Online Payment Fraud: What Is It and How Razorpay Prevents It

FeaturedFraud Prevention for Online Businesses

This is the second blog in our series on online security and fraud prevention. To understand more about online safety (how to distinguish between a secure and non-secure website, how to ensure you are making a secure payment) read the first part here. To understand how online payment fraud occurs and the steps to prevent it, read on!


There is a reason why banks put up disclaimers announcing that their employees do not ask you for sensitive data, or that you should never reveal details like your OTP to an unknown person.

Online payment fraud is a reality of the internet age we live in and the numbers are only set to increase with the increasing digital adoption in India. According to a study by the credit information company

Experian and the International Data Corp (IDC), the fraud risk in India is currently pegged at 8.1 points; second only to Indonesia (8.7 points) and significantly higher than the average 5.5 points in the Asia Pacific region.

A 2016 consumer study conducted by ACI Worldwide places India at the fifth position in terms of total card fraud rates; behind Mexico, Brazil, United States, and Australia.

As they say, the best weapon against any problem is education; so let’s begin by understanding the different types of payment frauds that occur in India and how online sites and payment gateways like Razorpay prevent it.

Online Payment Fraud: The Different Types

The most common types of online fraud occur via phishing or spoofing, data theft, and chargeback or friendly fraud. We have explained these in detail below.

Online Phishing or Spoofing

Phishing is the process of accessing one’s personal information through fraudulent e-mails or websites that claim to be legitimate.  The information gathered this way can include usernames, passwords, credit card numbers, or bank account numbers.

The most widely used method for phishing is to redirect an online user (from an email or SMS) to an “official” website where they are asked to update their personal information.  You are thereby tricked into revealing personal information that you would ideally not reveal to anyone else.

Phishing can also occur via other electronic means such as SMS, instant messaging, and on email. You can be redirected to make a payment on a website that looks legitimate, but which is created to capture your card details so they can be used later.

According to reports, India is the third-most targeted country for phishing attacks, after the US and Russia.

Data Theft

Sometimes, dishonest employees or partners can steal credit card data from businesses and use this for committing fraud. Most online sites take stringent measures to ensure that such privacy breaches do not occur.

Instead of storing credit card details as is, for instance, websites and payment gateways use methods like tokenization and encryption to keep the data secure.

Razorpay takes data security very seriously. We are a certified ISO-27001 compliant organization, which means we undergo stringent audits on our data privacy processes.

Chargeback Fraud or Friendly Fraud

Let’s say a customer makes an online purchase. Later, they claim that the purchase was made fraudulently and ask for a chargeback – even though they made the purchase themselves! (A chargeback – in the simplest of terms – is an order from a bank to business, asking it to return the amount paid for a possibly fraudulent purchase.)

This is known as chargeback fraud or friendly fraud, where business processes a transaction since it seems legitimate; only to be issued with a chargeback later on.

Chargeback frauds cause GMV losses and are a hassle for any business. We have a Razorpay Chargeback Guide that will help you understand why chargebacks happen and take steps against fraudulent charges.

The Effect of Payment Fraud on Businesses

As per the current terms and conditions, a credit card issuer (i.e., the bank) does not consider the cardholder liable for any fraudulent activity; for both card-present and card-not-present frauds.

Therefore, payment frauds involving credit cards have a significant effect on the business community and a significant impact on a merchant’s bottom line. Every time a customer issues a chargeback, it leads to loss of both inventory and GMV. This is especially true for retail establishments, where the profit margins are usually small.

Regarding industry, the subscriptions industry continues to have the highest rate of fraud for two main reasons:

  • Subscriptions are essentially a card-dependent service; wherein the USP of the service is that the customer does not have to make manual payments. It is easy to claim that one’s card was used without knowledge in such a scenario.
  • Fraudsters and hackers use subscription services to ‘test’ cards. Online subscription services usually provide a one-month free trial, but one needs a credit card to initiate the trial period. Since the value is negligible, such payments usually go unnoticed by a card owner. If the card details are incorrect, the subscription business shares a detailed authorization error; thus making it easy for the hacker to modify their strategy and continue using the cards.

Razorpay: How We Help Businesses Reduce Fraud and Mitigate Risk

Apart from the mandatory protocols, Razorpay has its processes (developed in-house by our tech whizkids) to detect and prevent fraud and mitigate risk. As a payment gateway and a converged payments solution company, we take data security very seriously.

By delving into our data and analyzing patterns, we have been able to institute processes that ably discern between a ‘normal’ and a ‘suspicious’ transaction with credible accuracy. These systems are divided into two types:

a) Systems for detecting ‘Merchant Fraud’

Merchant fraud occurs when someone creates a fake or bogus company with no intention of selling any product to the customer. The business appears legitimate; but since it offers no actual goods or services, all users who make an online purchase only end up losing their money.

As a payment gateway, Razorpay has strict processes in place to vet every company which uses our gateway for processing payments. Some of the ways how we check for merchant fraud include:

KYC checks: Adhering to strict KYC norms even before we onboard a business is an integral part of fraud mitigation. We have an in-house ‘Risk and Activation’ team that runs background checks on new businesses and vets them before they are ‘live’ on our payment gateway.

At Razorpay, we take this check one level higher by monitoring all suspicious and potentially fraudulent businesses, and the transactions that originate from them.

Transaction monitoring: Razorpay Payment Gateway has an inbuilt ‘Risk’ logic which can sniff out a possible fraud faster than a K9 squad. Let’s say a merchant who gets 3-4 online orders in a day suddenly starts to get 300 daily orders.

A sudden spike in transaction velocity (number of transactions per minute/hour/day), volume (amount transacted for), or pattern (international orders for a local brand) is an indicator of fraud and our systems immediately flag such transactions for further investigations.

Our ‘Risk’ logic also has 72 odd rules for monitoring the thousands of transactions on our payment gateway on a daily basis. This logic is designed according to the merchant, and our logic pathway can easily differentiate between standard day-to-day transactions and those that carry a high probability of risk.

b) Systems for detecting ‘Customer Fraud’

Customer fraud occurs when a stolen or lost card is used for suspicious activities. It can also occur for other payment modes. Not only does this affect the user, but it is also detrimental to e-commerce websites as it increases cases of refunds and chargebacks, and leads to loss of GMV.

At Razorpay, we strive to protect both our merchants and our customers. Which is why we conduct extensive transaction monitoring as well to protect both their interests. How do we do it? Here’s a peek:

Checking for hotlisted cards: Every time a card is used for payment, our gateway connects with the card provider to check if the card has been hotlisted. (Hotlisting means that the card has been blocked temporarily or permanently for use). This is done in real-time so that a verified transaction is still completed within seconds, while the suspicious ones get flagged.

Pattern-based transaction monitoring: We also use geographical and pattern-based transaction monitoring (as for detecting merchant frauds) to identify suspect transactions. This helps us in preempting and preventing chargeback frauds and other types of customer frauds. We have a hit ratio of being able to identify 85% of fraudulent cases in advance.

Online Fraud Prevention: The Future

Online fraud will remain a contentious issue even in the days to come. The more we connect and transact online, the bigger the threat. Moreover, since we cannot eliminate it, the solution must be to remain on guard every single second. The only way to prevent online fraud is through vigilance and regulation.

A good example here is the 3D Secure (3DS) protocol that VISA had developed to keep its customers safe, and which has since been adopted by other card companies like American Express, MasterCard, and JCB International.

A similar process is the 2FA used in India, which is mandatory for all cardholders and card-issuing banks. The RBI has also mandated online alerts for all card transactions – even those where the cardholder physically swipes their card at a PoS system.

For all transactions considered suspicious, cardholders have the option to issue a ‘de-activation request’ immediately and hotlist their cards.

The Indian government’s decision to appoint a nodal agency for dealing with phone frauds – called the FCORD initiative – is another praiseworthy step. We at Razorpay are also in touch with the MHA, which has designated the FCORD as the Nodal Agency for reporting and preventing Cyber Crime frauds in India, regarding the same.

While a zero-fraud system will take some days to achieve, we are constantly building new processes to minimize fraud risk for all consumers.

The bottom line though remains this: If you are building an e-commerce website, remember to follow all the protocols mentioned above and minimize the risk of fraud. Alternatively, find a payment gateway (hello there!) that has stringent security protocols already in place. We’re just a click of a button away!

How Secure Are Your Online Payments?

