How do e-commerce platforms choose payment channels in India?

I. Understanding the characteristics of the Indian payments market

India, one of the fastest growing digital economies in the world, has a unique payments ecosystem. Firstly, UPI (Unified Payment Interface) has become mainstream with transaction volumes crossing 10 billion by 2023. Secondly, wallet payments such as Paytm and PhonePe hold a significant share. Credit/debit card penetration is around 51 TP3T, but is used frequently by the high-end user segment. Cash on Delivery (COD) still accounts for over 30% of e-commerce transactions.

The degree of localisation has a direct impact on conversion rates - platforms that support RuPay cards outperform those that only support international cards by 18%. Language support is also critical, with payment pages that offer local language interfaces such as Hindi reducing the abandonment rate of 15%.

II. Assessment of key selection criteria

1. Coverage and compatibility

Priority is given to checking whether UPI omni-channel access is supported (including mainstream applications such as Google Pay, PhonePe, etc.). Check compatibility with RuPay cards and processing efficiency. Confirm whether it covers government-promoted payment methods such as BHIM.

2. Comparison of rate structures

Typical rate range: 0.3-0.81 TP3T for UPI transactions, 1.5-31 TP3T for credit cards, 1-1.51 TP3T for wallets.Watch out for hidden fees: cross-border settlement fee (~0.51 TP3T), refund processing fee (Rs. 10-30 per transaction), and monthly minimum charges (commonly Rs. 500-2000).

3. Complexity of technology integration

Mainstream gateways provide API documentation completeness scores: Razorpay (9/10), CCAvenue (7/10). Average integration lead time: 7 business days for basic functionality, 2 additional weeks for advanced risk control modules.

4. Compliance certification level

Must hold PCI DSS Level 1 certification. Check for a PA/PG licence from RBI.GDPR compliance affects EU user data processing capabilities.

III. Comparative analysis of mainstream solutions

Emerging options to watch:

• JusPay specialises in mobile optimisation, increasing in-app payment success rate by 22%
• Pine Labs offline POS linkage solution is suitable for O2O business

IV. Recommendations for risk management strategies

Establishment of a tiered validation mechanism:

1. < Rs 2000 transaction with OTP verification only

2. Rs 5000 mandatory to add 3DS verification
   Real-time monitoring should be included:

IV. Recommendations for risk management strategies (continued)

1. Hierarchical management of transaction risk

• Microtransactions(< Rs. 2000): Adoption of a simplified verification process that requires only OTP SMS verification to complete the payment, enhancing the user experience
• medium-sized transaction(Rs. 2,000-5,000): Increased equipment fingerprinting and behavioural analysis detection
• Large transactions(> Rs. 5000): mandatory 3DS 2.0 authentication enabled, static password + dynamic captcha required

2. Real-time monitoring system configuration

It is recommended that the following monitoring mechanisms be deployed:

1. IP geolocation analysis: automatic interception of multinational anomalous logins

2. Behavioural biometrics: detection of features such as typing rhythm, sliding patterns, etc.

3. Velocity Check: more than 3 transactions within 15 minutes on the same account automatically triggers manual review

4. MCC Code Verification: Verify that the merchant category code matches the actual business.

V. Key details of localised operations

1. Settlement cycle optimisation programme
Comparison of Typical Settlement Cycles of Native Indian Payment Gateways:

Note: All channels are delayed by at least 1 working day during holidays.

2. Special handling of returns and refunds
The Indian Consumer Protection Act states:

• COD order returns must be returned within 7 working days for original cash return
• Maximum processing time for Digital payment refunds 48 hours