Can you guess what a business owner considers the most while selecting a payment gateway? Is it the market reputation of the payment service provider, attained payment success rate, or the number of payment sources supported?
As per changing market trends, many people believe that price is one of the factors that determine a product’s quality. The selection of a payment gateway does depend on the MDR and other associated charges.
To be more specific, MDR is the rate or amount charged by payment service providers for transactions made using different payment methods. Usually, the merchants need to pay for this amount. But you might have heard some of them asking for an additional amount from the customers to cover MDR.
At once, you might have thought the difference in the charges for payment gateways is not big enough. But for bigger businesses having revenues in crores, even the slightest difference in one or two decimal places causes a significant impact on the profits. Particularly in Asia, price and promotion is a significant factor that drives purchase decisions, with 19% share amongst others, as per Global Online Consumer Report.
Although you might find several payment gateways in India with zero setup and maintenance fees, you still have to pay a certain transaction fee at MDR.
Wondering which payment gateway you should select for your online business website or app in terms of payment gateway charges? Read more about the concept of charges for payment gateway in detail first.
What are payment gateway charges?
Payment gateway charges or fees refer to the cost incurred by the business owners to facilitate online payment processing through the chosen payment gateway on their website and/or app. It is usually determined as a percentage of the transaction amount and also varies as per the type of payment method used by the customers and the level of risk involved in the transaction.
Integrating a payment gateway on your website or app helps in accepting online payments. It also aids in the transaction management process to maintain operations, provides instant refunds, and a real-time bank settlement facility. Hence, you can think of the charges for payment gateway as the fee charged to offer all of these services.
Factors that affect payment gateway charges
The payment gateway charges asked by different payment enablers are not random numbers. They depend on several factors, which include:
This rate is related to credit card transactions, which are on the rise in India. As per data, more than five lakh ATM transactions and 174 million POS transactions were made using credit cards in the country in December 2020.
Interchange rate is the amount that credit card issuing companies like VISA and Mastercard charges to the receiving bank for every payment received by a credit card. This rate covers the transaction handling cost incurred by the issuing bank and investments made to minimize the risk of fraudulent transactions.
You should also know that the interchange rate is calculated based on the type of card used for transactions, risk associated with the linked business, and chosen mode of payment (online transaction or POS machine swipe).
Merchant account fee
If you want to accept credit card payments online, interlinking the credit card network to a merchant account is a must. It is the account that lets you accept payments via credit cards online, while the merchant account provider deposits the received sum into your bank account at regular intervals.
Most merchant account providers ask for a small fee in addition to the interchange rate, depending on the business type and gross volume of transactions.
Payment gateway charges also depend on how customers use their cards to make a payment, be it via in-store transactions, online transactions, over-the-phone transactions, etc, each of which carries a different degree of risk.
For example, accepting payments in your offline store via a card swiping machine is less risky than online transactions which are highly vulnerable to cyber-attacks.
Components of Payment Gateway charges
Payment gateway fees generally consist of various components that are utilized to facilitate online payment processing.
Here’s a table that enlists various components of the payment gateway fee:
|Payment Gateway setup charges||One-time fee charged to set up a merchant account|
|Annual maintenance charges||Regular fee charged every year for maintenance of payment technology, operations, and security upgradation|
|Integration charges||Fee charged to integrate a payment gateway into a website or app|
|Merchant Discount Rate (MDR)||Amount levied on the total purchase value before transfering the rest into the merchant’s bank account|
The inclusion of these components into the total charges for payment gateway is at the sole discretion of the payment service provider. For instance, Paytm Payment Gateway does not charge any setup or annual maintenance fees to its merchants.
Why you should consider payment gateway charges?
As detailed above, payment gateway charges are based on various parameters, including the type of transactions conducted, transaction frequency, market type, and overall revenue generated by a business.
Knowing about charges for payment gateways asked by different service providers will help you make a detailed comparison. Keeping these charges at the point of reference, you can then look at other factors, such as the number of payment sources/modes supported, payment security, success rate, and other benefits.
You should keep in mind not to make the final decision to select a payment gateway only on the basis of these charges.
Paytm Payment Gateway charges for your business
If you have only heard of Paytm as a way to make online payments, it’s time to change that definition. With the Paytm Payment Gateway, you can also accept payments from your customers online on a website or mobile application.
Some features of the Paytm Payment Gateway are:
- Easy integration
- Developer-friendly APIs
- PCI-DSS compliant
- High success rate backed by 250 million+ saved cards
- Instant refund facility
- Easy to accept international payments
Given below are the details of charges for Paytm Payment Gateway for small/medium businesses:
|UPI – Standard||
|UPI – Subscription||Rs. 5 per mandate*|
|Debit Cards||Rupay – 0%
Mastercard and VISA – 0.4% for transaction amount below Rs. 2000; 0.9% for amount greater than Rs. 2,000
Payment Gateway charges FAQs
Which payment gateway is cheapest for Indian businesses?
The Paytm Payment Gateway is one of the best payment gateways available in India at low MDR. Although pricing is an important parameter to consider, you should also look for various payment gateway features while selecting one for your business.
Is there any free payment gateway I can choose for my business?
The payment gateway charges payable to a service provider are nearly negligible if you look at the big picture of online sales and profits. You can get a plethora of exciting benefits by integrating the most suitable payment gateway.
Why do payment gateway charges exist?
Payment gateway charges help the service providers in covering various expenses, be it operational, software maintenance, payment security, to name a few.
How to choose the best payment gateway for my online business?
Start with checking the features of available payment gateways and then match them with your business needs. Make sure you look at various sides of payment gateway selection before making any final decision.
Is Paytm Payment Gateway safe and secure?
Paytm Payment Gateway simply means secure payment processing. It is based on anti-fraud technology which helps detect and prevent fraudulent transactions. Also, it is PCI-DSS compliant to ensure safety of all transactions done online.