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At Razorpay we strive to make every transaction done via our payment gateway a secure payment. We’re a technology-first online payments company and online payment security is in our DNA. We employ a ‘no stones unturned’ approach to safeguarding the interest of both the online businesses who use our products, as well as their consumers.

We also understand the assurance of secure payments is one of the primary drivers behind the choice of a payment gateway.

With the growing number of e-commerce users and transactions in India,, it is important that we are all aware of the mandatory security protocols for e-commerce websites; so that we can avoid fraudulent situations. As the saying goes, prevention is better than cure.

In this article, let me walk you through the security protocols and processes followed at Razorpay, and which you should look for, too, every time you transact online.

online payment security architecture and information flow

1. TLS Encryption

Data security on e-commerce websites or an online payment system begins the moment a user lands on the site. The TLS Certificate tells users that the data transmitted between the web server and their browser is safe.

As a payment provider, Razorpay uses the highest assurance SSL certificate on its website which is the EV SSL (Extended Validity SSL) certificate.

Without TLS Encryption in place, all data sent over the Internet is unencrypted and is visible to anyone with the means and intent to intercept it. An easy way to check if the e-commerce websites you frequent are SSL certified is to look at the URL and see if it uses ‘http://’ or ‘https://’ protocol.

The additional ‘s’ signifies a secure e-payment system. You can also look for the padlock icon at the beginning of the URL. Modern web browsers in their race to make the Web secure by default are now following the opposite paradigm – mark HTTP sites as “insecure”.

2. PCI-DSS Compliance

The PCI Security Standards Council is a global organization that maintains and promotes compliance rules for managing cardholder data for all e-commerce websites and online payment systems.

The Payment Card Industry Data Security Standards (PCI-DSS) is in effect a set of policies that govern how sensitive cardholder information should be handled.

Fact: The PCI Security Standards Council was created as a joint initiative by the four major credit-card providers: American Express, Visa, MasterCard, and Discover, in the year 2004. Over the years, the PCI-DSS standard has become the guiding principle for online security across the globe.

For an e-commerce website or an online payment system to be PCI-DSS compliant they have to follow certain directives:

Maintain a secure network to process payments: This involves using robust firewalls which can protect against malicious security threats. Further, the website or payment gateway should not use default credentials like manufacturer provided PINs and passwords, and must allow customers to change this data as needed.

Ensure all data is encrypted during transmission: When cardholder data is transmitted online, it is imperative that it be encrypted. Razorpay encrypts all information you share using checkout via TLS (Transport Layer Security). This prevents data interception during transmission from your system to Razorpay.

Fact: On the Razorpay Payment Gateway, all the details entered by a user like their name, address, and credit/debit card information are used only to process and complete the order. Razorpay never stores sensitive information like CVV numbers, PINs etc.

Keep infrastructure secure: This directive involves keeping abreast of new PCI-DSS mandates and using updated software and spyware to protect against known software vulnerabilities, running regular system and software scans to ensure maximum data protection.

Restrict information access: An important part of securing online payments on e-commerce websites is restricting access to confidential information so that only authorized personnel will have access to cardholder data. Cardholder data must be protected at all times – both electronically and physically.

3. Tokenization

Tokenization is a process by which a 16-digit card number gets replaced by a digital identifier known as a ‘token’. This is done to ensure the safety of the original data while allowing payment gateways to securely access the cardholder data and initiate a secure payment.

Fact: Even if a website gets breached and the tokens stored are hacked, it is immensely difficult to reverse-engineer the actual card number from the token itself. To do this, one needs access to the logic used for tokenization, which is not publicly available.

Credit card tokenization helps e-commerce websites improve security, as it eliminates the need for storing credit card data, and reduces security breaches. For more on how tokenization works and impacts online payments, you can read our in-depth blog.

4. Two-Factor Authentication

Two Factor Authentication, aka 2FA, or two-step verification is an extra layer of security added by e-commerce websites to ensure a secure payment for a customer.

This is a customer-facing authentication process, mandated by regulatory bodies like RBI, in that the transaction is processed only after the user enters a detail that only they could know, or have at hand (like a physical token or a security key). Many banks and other e-payment gateways also use the 2FA for their own payment modes.

Fact: 2FA is not a newly-minted technology, but it has recently become the de-facto method of authentication in the digital age. In 2011, Google announced 2FA for heightening online security for its service. MSN and Yahoo followed suit.

When you use Net Banking for a transaction, you are first asked to enter your username and password. As a final confirmation, the bank sends you an OTP on your registered mobile number. This process has been mandated by the RBI, is divided into two levels of authentication:

What the user knows: In this step, users fill in their card/Net Banking details such as username and password. This helps the payment gateway recognize which bank the card belongs to.

What the user (and only the user) has: This step is known as ‘Authorization‘ and is done through the OTP/PIN/CVV. The bank (and the payment gateway) can then confirm that the request for payment is initiated by the rightful user.

5. Fraud Prevention

Apart from these mandatory protocols, most e-commerce websites and payment gateways have their own fraud and risk prevention systems. Big data analytics and machine learning play a huge role in devising these risk prevention and mitigation systems.

By delving into our customer’s data and analysing patterns, we at Razopray can discern between a ‘normal’ and a ‘suspicious’ transaction with credible accuracy. Apart from this, there is a lot that you as a customer can do to reduce the risk of fraud. 

Always remember that:  

– Anyone of importance will never ask for your card data/passwords up front. Banks and financial service providers have a safe protocol to gain admin access to an account if the need ever arises.

– Passwords are safer when you don’t write them down. Keep strong passwords that you can remember, change them frequently, and refrain from writing them down somewhere.

– You have the right to dispute suspicious charges on your card or accounts. Raise a chargeback request for any unidentified transaction on your card. You have a legal right to a resolution.

If you are building an e-commerce website, remember that fraud prevention requires that you follow all the above-mentioned protocols. Or find a payment gateway (hello there!) that has stringent security protocols already in place. We’re just a click of a button away!

GST Invoices : Create and Send GST-compliant Invoices with Razorpay

FeaturedRazorpay-GST-Invoices-Launch

With GST coming into effect in 2017, all Indian businesses are now required by law to create GST-compliant invoices – both on paper and electronically.

The number of e-invoices across the globe is on the rise (volume of e-invoices in 2016 was approx. $30 billion worldwide, with an average growth of 10-20% per year); as has the volume of e-retail, with global transactions crossing the $2.3 trillion mark in 2017.

This led the think tank at Razorpay to have another of our lightbulb moments – we already had the infrastructure for businesses to accept payments online.

Why not merge it with an invoicing feature so that accepting payments against a GST-compliant invoice becomes easier for everyone? This would automatically cut down the need for multiple software and make the payment process more seamless for everyone included.

So, we set to work. And the outcome is an intelligent software that provides automation of GST incorporation into invoicing – a feature that very few products in the market currently allow. As the Product Manager for this new feature, I am proud to introduce you to ‘Razorpay GST-compliant Payable Invoices‘.

gst invoicing software

Razorpay GST Invoices – How Do They Help?

Invoices have been in trend since the ancient times when merchants used clay tablets to keep a record of supply. In the simplest of terms, an invoice is a “document which states the supply of goods and services and forms the basis for a tax levy”.

GST-compliant invoices differ from the earlier VAT invoices by a few crucial factors:

  • It is important to mention details like GSTIN of the supplier and the customer, the place of supply, the HSN/SAC codes which are specific to the goods/services being sold.
  • The invoice needs to have a clear breakup of the tax levied. Just stating the value of tax is not enough; there needs to be a breakup of the CGST/SGST/IGST components.
  • It is mandatory to issue invoices for all registered supplies as not doing so will be considered an offence under the law.

For a B2B business, e-invoices are an effective way of managing compliance as well as saving costs. It is estimated that creating invoices online can help reduce operational costs by 60-80% vis-a-vis paper-based invoicing. However, this saving does not mean much if you spend money on multiple software for payment, accounting and for invoicing.

GST Sample Invoice

The Benefits of Using Razorpay GST Invoices

The Razorpay GST Invoices gives you access to a single powerful system- where you generate invoices and collect payments via the same software.

Ultimately, this helps your business reduce operational costs, reduce payment delay and delinquency, and manage cash flow in a better manner.

Most importantly, it adds an informational element to the transaction. The customer knows exactly what they are paying for upfront.

