
  • Subscription-based PlatformsPlatforms that offer subscription-based services, whether from the entertainment and content sector like Netflix, Prime Videos, or daily groceries like MilkBasket.
  • RetailOnline retail stores that might be run by traditional retailers or dedicated ones like LensKart, Xiaomi, OnePlus, Urban ladder and more. 
  • OthersAt Cashfree we are constantly new business ideas being adopted in an online model, whether it’s petcare, online medical store, or furniture rentals.

Payment gateway platforms like Cashfree work at the Nexus of Banking, card networks and regulatory bodies. It is an enabler with which helps these platforms provide differentiation to their customer in terms of flexibility of payments. A payment gateway enables any online business or merchant to collect payments in the method they deem fit, whether its via cards, net banking,  UPI or others. 

How does a payment gateway work?

Payment Gateways were popularized in India, in the mid and later 2000s, with the inception of platforms like Flipkart, Snapdeal and others. It’s no hidden fact, that India like the other developing nations have been slow to adopt digital payments. 

The real adoption rate started soaring after 2010, and when UPI rolled out, the entire digital adoption rate saw an incredible rate of growth, with UPI transactions overtaking card-based transactions in India for the first time in mid-2019.

The payment gateway model has evolved continuously in India with regulatory bodies like the RBI and NPCI relaxing norms and adding flexibility to allow more third-party providers to enter the ecosystem. 

Here is a brief on how current payment gateways work –

    1. Your customer/The buyer initiates a purchase on your website or mobile app and heads to the payment page.
    2. The payment page is the space where the buyer interacts with the payment platform for the first time. Depending on the merchant, the payment page could be a generic page provided by the payment platform or a completely personalized one. The buyer at this page needs to select their preferred payment method (cards, net banking, UPI, Digital wallet, etc) and enter the details. 
    3. The information is collected by the platform, which now directs the customers to the gateway, where this PG issues a signal to the seller’s bank. The seller’s bank now reciprocates by sending a collection request via the payment gateway.
    4. The request goes through one of the card/interchange networks, like Visa, MasterCard, and others. These networks allow or deny transactions on the basis of a few authentication variables –
      1. Knowledge parameters – Information of the buyer like PIN, CVV, passwords and more.
      2. Possession parameters – Physical cards, cheques, account numbers, etc.
      3. Inherence parameters – Additional verification biometrics or OTPs like a signature, fingerprint, or 2-factor authentication codes.
    5. Once the interchange network authenticates the payment, it passes a request to the buyer’s bank. The issuing bank checks for sufficient funds and authorizes the payment.
    6. In the last step, the money is transferred from the buyers’ account to the PG’s account which settles it with the seller in the pre-agreed settlement window. The seller receives the monetary settlement under this frame of time.

As a business owner, it’s important to understand the process above, exactly how money travels from the consumer’s end and reaches your business account.

Best payment gateway for my business

While at first look, all payment gateways may look similar and claim to be the best, you need to carefully evaluate the options available based on your specific business requirements.

  • Are you going to accept international payments?
  • Do you want to provide wallets like Paytm as a payment option on your checkout page?
  • Would you want to offer “Buy now, Pay later” options for a smooth checkout?
  • Does your business have a high average order value that needs multiple EMI options?
  • Does your business need to collect recurring payments?

Once you know your requirement, you can evaluate the options. In this blog, we are sharing a list of top 10 things to look out for when choosing the best payment gateway in India for your business.

Top 10 Features To Observe Before Selecting the Best Payment Gateway

1. Mode of Payments

Having a vast pool of payment options has 2-fold benefits for your business –

  1. A larger pool of payment options means customers have more choices to checkout and the comfort to purchase via their preferred method.
  2. Lower cart-abandonment rates as you’re able to provide all options to your customers.

While doing your research, look at the options available between each of your shortlisted payment gateway platform which would help you select the best payment gateway for your business case. Here are the payment options that are accepted in India –

  • Debit, Credit and Prepaid Cards – Debit and cards from leading banks and card networks (MasterCard, Visa, American Express and Rupay).
  • NetBanking Options – Net Banking allows you to directly log into your banking account and authorize payments. 
  • UPIUPI has seen an incredible surge in usage, surpassing cards for the first time as the defacto payment mechanism, so yes, it would be a mistake to not have this option present for collecting payments. 
  • Digital Wallets – Digital wallets such as PayPal, PayTM, Freecharge, Mobikwik all are quite popular payment methods available in India, ensure that the PG supports it.
  • Pay Later and Cardless EMI – New lucrative services like OlaMoney Postpaid, Lazypay, ZestMoney, etc, offer consumers a way to pay for their orders on a credit from these services. 

