{"id":22712,"date":"2019-08-05T19:07:10","date_gmt":"2019-08-05T13:37:10","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=22712"},"modified":"2019-08-05T19:07:13","modified_gmt":"2019-08-05T13:37:13","slug":"how-to-start-payment-gateway-in-india","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/how-to-start-payment-gateway-in-india\/","title":{"rendered":"How to Start Payment Gateway in India"},"content":{"rendered":"

In this post, we will cover the complete information on the query of how to start a Payment Gateway in India. Payment gateway business is a lucrative business opportunity citing the growth story of the digital payment mechanism in the country. We will also cover the characteristics of the best payment gateway along with the functioning of payment gateway.<\/p>\n\n\n\n

What is Payment Gateway? <\/h2>\n\n\n\n

Payment gateways are used for making payment\ntransactions via an electronically communicated channel. It is a front end\ntechnology that reads the banking information the user and communicates that\ninformation to the merchant banks at both ends in electronic signals.<\/p>\n\n\n\n

How Payment Gateway Works?<\/h2>\n\n\n\n

A payment gateway is an elementary step towards making\npayment via digitally communicated payment transaction channels. A payment\ngateway reads the banking information of the person making a payment\ntransaction. Further, it transmits the information to the merchant banker\nacquiring the payment.<\/p>\n\n\n\n

The merchant bank then facilitates the authorization of\nthe payment transaction taking validity from the issuing bank and payment\nprocessor.<\/p>\n\n\n\n

Payment gateways are a blend of software and servers\nthat create a platform where transaction information to acquiring banks and\nresponses from issuing banks taken are exchanged in for of electronic signals.<\/p>\n\n\n\n

Business Integration of Payment Gateway<\/h2>\n\n\n\n

Payment gateways are the digital channels for making\npayments for both web-based and brick and mortar businesses. However, the\nassimilation<\/a> of the digital payment system in their payment operation has\ndifferent methods of integration.<\/p>\n\n\n\n

The businesses which operate on the website or mobile\napplications require integration of application programming interface (API) in\ntheir platform. The API enables their functionality to complete the transaction\nof payments.<\/p>\n\n\n\n

On the other hand, the traditional Brick and Mortar\nbusinesses require integration of point of sale terminal for payment\nfunctionality. The point of sale terminal is connected electronically through\ntelecom network i.e., either through a phone or internet connection.<\/p>\n\n\n\n

The coming age terminal can now accept both contact and\ncontactless cards (tap to payment cards). The terminal is also available with\nportability in usage to be connected via Wi-Fi connection. They also have the feature\nto display transaction information in usage.<\/p>\n\n\n\n

What are the Steps to Start A Payment Gateway In India?<\/h2>\n\n\n\n

There are four significant steps to register a Payment\nGateway Business in India <\/p>\n\n\n\n

Register Your Company<\/h3>\n\n\n\n

The fundamental step is to register your company that\ncan commence the business of payment gateway in India. You can register your\ncompany with a minimum of two directors.<\/p>\n\n\n\n

Get PCI-DSS compliance<\/h3>\n\n\n\n

The second step is to PCI DSS security standards\ncertification. The Payment Card Industry Data Security Standard (PCI DSS)\nrepresents a set of policies and rules that are to be taken in practice for\nprocessing online payment transactions. The PCI-DSS is a part of the Payment\nCard Industry (PCI) security standards.<\/p>\n\n\n\n

Get Tax Registrations<\/h3>\n\n\n\n

It is essential to get mandatory tax registration as\nprescribed by the regulatory authorities.<\/p>\n\n\n\n

Apply for Merchant Service Provider (MSP) or Payment Facilitator<\/h3>\n\n\n\n

An entity needs to apply for the merchant service providers\nto comply with the PCI DSS compliance. These are the payment facilitators in\nworking relationships with multiple banks. You can also go to establishing a\ndirect net banking relationship with the banks.<\/p>\n\n\n\n

Business Scope for Payment Gateway in India<\/h2>\n\n\n\n
\"Payment<\/figure><\/div>\n\n\n\n

There is a vast scope for payment gateway providers in\nIndia. The payment gateway business is on growth in India, especially after the\ndigital India initiative of the Indian Government. The digital revolution is\nalready in place in the Indian economy. <\/p>\n\n\n\n

As per the data released by Indian retail payments\norganization National Payments Corporation of India (NPCI), the total Unified\nPayments Interface (UPI) transactions in the country stood at 822.29 million\n(82.22 crores) for July 2019. <\/p>\n\n\n\n

The majority of the businesses are shifted to online\nplatforms in India. These web-based businesses use payment gateway for websites\nfrom where they operate the business, make sales, and accept payments in\nelectronic mode.<\/p>\n\n\n\n

The business scope of payment gateway in India is not just\nlimited to online businesses. The traditional brick and mortar businesses are\nalso using digital payment platforms to facilitate their customers. Traditional\nbusinesses are rapidly shifting to an online payment gateway. <\/p>\n\n\n\n

Taking the vast number of businesses in practice in\nIndia, the scope for commencing a business of payment gateway in India business\nis both lucrative and profitable. <\/p>\n\n\n\n

Legal Framework for Payment Gateways <\/h2>\n\n\n\n

The legal framework of the payment gateway is a\ncritical milestone to start a payment gateway in India. The payment gateway\nbusiness is regulated under the section of payments & settlements Act,\n2007. It also has to comply with the guidelines laid by the Reserve Bank of\nIndia.<\/p>\n\n\n\n

The application to start a payment gateway is to be\nmade in Form A under Settlement System Regulations, 2008. <\/p>\n\n\n\n

Additionally, in order to ensure transparency and\nsecurity, the payment gateway entity needs to comply with AML, KYC, and CFT\nnorms. Complete authorization of rules prescribed by the RBI should also be taken\nin practice.<\/p>\n\n\n\n

There is a possibility to use payment gateway services\nfor money laundering or anti-state activities.<\/p>\n\n\n\n

In order to prevent such activities, it is mandatory\nfor a payment gateway to comply with the Prevention of Money Laundering Act,\n2002 & Anti Financial Terrorism Norms.<\/p>\n\n\n\n

You can read more about the Legal Framework of the Business of\nPayment Gateway in India.<\/a><\/p>\n\n\n\n

Precautions to Practice for Payment Gateway Operators<\/h2>\n\n\n\n

Although it looks like the world has entered into a\nutopian era of digital payments, it is not all green to work negligently. The\nsector poses a threat controllable threat from potential hackers and anti-state\nactivists. The technology used for processing payments can be used by hackers\nfor unauthorized usage and laundering of funds.<\/p>\n\n\n\n

In order to get protection from such a situation, it is\nessential to follow the security and privacy protocol of the industry. The\nprotocols are laid by the Reserve Bank of India to ensure the safety of\ninformation and transactions.<\/p>\n\n\n\n

The strict practice of security protocols in payment\ngateways and payment processors is not only crucial to prevent fraud but also\nto secure the trust of the masses towards digital payment mediums.<\/p>\n\n\n\n

You can read more about the business of Payment Gateway\nin India in the following posts<\/p>\n\n\n\n