The hallmark of any good product is that it simplifies an industry pain point and helps improve business processes. Our invoicing feature helps you in the following ways:

  • You can create ‘Payable Invoices‘ for B2B or B2C transactions easily and accept payments via a single process. For monthly recurring invoices, you can use our APIs to create invoices in bulk.
  • Automatically include the GST breakup in your invoices. Since this is linked to the HSC/SAC codes of the supplied items, there is zero chance of error in levying taxes. Remember, GST tax rates vary according to the tax bracket of the item and correctly calculating tax is an important part of creating GST-compliant invoices.
  • Your customers can choose to pay from multiple payment options available on Razorpay or even use Virtual Accounts to make offline payments against the invoices. This enables customers to make instant payment – anywhere, any time – and helps businesses maintain regular cash flow for important tickets.
  • The ‘Dashboard Tracking’ option allows you to tally Account Receivable (outstanding amount) and the money collected/received from your Razorpay dashboard. There is no need for a separate accounting software for this.
  • In certain cases, your customers may want to make partial payments against an invoice. Let’s say they only wish to credit a small amount as an advance and expect to be able to pay the rest when they receive the goods. Razorpay GST Invoices come with a ‘Partial Payment’ option for such use cases.

Most importantly, you can use our software to create invoices even if you’re not registered under GST. Our intuitive and intelligent software can be used to create normal invoices without GST taxes that can be sent to your customers as proof of transaction.

Creating GST Invoices with Razorpay – The Process

At Razorpay, we have always been very particular about keeping the user flow/user experience simple, so that our users – whether they be a startup or an established business –  can use the product seamlessly. We have tried to do the same with the GST Invoices and I have detailed the process below.

For easy understanding, I have broken down the process into five steps from creation to reconciliation.

GST Invoice Generation

Step 1: Creation and Generation of GST Invoices

  • To create an invoice for a customer, begin by adding all the necessary details such as the GSTIN of the customer, PAN details, mobile phone, and email id.
  • Next, add item details of the goods/services sold to the customer. You can choose the HSN/SAC codes for the same, and add it to the invoice.
  • Once you add the item details and the place of supply, the GST will be automatically calculated by the software. The GST rate is linked to the item code and the place of supply; hence there is zero chance of error.

You can save the details for further use. This will help in the mass creation of invoices and faster creation of recurring invoices.

Step 2: Sharing of GST Invoices

  • The invoices are shared via email and SMS (you added these details in the first step).

Note: Even in legacy software, the sharing has to be done manually. However, Razorpay automates the process so that it is easier and faster.

Step 3: Payment

  • You can share your bank details over the same mail to facilitate online payments. This works for ‘Payable’ invoices that need to be paid online.

Step 4: Notification

  • If the invoice is paid online, you will receive notifications via the webhooks available on our site. If the payment is done via RTGS or NEFT, then it needs to be manually tallied.

Step 5: GST Reconciliation

  • Reconciliation for Razorpay GST invoices is done the same way as for any other invoice. You will have to account for the monthly ‘Account Receivables‘ and ‘Invoices Issued‘ and ensure that they both tally.

So there! The easiest invoicing solution for businesses is now in town – Razorpay GST- compliant Payable Invoices. Have you used it yet?

TDR, MDR and Other Payment Terms Simplified

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So, there I am. A newbie in the world of geeks, trying my best to understand terminology I wouldn’t have been caught dead using just a few days back.

Yes, it’s KT (knowledge transfer) time at Razorpay and as the new kid on the content block, I need my grey cells to absorb as much of the payment-related terms as they can.

And that’s when it hits me. If understanding these bywords is hard for someone who’s been in the fintech industry for a while, I wonder what others go through.

So, whether you are a startup enthusiast, SME owner, or just a curious Lannister who likes to know things, here’s a simplified introduction to payments and some of the oft-used terms in the industry. I hope you find them useful!

For the purpose of this blog, let’s take a look at a simple payment flow and the terms associated with this:

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1. Aggregator/Gateway

A payment gateway is a technology that allows merchants to accept online payments from their customers. PayPal, WorldPay, MIGS are some well-known examples of payment gateways.

Now, customers have their own preferred method of making a payment. If I was buying my favorite beverage on ChaiPoint, I might pay for it via NetBanking, while somebody else might prefer a wallet or UPI.

A payment aggregator brings together all these various modes of payment in a single interface, thus allowing the user the flexibility of choice.

2. Authentication

When you are dealing with high volumes of money on a daily basis, fraud and risk must be minimized. The authentication process is what helps payment gateways verify that you are who you say you are and prevent fraudulent transactions.

As mandated by the RBI, every online transaction in India undergoes two levels of authentication:

  • Verification of payment details: This helps the payment gateway recognize which bank your card belongs to so that they can process your payment faster.
  • Verification of user or Authorization: This is done through the OTP/PIN/CVV. When you enter these correctly, you essentially tell the bank (and the payment gateway) that you are the person using the payment mode, and have initiated the request for payment.

3. Acquiring/Issuing Bank

Now, these are two very similar-sounding terms which can get a bit confusing at first. So, listen closely! Simply put, an acquiring bank is a bank which facilitates the transaction through its gateway. And the issuing bank is the one used by the customer when making a transaction.

Let’s say that I used my HDFC credit card for a purchase at ChaiPoint. The transaction was processed via Razorpay. The issuing bank – which gave me my card – is, therefore, HDFC.

Now, Razorpay has to channel my money to ChaiPoint, and it does so via the gateway provided by SBI. Thus, the acquiring bank, in this case, will be SBI. In a sense, the acquiring bank is the partner bank for the payment gateway.

**These terms become even more important when we talk of issues like refunds, or card holder’s verification. The onus is on the issuing bank to verify the details entered by the cardholder and validate the transaction.

4. Merchant/Nodal Account

As defined by the RBI, a nodal account is an account created by an e-commerce, payment gateway, wallets, and aggregators specifically in order to accept digital payments. A merchant account is a temporary virtual account that a business creates with a payment gateway.

For instance, Razorpay has a nodal account for accepting and processing payments. When a merchant signs up with Razorpay to use our services, we create dedicated merchant accounts for them, which act as temporary vaults for payments.

Every payment made by a user is first directed to the Razorpay nodal account and managed through the specific merchant account.

Once the funds are deposited into the merchant account, the merchant is free to do as they please with it. So, they can effectively choose to send the whole amount to any of their business’ current accounts, or use it to make payments to their vendors and other associates using a feature like the Razorpay Route.

Most Indian banks offer the facility to open a current account. You can also create one through a private service provider.

Now, I know what you are wondering about and here’s the answer to your query – a merchant account and a business’ current account are indeed two separate entities.

Provided by your payment processor, you can use the merchant account only to accept digital payments from your customers, and disburse it to your vendors. Your current account, on the other hand, is where funds from both cash and card transactions are added, and which you use to pay salaries and bills.

5. Capture

To help you understand this term better, let’s analyze the anatomy of the transaction I made at ChaiPoint earlier.

The process began with me choosing to make a purchase online. I picked my favored mode of payment, entered the details, and confirmed the payment.

Voila! I see that the money has been debited from my HDFC account and credited to Razorpay’s nodal account. It now needs to reach ChaiPoint’s account and for this to happen, ChaiPoint has to ‘capture’ the payment so that Razorpay knows where to forward it to – almost like sending out a virtual Thank You, and a confirmation that the money indeed belongs to them.

And if ChaiPoint does not raise this ‘capture’ request within a stipulated time (5 days from the date of payment) then the amount is automatically refunded to my account.

6. Settlement

Once the transaction has been ‘captured’, the payment gateway i.e. Razorpay has to ‘settle’ the amount with ChaiPoint. Note that the money has still not been transferred to ChaiPoint’s merchant account. This is because even though the authorization, authentication, and capture (in most cases) happen in real time, the fund transfer follows a separate cycle.

Banks transfer the amount to Razorpay’s nodal account first, and this usually takes 1-2 days. Razorpay then sends it to ChaiPoint’s merchant account, and this happens 2-3 days after the transaction was first made. This is known as a settlement

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So far, we have looked at the flow of money from the user to the merchant and understood the terminologies involved. Now, let us understand the process of reversing a transaction (as in the image above) and the terms used in this flow.

7. Refunds

Refund is as refund does. Come on, we have all done this at least once in our lives!

A refund is, in essence, a reversal of a transaction made by a user. In cases where the user is not happy with the goods or services purchased, or if they have paid for said purchase without actually receiving anything, they can ask for their money to be refunded.

The process is complicated and if you have ever wondered about it, here’s a wonderful blog that should clear all your doubts.

