Classpro - Payment Gateways in India

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(A guide on why, when and how to use virtual platforms for cash transactions)

The burning issue (in all measures) in our country today is the demonetization move started by our humble government. While most of us can spend hours at stretch in debating the pros and cons of this rather radical currency shift, it would be wise instead to spend an equivalent gusto in devising ways out of the problem. Simply put, rather than relying heavily on liquid cash, why not think of alternatives to beat it’s need instead?
While most established businesses have their virtual payment mechanisms figured out, it is the small business providers like local coaching institutes who are left pondering about the same. If you run a local tutorial/coaching business, we are well aware of the current sting you are facing. With most fee payments being in cash, you can do nothing about the loss of business you might face, until the economic demonetization stabilizes. Or so you thought! With a plethora of virtual payment options out there, you can easily save yourself from these unavoidable payment hassles.
Below is a brief guide on the various payment modes you can opt for, as an efficient alternative to cash collections:

1) POS Terminals (Debit/Credit card swiping machines):

The POS (Point of Sale) terminal is nothing but the popular card swiping machine that you can find in various shops and malls. Usually POS terminals, also known as EDC (Electronic Data Capture) machines are offered by the merchant teams of banks. Popular players in this field are SBI, ICICI and HDFC. Basically, to get your hands on a swiping machine from the bank, you will need to open a current account with the issuing bank. Once done, you can either rent or purchase these machines from the bank. While purchasing the machine will cost somewhere around Rs.7000, you can rent it at a much lesser rate, depending from bank to bank. Further, on each transaction the bank will charge you its own stipulated fee i.e. 0.75 % to 1% above Rs.2000 for debit cards and up to 1.4% to 2% for credit cards.

In alternative to the traditional card swiping machines, you can also go for easy to use and portable POS terminals offered by companies such as Ezetap and Mswipe. Ezetap provides a portable mobile based POS at an affordable price of Rs.500 (+ a monthly fee of Rs.150 and a commission of Rs.5 per cash -back transaction). All you need is a zero balance current account with a bank to start using this wondrous pocket sized machine. Similar to Ezetap, Mswipe also provides an app based card swiping machine for small businesses. All you need to do is download the app, connect the device to your phone using the audio jack, and swipe!

In the varied range of POS machines, the one that personally caught our eye is the PayUmoney POS. It carries a number of benefits as compared to regular POS devices and it extremely business friendly.

Following is all you need to know to about the PayUmoney POS machine:

  • The card swiping device by PayUmoney does not require you to have a current account as a mandate. You can also link it to the savings account of any bank.
  • You can purchase it at a flat price of Rs.7000.
  • It does not charge you a monthly rental fee or require you to maintain any minimum balance in your account.
  • All you need is a pre-paid or postpaid sim, a PAN card and a cancelled cheque, and the device will be ready to use within 48 hours.
  • It accepts debit/credit cards of all banks and charges users a flat 2% TD. Further, it generates receipts via email/SMS without the need to use paper backed copies. To know more, please click here.

2) Mobile Wallet:

Another very efficient method to collect fees/payments on a convenient basis is the use of Mobile wallets. A Mobile Wallet is a virtual platform that enables you to store the card and bank details on your phone, thus helping you to do away with the need of physically owing a swipe machine. Simply put, with the use of an M – Wallet, a student can pay his fees by transferring the money from his mobile wallet to yours in a hassle free manner. To set up this function, you will typically need to register yourself as a merchant by filling in a basic online application with the servicer provider of your choice. With companies such as Uber, Snapdeal and Pizzahut using mobile wallets, we see no reason why one should not tap onto its benefits. Below you can find the enumerated details on three popular Mobile wallets providers in India:

Paytm:
The ever-growing popularity of Paytm is known to all. You too can join the Patym bandwagon and enjoy the ease of cashless transactions. Below are some pointers in this regard:

