This article provides full guidance about how to start a payment gateway in India. For that first you need to understand what payment gateway is and how it works.
So basically, in terms of consumer or the merchant, his work is based on the following–
- Customer is redirected to payment gateway checkout.
- Pay the quantity and enter their credentials.
- Amount is credited to the merchant’s payment gateway database.
- Merchant request automatically releases the payment or payment gateway within a business day or by policy.
SOME LEGAL COMPLIANCE YOU HAVE TO FOLLOW:
REGISTER YOUR COMPANY
In the first place a payment gateway company must register its company in India. There are many types of business formation in India, but for a payment gateway it is best to start from a private limited company in India.
Requirements for Private Limited Company –
- Minimum 2 Directors
- Minimum 2 Shareholders
- Directors and Shareholders can be same.
Required documents for the Private Limited Company –
- PAN Card or Address Proof of the Directors
- Business Place ownership proofs.
Steps involved registration of Pvt. LTD Company
- Request the DSC (Digital Certificate of Signature) and DIN (Director Identification Number).
- Apply for the approval of the name and complete other eforms or you can use INC 29 integrated forms.
- Issue the Certificate of Incorporation
- Open a current bank account and apply for company PAN.
Let us now talk about other legal compliance, such as TAX registration and compliance with PCI DSS.
As a payment gateway company, it acts as a service provider for the merchants, so it charges the merchants ‘ service tax to provide services. So it needs the service tax registration number for charging service tax.
What is PCI DSS Compliance?
The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted set of policies and procedures aimed at optimizing credit, debit and cash card transaction security and protecting cardholders from misuse of their personal data. The Payment Card Industry Security Standards Council (PCI SSC) was launched on 7 September 2006 to manage the ongoing evolution of security standards in the Payment Card Industry (PCI) with a view to improving the security of the payment account throughout the transaction.
How to Apply for the Merchant Service Provider or Payment Facilitator
You must apply for a Merchant Service Provider or Payment Facilitator with a lot of banks like HDFC, ICICI, Axis, CITI, etc. after compliance with the PCI DSS Compliance. The Bank can approve your application, depending on your financial status and credibility. Once done, you can begin to register merchants on behalf of the bank.
The acceptance of Net Banking is harder than the acceptance of a visa / MasterCard. You will have to persuade individual banks to net banking relationships with you.
Alternative Option for the Internet Banking
According to the co- founder of JustPay Ramanathan RV on Quora, you will have to apply for an aggregator license with individual banks for NetBanking. This takes time and could entail more money and effort. Alternatively, you can try to contact BillDesk to resell its NetBanking APIs. Aggregators such as Zaakpay and Razorpay use Billdesk as their service provider until they find out their own stuff. Banks are usually not easily persuaded to give you an aggregator relationship.
The total cost of creating PG for cards and net banking could be between 30 lakhs and 1 crore (as far as capital requirements are concerned).
We hope that this article gives you an overview of how to start a payment gateway in India.
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