**Refunds and chargebacks may seem similar, but there is a difference in their machinations. A refund is initiated by the merchant (with or without a request from the user) because they failed to provide the goods/services agreed upon. A chargeback is a customer asking the issuing bank to forcefully remove money from the merchant account because the charges levied by the merchant are not valid.

8. Chargeback

The world of online payments is not just APIs and code. Every once a while, it can read like an interesting whodunit. Imagine a scenario where a customer has been charged for transactions on his credit card, which he claims he did not make. Is this a case of amnesia? Sour grapes, or a shopping affair gone wrong? Or, an intent to defraud? Whoa!

When a customer contests a charge made on their card, the issuing bank immediately issues a ‘chargeback’.

Again, in the example that we have used till now, let’s assume I ask my issuing bank to initiate a chargeback against ChaiPoint for transactions billed to my credit card. ChaiPoint will now get its best Sherlocks on the case to prove the validity of these charges within 15 days, failing which I am entitled to get my money back. End of story.

While as a payment gateway Razorpay is not directly involved in initiating chargebacks and refunds, we are a part of this digital infrastructure and do our best to resolve such issues quickly. Ideally, a business would like to stay away from chargebacks because it causes both loss of inventory (if you did make a sale), as well as money.

All the charges levied on a digital transaction are also levied in case of a chargeback.

**The Fair Credit Billing Act of 1974 (USA) is widely considered as the genesis of chargebacks. In India, this would fall under the ambit of the Consumer Protection Act, 1986.

9. TDR/MDR/Bank Charges

As we have seen till now, there are a lot of steps and entities involved in a successful online transaction. Since all of these entities offer a service to the user, they are entitled to a small fee which we have detailed below:

Bank Charges: This is the amount that the acquiring bank charges for providing card payment services. This rate is in guidance with specifications provided by the RBI (Reserve Bank of India). One of the components included is the ‘Interchange’ which is a fee given by the acquiring bank to the issuing bank for their card transactions.

Processing Charges: Your payment aggregator might also have to pay certain fees to other players in the loop like online wallets or banks for processing payments of a specific type. They would include this in the amount they charge you for every successful transaction.

TDR – Transaction Discount Rate: This is the amount that the payment gateway charges the merchant while transferring the money to their merchant account. This is specified by the gateway itself and includes the above charges. In India, this is interchangeably used in common speech with MDR (Merchant Discount Rate).

In conclusion, TDR = Bank Charges + Processing Charges + Taxes

**Payment Aggregators also provide additional services and products for managing your payments and hence on a case-to-case basis, may charge an additional service component.

And there’s more, but that’s for another time!

This obviously is not the end of the terminologies, but this is where we will stop for now. The Indian payments industry has been evolving rapidly and payment gateways have become essential for all businesses; whether online or operating out of a brick-and-mortar space. Hopefully, these jargons have helped you understand our world better!

Installing Razorpay Thirdwatch for WooCommerce in 5 Simple Steps

WooCommerce is one of the biggest platforms in the world for setting up an online store and rightfully so, owing to its seamless functionalities and ease of use. Thirdwatch from Razorpay is a plugin designed to detect fraudulent orders and reduce RTO for e-commerce businesses. If you haven’t been aware of Razorpay’s entry into the e-commerce industry, allow us to explain to you what we’ve been up to and how to install Razorpay Thirdwatch in 4 simple steps.

What is Razorpay Thirdwatch?

Razorpay Thirdwatch is a first-of-its-kind solution for fraud prevention for e-commerce businesses. Thirdwatch is an AI-powered platform that enables online sellers to prevent Return-To-Origin (RTO) orders and reduce losses up to 30 percent. Thirdwatch’s AI engine evaluates every order in real-time and provides actionable results to weed out orders likely to result in RTO. 

One of the small, yet significant components of Thirdwatch is Buyer Action, a feature that automates confirmation from customers. This can significantly reduce manual intervention while keeping fraud at bay. Read more about Buyer Action and how it impacts business here.

How does Thirdwatch’s AI-engine work?

Once integrated, the solution captures 200+ parameters from your online store analytics. It leverages an ensemble of AI algorithms and graph algorithms to flag an order with a high risk of RTO and enables the seller to either cancel or take corrective actions.

What happens to the processed orders?

The processed orders transition into the following two states –

  • Red: If the order is marked red, then the seller can either decline the order or take corrective actions like updating the address or getting a confirmation from the customer on order quantity, etc
  • Green: If the order is flagged green, then the sellers can go ahead with the usual flow and ship the order

What is the basis of screening orders?

There are a variety of parameters used to judge whether an order is risky or not. Following are the key parameters that play a critical role in screening the orders:

  • Shipping Address Profile
  • Device Fingerprint
  • IP Address Profile
  • Buyer’s History
  • Buyer’s Navigation Behaviour
  • Network Effects

Are there any customization options available?

Razorpay Thirdwatch comes with a horde of options for easy customization. You can also customise the Thirdwatch plugin at the time of integration by accessing the open-source project, available here

What are the steps to install Razorpay Thirdwatch for WooCommerce?

To make it easier than ever for merchants to install Thirdwatch, we’ve made a step-by-step guide to make your installation process quick, easy and hassle-free. Let’s get started!

Type 1: Direct Installation

Step 1: Download WooCommerce plugin from WordPress store using this link.

Step 2: On your WordPress dashboard, click on “Plugins” on the left tab, and search for “Thirdwatch” on the search bar on the right side.

Step 3: Install the Thirdwatch plugin and click on “activate”. Once you’ve activated, you can enter the Thirdwatch dashboard from Plugins–>Installed plugins–>Thirdwatch

Step 4: On the Thirdwatch dashboard, click on “Settings” to get your API Key. To generate an API key, enter your online store’s URL. 

Step 5: Head over to WordPress dashboard–>Thirdwatch and enter your API key–> Check “Enable Thirdwatch Validation”–> Click on “save changes” (details of API key given below as well)

Type 2: Custom Installation

Step 1: Download the Razorpay Thirdwatch plug-in from the WordPress Store.

wordpress plugin free install

Step 2: Now, click on the Plug-ins option in the left-hand bar on the WordPress dashboard. Under the Thirdwatch tab, click on activate.

Step 3: After successful installation of the plugin, click on the Settings button and check on Enable Thirdwatch Validation.

Step 4: To enter your API Key, you can sign up on the Thirdwatch dashboard for free. Upon signing up, you can find the API key in the Settings tab. Here’s a guide to fill the following details:

  • 🏁 Approve Status (Change order status when an order has been approved by Thirdwatch)
  • 🚩 Review Status (Change order status when an order is flagged by Thirdwatch)
  • ⛔️ Reject Status (Change order status when an order is rejected by Thirdwatch)
  • 💬 Fraud Message (Choose a custom message to be sent to the customer if their order has failed validation)

Step 5:  Head back to the WordPress dashboard–>Thirdwatch. Click on save changes, and you’re good to go!

Yes, it’s that easy to install Razorpay Thirdwatch! With all-new features like Buyer Action on Thirdwatch, it’s easier than ever to keep a check on fraud and the losses that come with it. 

Install Thirdwatch for WooCommerce today and supercharge your business like never before! Start saving money by optimizing your e-commerce operations with Thirdwatch. If you have any questions, make sure to get in touch with us here, and we’ll be happy to help you with them. 

Understanding the New Age Ways of Business Banking

business banking

Banking is the most fundamental form of managing finances. Whether your use is personal or official, you rely on banking and its services. And, if you have a business of your own, you definitely know the importance of business banking. Today, we’ll take a look at business banking and understand the new age forms of using these services. 

What is business banking?

Business banking is the process of a third party managing your company’s finances by providing loans, credit, savings, and current accounts that are especially designed for businesses instead of individuals.

Business banking helps keep your funds safe while providing you with a clear view of your business’s financial health. You also get additional perks that you won’t receive with a personal account.

Methods of business banking

Business banking can be carried out in a few ways.

A physical branch – This is the traditional way of business banking where are your transactions will be processed at a branch.

Online banking – This method of banking has become increasingly popular because of the ease it provides to the customers.

In online banking, neobanking and open banking have opened up a whole new avenue of services that primarily focus on experience while providing your business with the best possible solutions for money management. Let’s take a closer look.

What is neobanking?

It is a type of digital bank that does not have any physical branches. Unlike a traditional bank that has a branch at a specific physical location, a neobank is entirely digital and online.

Think of a neobank as a cluster of financial service providers who cater to today’s tech-savvy consumers. Without a license of its own, a neobank leans on bank partners to provide bank licensed services to its customers. 

