Merchants can easily access the payment gateway without individually applying for PCI DSS certification (as the PG acquires the risk involved in the payment process) Requires merchants to be certified to PCI DSS in order to access the payment gateway Official information security standards required for handling online card transactions The opportunity to use brand name and brand design for the payment checkout processĭoes not allow for any co-branding/brand placement or customization in the payment, checkout processĪllows for various levels of customization and brand placement in the payment, checkout process Provides system level risk engines that mitigate the chances of online frauds System level risk identifiers that aim at curbing fraudulent/risky transactionsĭoes not provide inbuilt risk engines that reduce the occurrence of online frauds Merchants can easily refund transactions directly from the dashboard through a click of a buttonĬards once used by customers are saved automatically for future useĭoes not facilitate card saving, hence not optimised for superior customer experienceĪllows for card saving feature across multiple cards, thus enhancing customer experience that might lead to increased customer loyalty User friendly and intuitive UX that also allows for merchant related customisationĪ manual refund and verification process is to be followed to issue refunds to customers Some gateways allow for integration within a few hoursĬomplicated UX with limited or no scope for merchant customization. Paperless submission of documents making the whole process easy and efficientĮase of integration and mode of integrationĭifficult to integrate requires significant time and effort from the merchant’s tech teamĮasy and simple integration with minimum coding efforts. Average time for onboarding is 5-10 daysĭocumentation needs to be submitted in hardcopy, making the process cumbersome Quick approval and online onboarding process. Average application and approval cycle is around 3 months Includes documentation and approval time for PG access One time cost to integrate website with the PG Now that we know the basics of the two channels, let us see how one compares with the other: Difference between Second party vs third party payment gateway While on the face of it, third-party payment gateways seem similar to bank payment gateways, they are in fact far more user friendly, accessible and easy to integrate, especially for first time startups. This way, online businesses have the agility to accept payments through practically every online digital mode. In addition to this, many solution providers, like Razorpay, also allow merchants to process digital payments through multiple channels like prepaid digital wallets and recently, even UPI and several digital wallets. Similar to banks, these gateways also facilitate payments made through debit cards, credit cards and netbanking. Such payment gateways also collect TDR on transactions while setup costs may or may not be applicable, depending on the solution provider. Integrating with a third-party payment gatewayĪn easy and efficient way to process online payments is through a third-party payment gateway. While the whole system looks straightforward in principle, integrating with a bank’s payment gateway is often challenging and tedious for startups. The key channels are: 1) Integrating with a bank’s payment gatewayĪ payment gateway provided directly from a bank (also called a second party payment gateway) allows online businesses to process payments via debit cards, credit cards and net banking and is supported through platforms such as Visa, Mastercard and American Express, among others.įrom the cost standpoint, businesses will need to pay an initial setup fee and transaction fees or TDR (Transaction Discount Rate), which is a percentage of the transaction value for all transactions processed via the gateway. Online digital payments can be accepted by businesses through multiple ways, each with its own set of advantages and challenges.
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