Today we talk about ” How to Start a Payment Gateway Business in India as Startup”. so first of all we have to understand what is the payment gateway and how its works ?
so basically if we talk about as simplest way as consumer or merchant then its work on following basis –
a) Customer Redirect on the payment gateway checkout.
b) Pay the specific amount and enter their credential details.
c) Amount is credited into payment gateway merchant database.
d) Merchant request release the payment or payment gateway automatically release the payment within some business day or according to polices.
but if we talk about How Payment Gateways business Works then below Business Today infographics explanation gives you overview.
Now we talk about the Legal Compliance :-
Register Your Company
First of all a payment gateway business have to register their business in india. Register a Business in India there are lot of type of business formation but for a payment gateways best is starting from a private limited company in India
Requirements for Private Limited Company –
- Minimum 2 Directors
- Minimum 2 Shareholders
- Directors and Shareholders can be same.
Documents Required for the Private Limited Company –
- PAN Card or Address Proof of the Directors
- Business Place ownership proofs.
Steps involved for register the private limited company –
- Apply for the DSC ( Digital Signature Certificate) and DIN ( Director Identification Number).
- Apply for the Name Approval and fillings other eforms or you can use INC 29 Integrated Forms.
- Issue the Certificate of Incorporation
- Apply for Company PAN and open a current bank account.
Now lets talk about the other legal compliance as TAX Registrations and PCI DSS Compliance.
So as a Payment Gateway business its act as service provider for the merchants so its charge service tax from the merchants to providing the services. so for the charging service tax its need service tax registration number.
Now talk about the PCI DSS Compliances.
What is PCI DSS Compliance ?
The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted set of policies and procedures intended to optimize the security of credit, debit and cash card transactions and protect cardholders against misuse of their personal information. The Payment Card Industry Security Standards Council (PCI SSC) was launched on September 7, 2006 to manage the ongoing evolution of the Payment Card Industry (PCI) security standards with focus on improving payment account security throughout the transaction process.
Apply for the Merchant Service Provider or Payment Facilitator
After the comply with the PCI DSS Compliance you have to apply for the Merchant Service Provider or Payment Facilitator with lot of the banks such as HDFC, ICICI, Axis, CITI, etc.. Depending on your financial standing and credibility, the bank may approve your application. Once they do, you can start signing up merchants on behalf of the bank.
Providing NetBanking acceptance is more difficult than providing visa/mastercard acceptance. You will have to convince individual banks to get them to give you netbanking relationship.
Alternative Option For the Internet Banking
As per the Co founder of JustPay Ramanathan RV on Quora Explain that For NetBanking, you will have to apply with individual banks for aggregator license. This is time consuming and might involve more money and effort. Alternatively, you could try and get in touch with BillDesk for reselling their APIs for NetBanking. Aggregators like Zaakpay & Razorpay use Billdesk as their service provider, until they figure out things on their own. Usually, banks are not easily convinced to give you aggregator relationship.
Overall cost of setting up PG for cards and netbanking could be anywhere in the range of 30 lakhs to 1 crore (as far as capital requirement goes)
Hope this Article gives you overview for starting a payment gateways business in India
Source : BusinessToday and Quora