How does neobank help with business banking?

Often, businesses have to deal with tedious, never-ending processes that involve disbursals and payments. These processes result in hours and hours of manual efforts due to buggy software, complex infra systems, and many other reasons. This complexity may further grow into fiddly money movement views. 

Business banking via neobanks helps solve all these problems.

  • Account creation is a breeze since neobanks are completely online; they don’t have a storefront. All it takes are a few minutes and a couple of simple steps on a smartphone
  • With friendly UI, you can provide the best user experience to your customers
  • Business banking with neobanks helps take your business to any part of the world
  • Neo-apps help manage your finances by providing you with an overview of your expenses and a savings goal that matches your needs
  • You can save 10x time because of reduced manual effort and instant payouts
  • Make, track, control, and analyse all forms of money movement, all from a unified platform
  • You can also track and manage money movement to vendors, customers, employees, and more, with the in-depth Financial CRM 
  • Use APIs that are easy to deploy and integrate banking into payments and accounting infrastructure
  • Make informed, impactful business decisions with off-the-shelf analysis on payouts mode 

Neobanks also provide current accounts since they support higher volumes of transactions. 

Read more: Everything You Should Know About Neobanking

What is open banking?

Open banking involves sharing financial information digitally and securely, with customers’ approval. The use of APIs enables third-party developers to build services and applications around a financial institution. This drives speed while keeping costs low when compared to traditional systems. 

A combination of rich bank data and disruptive fintech results in financial products that provide both businesses and customers with the best of both worlds.

How can you improve your business banking with open banks?

The utilisation of APIs by banks has become very progressive all around the world, and for good reasons. With API banking, innovators have more flexibility to provide the best features and services to streamline financial services, thereby creating a surge of competition and innovation in fintech products.

Use cases for API banking

The most common use-case for API banking is payouts.

Lending: In the last year, the consumer lending industry saw a meteoric rise. And, with increased competition, the speed at which loads are processed became a top priority.

Today, RazorpayX has helped many lending companies reduce the average time to process a loan from 3 hours to 30 seconds.  

Gaming: Gaming is an industry in which instant gratification reigns supreme – winners want to claim their prize instantly. 40% of the real-money gaming industry in India uses RazorpayX to disburse winnings to their users.

Open banking provides solutions for all your business banking needs.

  • Have more transparency, knowledge, and options when it comes to managing your finances, and find a tailored solution that fits your business case 
  • With real-time capabilities, get enhanced visibility of cash flow, cash position, and more, across currencies
  • Reduce administrative hurdles with regard to managing your finances like applying for a business loan, checking your creditworthiness, and more
  • Be in control of your data as you decide how to use it or who gets to access it
  • Set targets on savings and expenditure, ration your finances logically while being able to account for each and every financial activity
  • Have a single view of all your finances while being able to control, track, and analyse all financial movements, all in one place

RazorpayX – business banking experience like never before

With RazorpayX, businesses can manage their entire financial operations and make timely payouts using our sleek dashboard or robust API.  Businesses like CureFit, MPL, Dunzo, and others use RazorpayX to make payouts at scale via API while keeping costs low.

This also helps them ensure their customers and partners are happy. RazorpayX Current Accounts takes business banking further by including all standard banking services like debit cards, accounting statements, cheque books, and more.

Conclusion

Surely, you’d want to manage your business’s money better, with more control and efficiency. Neobanking and open banking can help streamline and automate your business banking at scale.

UPI Steals the Thunder in 2019!

2019 was a big year for fintech, especially payments. We saw the rise of many innovations that led India on its journey to becoming one of the most advanced countries concerning digital payments. And, UPI is certainly an innovation that comes to mind when we think fintech.

With the festivities in the air, we wanted to mark the beginning of the new year with a recap of all the cardinal developments of UPI in 2019, along with some noteworthy insights.

Razorpay oversees payments from numerous merchants like IRCTC, Swiggy, BookMyShow, and 8 lakh+ partner business. We’d like to quickly mention that we’ve considered P2M (Person to Merchant) UPI transactions to derive the insights in this report, all of which are based on the transactions made on the Razorpay platform

UPI in 2019 – a snapshot

2019 was a remarkable year for UPI. We saw many use cases for the payment mode, observed growth in its adoption and analyzed volumes of UPI transactions throughout the year to bring these insights to you.

  • For the first time ever, UPI overhauled cards (debit & credit) in September and became the most preferred payment mode 
  • The most loved UPI app in all of India was Google Pay, displaying colossal adoption and growth rates of 337.73%
  • Karnataka was the most digitized state through 2019, contributing the highest chunk of digital payments from all over India
  • Bangalore recorded the highest number of UPI transactions from all over India
  • Food and Beverage (29%) industry saw the most number of UPI transactions in 2019, followed by Financial Services  (12%), and ravel industries (11%)

The upsurge of UPI

UPI was innovated by NPCI (National Payments Corporation of India) in 2016 to help Indian consumers make payments in real-time. What started as a mobile-first P2P (Person to Person) payment mode, quickly evolved itself to become the preferred merchant first platform. 

We looked through the UPI transactions made over the years. Here are some findings.

UPI transactions 2019

From its innovation in 2016, UPI set foot into 2017 with a bang. Considering all the UPI apps providing cashback, scratchcards, and other offers to promote adoption, the payment mode grew 95 times from 2016. We also saw several players competing to become the most used UPI app, which we will get to in a bit.

When we thought it couldn’t possibly get any better than the 95x growth from 2016 to 2017, 2018 saw 48 times the growth in 2017. 

Although the offers provided by the UPI apps played a sizable role, we cannot rule out the change in consumer behavior in recent years. Consumers preferred online payments to be quick, easy and immediate. Compared to other payment modes, UPI was far simpler to use. 

The authentication process was straightforward, and the best part – consumers didn’t have to carry anything specific (other than their phone, of course) or remember long numbers. The ease of carrying out a UPI transaction was far more satisfying. 

At the beginning of 2019, most offers turned into ‘better luck next time.’ But that didn’t slow UPI down one bit. The year noticed ten times the growth from 2018, still making a massive impact since the payment mode was widely used all over the country.

The ascension of UPI in 2019

Now, let’s take a look into some numbers that show how UPI performed throughout 2019.

growth of UPI

UPI had already gained a firm ground as it made into 2019. In the JFM quarter, the payment mode experienced an uptick of 128% from the previous quarter in 2018. Next, as it made its way to the AMJ quarter, the growth percentage increased by 71% from JFM. 

At 26% growth in JAS from the previous quarter, UPI displayed steady growth throughout, venturing into OND with a propelling growth of 36%.

UPI vs other payment modes

While we paid utmost attention to observing UPI, we didn’t forget the other payment modes. Let’s take a glance.

UPI vs other payment modes

UPI was the most preferred payment mode towards the 2nd quarter of 2019, contributing the most number of digital transactions when we compared month-on-month. When we pooled in the data from throughout the year, we observed that cards took precedence over UPI at 45.73%.

UPI was a close contender, taking second place at 37.69%, followed by netbanking at 11.43%.

Since cards and netbanking were close to UPI in terms of volume, we wanted to take a closer look.

UPI vs debit cards

UPI vs debit

  • In JFM, debit cards were preferred over UPI by 0.65% and the trend continued in AMJ, where debit cards were used more than UPI by 0.91%
  • This changed in JAS as UPI became the preferred payment mode over debit cards by 1.44% and took over cards in OND as well by 1.59%

UPI vs credit cards

UPI vs credit

Unlike debit cards, UPI stole the show throughout the year and kicked credit cards to the curb as it transitioned into the most preferred payment mode.

UPI vs netbanking

UPI vs netbanking

Remember the time netbanking was the most convenient way to transfer money? Not anymore! After overhauling cards, UPI stood over netbanking as well, all through 2019.

UPI transactions – a geographical split 

We analyzed the UPI transactions made from all over the country throughout 2019. Here are some highlights.

geographical split

As always, Karnataka claimed its position by contributing the better chunk of UPI transactions made in 2019, at 27.82%. Next up, 15.05% of the total UPI transactions were made in Maharashtra. Andra Pradesh and Telangana pitched in another 11.02%. Further, the NCR region contributed 8.06% of UPI transactions.

This trend remained the same throughout the year as well, when we observed UPI transactions month-on-month.

Now, let’s take a look at a city-wise split.

Again, like many other times before, Bangalore was our #1 contributor as 38.4% of the total UPI transactions were made in the city. Hyderabad followed the lead at 13% while Pune handed in another 9.7%.