2. International Payment Support

If you have customers outside India, or customers in India using international cards, it is vital to support international payments. The key challenges around international payments are ease of onboarding — most banks and payment gateways are reluctant to offer international payments, and often ask for hefty security deposits and setup fee.

Customers outside India will prefer to pay in their local currency, so they know the exact amount they are paying. This requires international payment gateways to offer multiple foreign currencies as the payment currency while converting the final payment amount to INR for the merchant’s convenience.

international payment gateway paypal integration

For international payments, the best payment gateway supports multiple currencies with easy onboarding. Paypal is the most trusted and preferred choice of payments for consumers worldwide.

In addition to supporting all payment options like credit cards and direct debit from a bank account, Paypal also offers buyer protection. Thus offering Paypal as a checkout option can greatly increase your conversion rates.

3. Payment Settlement Cycles

Settlement duration is the time it takes for the seller’s account to be credited after the buyer’s account has been debited.

To understand the payment settlement cycle let’s take the example of a customer who makes payment via his HDFC debit card. In this case, when a customer enters payment details, the information is captured by the payment gateway.

The payment gateway encrypts the data and securely sends it to HDFC for authentication. When HDFC approves the transaction, the fund flows from HDFC to the payment gateway and then, from the payment gateway to the merchant’s account. This process typically takes two to four working days.

The key here is to select vendors that offer the fastest settlement cycles, between T+1 to T+2 days at most.

payment gateway settlement

4. Integration Support for your Platforms

If you are looking for a payment gateway, chances are that you have already done with your platform. Either you’re using a third-party platform like Shopify, Magento, WooCommerce, or if you’re using a platform built on PHP, Ruby, Python etc, you would like to get started as soon as possible.

Therefore opt for payment gateways that offer plugins for the most popular payment platforms and have detailed integration guides for major computer languages such as PHP, Python, Ruby, C#, etc.

5. Swift Onboarding Experience

Many payment gateway platforms promise onboarding within a few minutes, but the ground reality is that opening a fully functional account could easily take over 2 days. This is due to the fact that there are various formalities attached to opening a merchant account with a payment gateway that has to be provided and verified before the account can be activated.

To ensure that you don’t have poor onboarding experience, confirm these details first-hand so that you don’t suffer due to false promises.

6. Reliable and Timely Support

Make sure that your payment gateway provides consistent support. You can consider talking to other merchants already using the payment gateway services from that particular provider. It comes handy if you can get a dedicated account manager who becomes your single point of contact at the time of your onboarding and also when you go live. Some platforms also provide real-time assistance by providing communication options like live chat, email etc.

7. Value-Added Payout Services

Apart from accepting payments from your customers, there is a spectrum of payment activities a business enters with accepting payments. For example, an eCommerce company, have to ensure that apart from the collection of payments, they also have to process refunds for order return. 

Based on your requirements, selecting the best payment gateway entails additional payment solutions like – 

  • Bulk payments and marketplace settlements
  • Instant Refunds for vendors and customers
  • Instant fund collection on COD orders via digital payment links
  • Employee salary payouts and reimbursements 

And more.

Based on these additional requirements, we’d suggest looking for a payment gateway platform or a payment vendor that could tackle these business aspects as well.

8. Payment Analytics

Once you gain traction and your business starts growing, predicting growth and scalability depends a lot of your current cash flow. Therefore your payment gateway should be able to provide you detailed reports and analytics of all your transactions. 

Some payment gateways have developed smart analytics boards that show you not only a summary of transactions but also provide insights such as your Payments Volume, Number of Transactions, and distribution of your payments across payment methods (Cards, Netbanking, Wallets etc) and platforms (iOS, Android, Desktop) etc. You can analyze this data grouped by hours, days, weeks or months across any timespan.

9. Personalised Checkout experience

A seamless, personal checkout experience — having your very own payment processing pages — can help offer your customers a more holistic payment experience. The best payment gateways offer payment processing with your own brand relevance, like having your custom design for collecting payment details with your brand logo and design language. 

In the end, the entire process negates the need for a customer to jump from one page to another which reduces friction as well as improves checkout velocity.

10. Pricing

Most payment gateways charge an upfront of 2-3% per transaction as a standard. This could be negated if your business needs are different and could be worked on, based on your transaction volume and additional requirements. While selecting the payment gateway, ensure that you speak with the sales team and broker the best possible rates, while keeping in mind the additional features that come with the gateway.


So these are our 9 factors one should look out for while you are on the hunt for the best payment gateway in India for your business. What do you think, we’d love to know what else could be included here, and among these factors, which are the most important ones for your business case. Please do share your feedback in the comment section below.

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