What is India Payment Gateway? A must-see comprehensive introduction for newbies

I. Basic Concepts of Payment Channels in India

Payment Gateway India refers to an electronic funds transfer system that connects merchants to consumers, specialising in localised payment solutions for merchants doing business in the Indian market. As one of the fastest growing digital economies in the world, India's digital payments ecosystem has unique characteristics and modes of operation.

1.1 Definitional analysis

Simply put, an Indian payment gateway is the technological infrastructure that securely transfers funds from the payer's account to the payee's account after the user initiates a payment request. It acts as a bridge between the two parties to a transaction and ensures that cross-border or local transactions can be completed smoothly.

1.2 Core functions

• Multi-currency support: Handling of INR (Indian rupee) and other major currencies
• Multiple ways to integrate: API, SDK, plug-ins and other technical access solutions
• real time settlement: T+0 or T+1 settlement cycle available on some channels
• risk management: Compliance with the stringent regulatory requirements of the Reserve Bank of India (RBI)
• data sheet: Provide detailed transaction records and reconciliation documents

II. Why do you need a specialised Indian payment channel?

2.1 Market specificity considerations

(1) Strict regulatory policies

According to the latest data for 2023, all payment service providers operating in India must hold:

• PA (Payment Aggregator) licence issued by RBI
• PCI-DSS Compliance Certification
• GST Tax Registration Certificate

(2) Diverse user preferences

The survey shows:
| Payment Methods | Percentage of Usage |
|———|———-|
| UPI | 58% |
|Wallets | 23% |
|Bankcard | 15% |
|Other | 4% |

2.2 UPI dominance

The Unified Payment Interface (UPI) has become absolutely mainstream:

Third, India's mainstream payment methods in detail

3.1 UPI (Unified Payment Interface)

UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI), which has become one of the most successful digital payment cases in the world. As of 2023:

• Monthly trading volume: over 8 billion transactions
• user scale: over 300 million registered users
• major application: PhonePe, Google Pay, Paytm, etc.

Operational characteristics:

1. prompt settlement: 24/7 real-time clearing
2. zero handling fee: Free of charge for inter-personal transfers
3. VPA virtual address: Alternative to the unique ID of the bank account (e.g. name@upi)
4. scanning code payment (computing): Supports static and dynamic QR codes

3.2 E-wallet solutions

Despite the rapid growth of UPI, wallet-based products maintain their dominance in specific scenarios:

Note: As per RBI regulations, all wallets have to complete KYC verification to make large transactions

3.3 Status of the card network

Credit/debit cards still offer value despite declining usage rates:

• Local RuPay Card(65% of debit card issuance)
• Visa/Mastercard Premium User Groups
• EMI instalment option (especially for high unit price items)

Fourth, how to choose the right payment channel in India?

1

Principle of Matching Merchant Needs

Assessment dimensions should include, but are not limited to.

- Industry Characteristics
Catering industry needs to focus on scan-and-pay capability
SaaS subscriptions require a recurring debit authorisation (RuPay Mandate)

- Settlement cycle requirements
Ordinary channel T+2~T+5
Expedited service can be shortened to T+0 (usually for an additional fee)

- Mechanisms for dealing with refusals to pay
PCI-DSS compliant dispute resolution process
Fraudulent Transaction Claims