  • To get started you will first need to download the paytm app on your phone and sign in with your mobile number. Now each time a customer wishes to pay, you can ask them to open the app on their phone, click on the “pay” or “Send” option, enter your mobile number and the amount, and voila! You will instantly receive the sum in your paytm account.
  • Alternatively, you can also receive payments using a QR code with paytm. All you need to do is fill in this form and get your QR code. You can then print and paste this QR code at your place of operations. The customers can merely scan the code and enter the amount to be paid, which will then instantly reflect in your account.
  • While you can start using paytm for free, you will need to pay a basic 1.99% transaction fee for each successful payment, along with service tax. However, for the first three months of use, you can enjoy a waiver on the abovementioned TD.
  • Further, you can hold up to Rs. 25,000 per month in your paytm account. This limit can be increased up to 1 lakh by following the KYC process with Paytm.
    You can also transfer the balance that accumulates in the paytm account to your bank at a zero % transaction fee until Dec 31st, 2016.
  • To know more, click here.
MobiKwik:
Similar to Paytm, MobiKwik also allows users to accept payments with the use of a simple application on their smart phones. To get started as a merchant on MobiKwik, you will need to register yourself with the help of your mobile number and email id. The rest of the functions are quite similar to paytm. At par with its counterpart, MobiKwik also allows you to transfer the accumulated balances to your bank account at a zero percent transaction fee. However, your TD per transaction may differ depending on your physical contract with the firm. Unlike paytm, the maximum monthly balance limit for MobiKwik wallets is only up to Rs. 10,000. However, if you are a KYC compliant, you can have this limit pushed to a maximum of Rs. 1 Lakh. To know more, click here.
Oxigen Wallet:
While considering mobile wallets, you can also choose the lesser known yet highly acclaimed player – Qxigen Wallet. Being the first RBI approved non- bank wallet to be integrated with NPCI, it allows instant money transfers from the bank accounts to the wallet and vice versa. To register as a merchant with them, you will need to fill up a regular online application followed by a successful completion of standard formalities. Oxigen charges users 1.5 % as a transaction fee and restricts the upper monthly balance limit to Rs. 20,000 (up to Rs.1 lakh in case of KYC compliant users). To know more, click here.

3) UPI:

Another lucrative system in the world of virtual payments is UPI. UPI stands for Unified Payment Interface and is an initiative by the National Payments Corporation of India (NPCI). The mechanism behind the UPI involves the use of an app to transfer funds from one bank account to another, without the hassle of typing out the card details, the IFSC code and passwords. It uses your Aadhaar card credentials and mobile number as a sole identifier. So far, over 21 banks have their own UPI apps, each of which can be easily downloaded from the play store on any android/IOS smartphone. You can use the following steps to get started with the UPI:

  • Visit the play store on your smartphone and download the UPI app for the bank in which you hold an account.
  • As a next step, you need to create your login id and a virtual address. Unlike a long and complicated address, the UPI creates a simple virtual payment address (VPA) for users that looks something like: XYC@abcbank.
  • Once you obtain a VPA, you need to obtain a unique M-pin to start transacting.
  • Further, you can add multiple bank accounts to a single bank’s UPI app.
  • To collect money or a fee from the student, you will need to tap on the UPI icon, and then click on “collect money”.
  • This dialogue will further prompt you to add details such as the recipient’s VPA, the amount and a remark.
  • Once you click on confirm, the app sends an automatic collection request to the student, which he/she must accept to make the payment.
  • Similarly, the payment can also be initiated by the student, by clicking on the “send money” tab and by further inserting your (the recipient’s) VPA to process the transaction and pay the amount.
  • Another unique feature of the UPI is that it allows users to set a later date for sending or receiving money on the app. The mentioned amount will thus be collected/debited on the later date as stipulated.
  • Every UPI app can be used to pay/receive an amount as less as Rs.50 up to a maximum of Rs.1 lakh.
  • Further, the transaction fee involved is as low as Rs.0.45 per deal.

Though recent is nature, UPI can be the future of payments in our country and is a boon for sole proprietors in the current saga of demonetization. To know more on the same, you can visit this link.

Based on the nature and scale of your business, you can opt for either one of the above mentioned virtual payment mechanisms. While the POS terminal machine is more suitable for larger coaching institutes, Mobile wallets and UPI are an excellent start for sole tutors or comparatively smaller institutes.
Though the barring effects of demonetization are bound to fade away soon, adopting any one of the above mentioned methods will offer you a sound and secure cash alternative. With students and parents becoming more tech- savy than ever, a move like this one will certainly be appreciated. Furthermore, with rising waves of technology, a substantially cashless economy may soon become the reality. With startups, local vendors, as well as autowallas reaping the benefits of digital transactions, it is a solicited move for every sole proprietor and small business owner to match their pace.
Further, trades with organized payment gateways are bound to appear more credible as compared to archaic “cash only” businesses. Hence, having multiple payment options for students is not only a sound marketing strategy, but also welcome relief for your clientele.
These digital payment gateways can surely help you bid a long goodbye to the woes of demonetization. When going cashless is this easy, why wait at all?