All you need to know about the components involved in payment gateway charges

All you need to know about the components involved in payment gateway charges

Payment gateways are the backbone of e-commerce, facilitating a streamlined payment process to make business operations simpler. They serve as the interlinked junctures between the merchant, bank, and the customers. A payment gateway eases financial transactions in several ways by providing multiple payment methods in a single network such as UPI, net banking, digital wallets, and debit/credit cards. Generally, these gateways collaborate with banks and major card players like Mastercard, Visa, Rupay, American Express, and other service providers to facilitate a seamless payment network.

Every service provider charges some sort of one-time fee or regular charges depending on the type of services provided. The payment gateway also has an initial setup fee and different charges according to the services that you asked for. Every gateway provider in India has almost similar pricing and fee.  However, businesses operate on different scales and so, one should opt for custom payment gateway charges according to business requirements. The payment gateway charges also vary from business to business, i.e dealing with domestic transactions and cross-border payments. Evidently, the charges for the international transaction will be more compared to domestic payments. Here is a list of various components involved in payment gateway charges:

Set-up Charges

At the time of setting up a merchant account for the first time, the payment gateway charges a one-time setup fee. It is a non-recurring charge which is paid when you integrate a payment gateway with your e-commerce web portal or application. Generally, these charges cover the expense of-

  • Onboarding a merchant i.e KYC of the business and verification process
  • Infrastructure Cost

Annual Maintenance Charge

The annual maintenance charge is a pre-determined fee or sum of money that is being charged on a monthly or yearly basis by the payment gateway as maintenance charges for the operation, customer assistance, software maintenance, and technological advancements, etc. These charges may vary and depend on the type of services you have chosen such as-

  • EMI or auto-billing service, integrated fund management, etc
  • There are multiple modes of payments, so the charge depends on the mode of payments you have activated
  • Several gateways offer you a range of risk prevention, fraud, and other management services. The more service you incorporate, the higher will charges

Integration Fee

This is charged to integrate the desired payment gateway on the web portal or the application. These charges mainly depend on the types of platforms the payment gateway incorporated.

Transaction Discount Rate (TDR)

It is a fee that is charged by the payment gateway provider for every single transaction related to your e-commerce platform processed. These charges are decided on a percentage basis and it is fixed by the payment gateway itself. If you opt for an affordable service, the TDR will be less like net banking, debit cards. On the other hand, the rate increases for international credit card transactions. TDR includes processing charges, bank charges, and taxes.

A payment gateway requires several developments and maintenance costs to facilitate the smooth flow of the payments process. The dynamic nature of the digital world comprises advantages as well as disadvantages. As an e-commerce business prospered with time, there has been a huge increase in online transactions. Thereupon, online fraudulent activities also increased, and to deal with that, various institutions were also formed to keep checking in online frauds. The payment gateway charges help in enhancing the security measures, which will boost the payment mechanism and helps e-commerce businesses to flourish more. Moreover, the customer will also be able to make instant payments without any fear of forgery. Lastly, consider all the necessary aspects, choose the most compatible payment gateway for your business.

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