NoteQ: Why is Bangalore’s contribution higher than Karnataka’s?

A: The state-wise split is different from the city-wise split. We considered the whole country to provide state-wise data, whereas we considered 15 cities for the city-wise data.

The elevation of UPI apps

So, we learned about how UPI did in 2019. Now, let’s understand how some of our favorite UPI apps fared.

UPI apps growth

Based on all the UPI transactions made in 2019 on the Razorpay platform, Google Pay took center stage as the most preferred UPI app. The app saw a growth of 337.73%, which is very significant, considering the adoption rates.

PhonePe grew the most at 857.22% followed by PayTM at 827.68%, while BHIM app expanded by 108.68%.

Bank UPI apps also showed promising growth throughout 2019. Here’s a look.

UPI bank apps

What’s next for UPI?

UPI has been one of the most promising fintech innovations. It didn’t fail to disrupt the Indian payments space, creating an impact we didn’t anticipate. 

We expect UPI to permanently dethrone cards and netbanking to become the most preferred payment app in 2020. Based on our analysis, we also foresee an ambitious and competitive market for UPI in 2020, where Google Pay may continue its top position. 

Unlike before, Indian consumers are more comfortable using UPI for most digital transactions. We look forward to a paradigm shift towards the consumer confidence towards making larger value transactions via UPI.

We also predict a rising trend in the adoption of UPI in tier 2 and 3 cities.

We’re very excited to continue our analysis on UPI transactions to see new patterns and trends in 2020. 

(Note: All findings are based on the transactions on the Razorpay platform from 2016 to 2019.)

The Fingerhold of Recurring Payments in India

Lately, India has seen an unparalleled expansion of online businesses. With the online commerce industry penetrating the Indian market by 74%, close to 329.1 million people are projected to buy goods and services via online stores by 2020. While consumers have a mountain of options to choose from, the need for more innovative consumption models also arise.

Why?

  • Convenience dictates consumer behavior. The ease of simply tapping a button to buy anything from anywhere, at anytime, is simply not beatable
  • Consumers prefer “accessing” something over “owning” it
  • Each consumer wants unique and personalised offerings, where they can tailor their experience
  • Consumers demand flexibility, not only “what” to consume, but also “how”

This has led us to where we are now with recurring payments.

The recurring payments model has a far reaching impact. It creates opportunities for product differentiation, taps consumer segments, and improves customer loyalty. And so, it’s no surprise that its growth is catapulting.

subscriptions data india razorpay recurring payments

Based on recurring payments on the Razorpay platform, here are a few highlights.

subscriptions data india razorpay recurring payments

Earlier in FY18-19, recurring payments began to gain popularity. Based on transactions on the Razorpay platform, there was a 78% growth in Q1 as many businesses got onto the bandwagon. What started out with standing instructions on credit cards soon got extended to debit cards, and in some cases, to netbanking as well. Physical NACH got transformed to eNACH.

All of this led to recurring payments receiving an even better response in FY18-19 growing by 96% in the second quarter of that year. By FY19-20, recurring payments have gained strong ground in India. Although Q1 and Q2 seem to show a smaller growth percentage, the growth is still significant because by then, most businesses were already using a recurring payments model.

Now, we anticipate recurring payments to sprout on all cards and UPI as well, which will further fuel the growth of this mode of payment.

“India is a key part of our international subscription growth.”

– Reed Hastings, CEO, Netflix

subscriptions data india razorpay recurring payments

Government initiatives have also been helping businesses move to the recurring payments model.

RBI opens up recurring payments on cards – A step ahead for digital payments

In September 2019, RBI turned out with a circular to engender the utilization of cards in making recurring payments. The circular says that starting September, buyers will have the option to utilize their cards to make recurring payments to businesses through e-mandate.

The e-mandate and additional factor of authentication (AFA) should be done just once at the hour of the principal transaction. All transactions taking place, later on, will be completed consequently without the prerequisite of rehashed AFA.

RBI has set a cap of ₹2,000 for such transactions and notified that they will be permitted on debit and credit cards, and prepaid payment instruments (PPI) including wallets.

This will empower consumers, just as traders, to significantly profit by getting rid of the issue of authenticating transactions on numerous occasions.

The RBI circular likewise specifies that consumers will be given the aid to set recurring payments for a predefined fixed value or a variable value. To guarantee that the cardholder is protected, they will have the option to determine the maximum transaction value as well.

Further, to defend the interests of the consumers, RBI said that they will get a notification through SMS or email a day prior to when the recurring transaction is to be completed. This notification, carrying details regarding the amount, date and purpose behind the transaction, will enable cardholders to drop the exchange, on the off chance they wish to do so. Obviously, the cardholder can pull back the e-mandate anytime too.

This facility will go far in further advancing digital transactions in the nation. All the more so, consumers won’t be required to pay any additional charges for setting an e-mandate for recurring payments through their cards.

eMandate for netbanking and debit cards

In April 2019, NPCI received final approval by RBI for the full-fledged implementation of eMandate for netbanking and debit cards. NPCI informed all the banks to take immediate steps and implement both eMandate variants within June. While the limit for each eMandate is set at Rs 1 lakh, the organisation is to review the limit.

This facility will allow businesses to greatly improve the customer experience while solving collection-related problems at the same time since eMandate will allow them to take a one-time consent from the customer to debit them subsequently.

UPI 2.0 with overdraft facility

The launch of UPI 2.0 in August 2018 was expected to bring many benefits to the payments landscape. In addition to current and savings accounts, consumers could have also linked their overdraft account with UPI to instantly make their transactions while the benefits of an overdraft account are retained. While the launch has not happened yet, it will be a gamechanger for recurring payments, given the immense popularity garnered by UPI in recent times.

What’s in store for recurring payments

“We believe that the recurring payments model will benefit not only customers, but businesses as well. With rapidly evolving consumer needs, this model will be a game changer for the Indian economy. Benefits like reduced transaction costs, convenience of upgrading or downgrading and reduced amounts of waste from unused assets will drive the adoption of recurring payments.”

– Harshil Mathur, CEO, Razorpay

Razorpay offers a full range of payment solutions for Recurring payments which include – recurring on cards, on bank account via eMandate or eNACH and Physical Mandate.

Interesting use cases for recurring payments on the Razorpay platform

 

recurring payments subscriptions trend data razorpay

Explore Razorpay Subscriptions.

2019 – The Year That Was for Razorpay

2019 year end review razorpay

As 2019 draws to a close, it’s a good time to sit back and relive how the year has been for us. In many ways, 2019 was a big year for not only Razorpay, but the fintech industry as well. 

We have captured how the year was for us in the infographic below, but allow me to talk about some highlights here as well.

  • We served 960k plus businesses on our platform this year
  • IFTA announced us as the most innovative payments startup and we made it to Y-Combinator’s list of top 100 companies as well
  • Our co-founders, Harshil Mathur and Shashank Kumar, brought home the Young Alumnus Award 2019 award from their alma mater, IIT Roorkee
  • Razorpay acquired two businesses this year – Thirdwatch & Opfin 
  • We processed payouts volume worth $3 billion on RazorpayX

Our product portfolio also grew by leaps and bounds, notably:

  • Payment Pages allows businesses to accept payments without a website or app
  • Support for freelancers, consultants and unregistered businesses
  • Current accounts and corporate credit cards on RazorpayX 

Personally, I love the fact that we were able to save transaction time worth nearly 6 years through our card saving feature! And of course, we pulled off the country’s biggest fintech event in FTX 2019.

So yes, 2019 has been an outstanding year for Razorpay. As we set foot into the new decade, we have big plans laid out to help businesses #OutgrowOrdinary. Through our acquisitions, we’ll help e-commerce businesses fight fraud and streamline their payroll processes as well. 

But until then, thank you for your support and faith in us. Here’s wishing you and your business a very happy new year, filled with boundless growth opportunities.

2019 year end review razorpay

How Startups Can Accept Online Payments in India

Starting an online business has never been as lucrative as it is today. The number of startups in the digital space have grown by leaps and bounds over the past couple of years. Some might say it’s a fad, but we believe in the entrepreneurial spirit of India. It’s a great time to start an online business, especially since India is embracing digital payments more and more. 

Startup entrepreneurs usually focus on various business aspects like building an attractive and functional website, ensuring the supply chain is reliable, and more. But apart from these, online businesses should also focus on the best way to collect payments. 

Online digital payments can be accepted by businesses through multiple ways, each with its own set of advantages and challenges. The key channels are:

1) Integrating with a bank’s payment gateway – A payment gateway provided directly from a bank (also called a second party payment gateway) allows online businesses to process payments via debit cards, credit cards and net banking and is supported through platforms such as Visa, Mastercard and American Express, among others. 

From the cost standpoint, businesses will need to pay an initial setup fee and transaction fees or TDR (Transaction Discount Rate), which is a percentage of the transaction value for all transactions processed via the gateway.

While the whole system looks straightforward in principle, integrating with a bank’s payment gateway is often challenging and tedious for startups.

2. Integrating with a third-party payment gateway – An easy and efficient way to process online payments is through a third-party payment gateway. Such payment gateways also collect TDR on transactions while setup costs may or may not be applicable, depending on the solution provider. 

Similar to banks, these gateways also facilitate payments made through debit cards, credit cards and netbanking. In addition to this, many solution providers, like Razorpay, also allow merchants to process digital payments through multiple channels like prepaid digital wallets and recently, even UPI and several digital wallets. This way, online businesses have the agility to accept payments through practically every online digital mode.

While on the face of it, third-party payment gateways seem similar to bank payment gateways, they are in fact far more user friendly, accessible and easy to integrate, especially for first time startups.

Now that we know the basics of the two channels, let us see how one compares with the other:

Second party payment vs third party payment gateway

Second Party PG Third-party PG
Setup costs
One time cost to integrate website with the PG
High setup costs Low/No setup costs
Application process
Includes documentation and approval time for PG access
Lengthy process. Average application and approval cycle is around 3 months Quick approval and online onboarding process. Average time for onboarding is 5-10 days
Documentation
Mode of document submission
Documentation needs to be submitted in hardcopy, making the process cumbersome Paperless submission of documents making the whole process easy and efficient
Technical integration
Ease of integration and mode of integration
Difficult to integrate;requires significant time and effort from the merchant’s tech team Easy and simple integration with minimum coding efforts. Some gateways allow for integration within a few hours
UX
User experience and user interface
Complicated UX with limited or no scope for merchant customization. User friendly and intuitive UX that also allows for merchant related customisation
Issuance of refunds
Handling of customer refunds
A manual refund and verification process is to be followed to issue refunds to customers Merchants can easily refund transactions directly from the dashboard through a click of a button
Card saving
Cards once used by customers are saved automatically for future use
Does not facilitate card saving, hence not optimised for superior customer experience Allows for card saving feature across multiple cards, thus enhancing customer experience that might lead to increased customer loyalty
Risk Engines
System level risk identifiers that aim at curbing fraudulent/risky transactions
Does not provide inbuilt risk engines that reduce the occurrence of online frauds Provides system level risk engines that mitigate the chances of online frauds
Co-branding,
The opportunity to use brand name and brand design for the payment checkout process
Does not allow for any co-branding/brand placement or customization in the payment, checkout process Allows for various levels of customization and brand placement in the payment, checkout process
PCI DSS certification
Official information security standards required for handling online card transactions
Requires merchants to be certified to PCI DSS in order to access the payment gateway Merchants can easily access the payment gateway without individually applying for PCI DSS certification (as the PG acquires the risk involved in the payment process)

Thus, from this comparative analysis, startups looking to accept digital payments should integrate with third-party payment gateway providers given the significant advantages gained at minimum effort.

Accepting payments beyond a payment gateway

Setting up a payment gateway works for online businesses that have a website or an app. But what if you don’t? Does that mean you won’t be able to accept digital payments? Nothing could be farther from the truth.

The Razorpay payment suite offers solutions for businesses to accept payments even without a website or an app. Here’s how.

Get paid instantly with Payment Links

If you don’t have a website or an app, you can easily create a Payment Link from your Razorpay Dashboard and send it to your customers via email, SMS, messengers, chatbot, etc. 

Even with a Payment Link, your customer can choose from a plethora of options to complete the payment. Razorpay Payment Links can be used by businesses without a website, as well as businesses with a website that require an alternate payment method. It is a smart way to collect payment, which comes with features like bulk upload and partial payments.

Check out Razorpay Payment Links

Collect payments with custom Payment Pages

Razorpay Payment Pages allow you to create a custom-branded payment page to build an online store in minutes. You don’t need coding expertise to get your store online in a matter of minutes.

With Payment Pages, you can list multiple products, apply smart purchase controls, meet your branding requirements and track your payments with ease. Payment Pages are used by businesses to sell event tickets and products as well as to collect donations and fees. 

Get started with Razorpay Payment Pages

Complete payment solution for freelancers

You don’t even have to be a registered business to accept payments with Razorpay. We support unregistered businesses, freelancers, consultants and professionals as well. 

With quick onboarding and support for multiple payment modes, freelancers never had it as easy as this to accept payments online. Our support for freelancers and unregistered businesses also enables them to create GST-compliant invoices to get paid instantly.

Signup to accept Freelancer Payments

Processing payments is one of the most integral aspects for online businesses today. It is the critical and final step that ensures the success of a product or service. Thus, in addition to merchant-level benefits, payment solutions should also be end-customer friendly and provide checkout experiences that are intuitive, efficient and secure.

At Razorpay, we provide the entire checkout experience on the merchant page with no external redirects, thus providing not only a quick, cohesive payment experience, but also very low dropoff rates.

In today’s crowded online ecosystem, startups require solutions that are many solutions wrapped into one tight and efficient one. Third-party payment gateways like Razorpay do exactly that.

Further reading: How to Choose the Right Payments Solution

Introducing Buyer Action on Razorpay Thirdwatch

ecommerce fraud prevention solution

The e-commerce market in the world is growing at a rate faster than we can comprehend and with unforeseen growth, comes unforeseen responsibilities. Studies show that e-commerce sales worldwide are predicted to reach $632 billion by 2020!

But, do you know what’s bigger than the market itself? It’s the implications of fraud that come with it. As the trade grows, it’s only fair to assume that the online market has become a breeding ground for online fraudsters to innovate their tactics.

E-commerce fraud is one of the least talked about things for an industry so big. Most merchants assume the losses or fraud instances experienced during their stint is just “cost of doing business”. 

Related read: Is 30% RTO the Cost of Running an E-commerce Business?

A closer look at e-commerce frauds

Before we understand the impact of buyer action on an e-commerce business, it’s essential to evaluate the problem statement. So, let’s dive right in!

Here’s the thing– e-commerce businesses don’t have it easy, especially the small ones. In a hypercompetitive e-commerce environment, the only way to stand out is to offer exceptional customer satisfaction.

To meet with the mounting expectations of customers, merchants often don’t have a choice but to ship risky orders, in the fear of losing out on a genuine customer. This can often put a toll on the merchant’s budget, as Return-To-Orders take up the cost of logistics back and forth, often leading to losses. 

Here’s how e-commerce companies lose money in processing these orders:

  • Forward & reverse logistics
  • Blocked Inventory (Items stuck in transit)
  • Physical quality check and re-packaging of returned items
  • Increased probability of damage to fragile items, and hence more money spent in shipping them
  • Operations costs in processing these orders

We took the time out to check out the RTO numbers and their true impact on business. Here’s what we found– in case of COD orders, the percentage of RTO orders can be as high as 40 percent!

So, how does this impact the merchant? 

With e-commerce and internet advertising booming, merchants have begun to experience a large influx of orders online. This does not, however, translate to all of them being genuine.

When it comes to small businesses, merchants waste a lot of money in the process of “confirming” the order. This means that they will have to send out communication from the company in the form of emails, IMs and such to double-check whether the customer actually intends to make a purchase. 

This can prove to be an expensive exercise for merchants to tackle. We took the time out to speak to a few merchants on how much they spend on communications and we found out that they shell out a shocking INR 5-10 per communication!

Calculating risks of inefficiency

For a merchant to trigger the communication activities for the customer in question, it’s important to first calculate the risks involved. The best way to approach this problem is to profile your customers and observe their actions on your website.

This can be consolidated into a “risk score” of sorts– an accessory that lets you determine the authenticity of your customer’s behaviour. A risk score can be modelled from a variety of data points, namely, the number of orders placed, attempts to cancel, cancelled orders, etc. This will help map out the personality of the user in ways that can supercharge the verification process. 

In a fraud detection software like Thirdwatch, EVERY user is assigned a risk score, which is based on the historical data across websites. This risk score is displayed at the decision-making crossroads, where the merchant is expected to take the order forward or reject it.

Find out more: Check out how we’re making life easier for e-commerce merchants

Devising a solution to keep track

When the basic cost of communication is higher than ever and fraud shows no signs of stopping, what is the way out?

Introducing “Buyer Action” from Thirdwatch- a product feature that solves all the above problems seamlessly. With buyer action, merchants can now track the status of confirmation with just a click. Allow us to explain that in detail.

As we mentioned earlier, merchants don’t have it easy. Imagine having to manually filter out risky orders and have a team of people call them up individually to confirm every order in question. This can be extremely monotonous and time-consuming, not to mention incurring the expenses involved.

The “Buyer Action” feature on the Thirdwatch dashboard solves the solution with a single button instead. The merchant simply has to click on “Request confirmation” and communication is automatically triggered in various forms. The different forms of confirmation that are sent out are:

  • IVR call
  • Email confirmation
  • SMS

A message is sent along with a link to the order page, where the customer can choose to accept, modify or cancel items altogether. This feature also allows the customer to remotely make changes, leaving no place for time constraints or miscommunication.

With this feature, not only is the humongous task of following up completed in mere seconds but manual intervention is also significantly reduced.

The true impact of Buyer Action

With RTO rates up to 40% for e-commerce merchants on an average, one can only imagine the efforts that go into reducing it. For smaller merchants, it can be worse as they are required to deliver products blindly to build credibility. 

Thirdwatch aims to make life easier for e-commerce merchants in terms of effort, credibility and human intervention. With an advanced Machine Learning algorithm, Thirdwatch helps detect fraud orders, impulse purchases, non-deliverable addresses and flag risky transactions in real-time to improve profitability.

With a feature like Buyer Action set in place, the merchant does not have to worry about intervening into the specifics of every order. 

What’s better? Buyer Action helps save a lot of money, too!

Buyer Action helps merchants cut costs while communicating with the customer and provides a seamless structure in place for any last-minute follow-ups, all while making sure that customer satisfaction isn’t compromised. With a smooth automation mechanism set in place, you can be sure to focus on the important things, while leaving customer delight to us. 

So, are you game? Join hundreds of merchants in using Razorpay Thirdwatch today and scale your business like never before!

UPI Continues a Strong Game, Albeit a Slight Drop in November

UPI november data Razorpay

UPI has become somewhat of a default payment mode for most people in India. In the last few months, UPI recorded the highest number of transactions, overhauled cards, and other payment modes, and became the most preferred one. If you’re interested to find out what happened in November, hang on tight. 

With 800,000 businesses onboard, Razorpay oversees huge volumes of P2M transactions every day from an umpteen number of businesses like BookMyShow, IRCTC, Swiggy, and more. To gather insights, we have only considered P2M transactions of UPI.

Note: All insights in this story are based on transactions held on the Razorpay platform

UPI transactions in the last 6 months

Like we mentioned earlier, UPI has been climbing up bagging the most number of transactions. But in November, UPI saw a slight dip as compared to October, although it was almost on par with September in the number of transactions (saw a growth of 39.56% growth from August to September). 

UPI november data Razorpay

UPI vs other payment modes

Although UPI didn’t see as many transactions, it still remained to be the most favored by Indian consumers.

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  • UPI contributed to 42.61% of the total number of transactions that were carried out on the Razorpay platform
  • Cards made a comeback from the previous month by contributing a bigger chunk of payments at 41.87%
  • The third most popular payment mode amongst Indian consumers was netbanking, at 10%

UPI app-wise contribution

Since UPI was the preferred payment mode in November, let us understand how some of the UPI apps contributed.

UPI november data Razorpay

  • Again, Google Pay was the number 1 player in the market, contributing to 56.61% of the total UPI transactions
  • PhonePe held its position from the previous month by handing out 26.26%
  • PayTM was next in line at 6.96%

UPI apps – a closer look

Contributions aside, let us jump in to understand how much our UPI apps grew in November.

UPI november data Razorpay

  • Unlike before, the ICICI UPI app showed the highest growth in November, at 8.47%, followed by Axis and HDFC UPI apps at 6.24% and 5.17% respectively
  • Google Pay although being the most used UPI app, fell by 19.15%
  • PhonePe and BHIM also took a downward plunge by 3.92% and 3.99%

UPI transactions – a geographical split

As always, we wanted to see where all the UPI transactions came from. Here’s what we found.

UPI november data Razorpay

  • 29.92% of the total UPI transactions made in November came from Karnataka
  • Maharashtra contributed 13.98% while Delhi and NCR pitched in 7.9% 

While we are still looking into where UPI transactions, let us take a look at the tier-wise split.

Will UPI make a comeback next month?

UPI has been at the forefront of fintech innovations, pushing a great deal of digital payments in the last few years. The impact UPI has made is huge, reaching so many people from across India and enabling them to make digital payments.

Let’s dive deep next month and draw new insights from the transactions on our platform.

See you then!

The Easiest Way for Freelancers to Accept Payments Online

Accepting payments for freelancers

The definition of a dream job is not what it was a few years ago. Gone are the days when a “dream job” was working in a nice office or a well-established company. Today, the so-called dream job is to freelance. It’s to do one’s own thing and work on one’s own terms. 

It’s not surprising then that the Indian workforce is swapping the security of a 9-to-5 job for the flexibility of freelancing. Millennials and Indian workers facing significant lifestyle changes such as motherhood or adapting to newer lifestyle choices like working remotely have started to adopt more flexible and empowering ways to work. 

Here are some statistics that paint a clear picture – 

  • It is predicted that freelancers will contribute to 50% of the nation’s workforce volumes by 2025
  • The Indian freelance market size is estimated to touch USD 25 billion by 2025
  • 60% of Indian freelancers are under the age of 30 years today
  • On average, Indian freelancers work up to almost 40 hours a week; 160 hours a month
  • The average income of freelancers across India is Rs 20 lakh per annum; 23% of them make over Rs 40 lakh per annum

However, despite the fast growth and healthy predictions for the future, the reality is that freelancers and unregistered businesses within this ecosystem are facing numerous challenges. 

Problems freelancers face

While talking to our existing merchants as well as the potential ones, it came as a surprise to see the kind of hassles these users were facing and the need to build a unique solution for them. Here are the top problems that the unregistered businesses face on a day-to-day basis:

Lack of knowledge around GST  

To some, it seems that GST is just for registered businesses but nothing could be farther from the truth. Unregistered businesses and freelancers also come under GST laws. This raises the demand for freelancers to create GST-compliant invoices. 

Freelancers are usually required to raise GST-ready invoices for their customers and their lack of knowledge in creating these invoices becomes a real challenge in the way they accept money.

Irregular & late payments

For freelancers, payment cycles are always irregular and this can create an unpredictable financial crunch. To make things worse, freelancers often have to deal with late payments and in some rare cases, clients renege on payment commitments. In fact, studies show that 58% of freelancers have experienced not getting paid at all for their work. They end up spending inordinate amounts of time following up with clients for unpaid dues. 

Inability to showcase their brand

Branding isn’t just for large organizations or registered businesses. Branding is the secret sauce that aids in the success of a business of any size. And for freelancers, this becomes more important than ever.

While most freelancers have a basic social media presence, they lack the technical know-how to be able to amplify their digital brand presence through websites and customized landing pages. 

This creates a significant difference in the perceived value that a freelancer brings to the table compared to a registered business. 

Absence of seamless digital payment solutions

The most common way for freelancers to accept money today is through cash or bank transfers. In both cases, management and reconciliation becomes a big headache, this problem is especially more pronounced for unregistered businesses that have large customer bases or handle significant volumes. Think of a homepreneur who sells homemade pickles around town – reconciling payments received could take up a significant part of their time, which could be better spent on growing their business.

A holistic solution for freelancers to accept online payments

We are more excited than ever to announce the launch of our much-awaited product – Razorpay for Unregistered Businesses. Whether you are a freelancer, teacher, boutique owner or a professional, now accepting payments is going to be easier than ever. We promise!

Our research of the freelancer universe-spanning our existing customer base, social media and platforms such as Product Hunt has unearthed insights that we have channelled into our new product offering. 

Presented below are the key elements of our new product – 

Payment Links for quicker settlements

  • Say hello to accepting payments via WhatsApp, email, Instagram, Facebook, SMS & more
  • Send quick payment reminders and accept recurring payments

accept payments via social media

An instant personalised page for better conversions

  • Create a storefront with zero-coding and start selling, even if you do not have an app or a website
  • Add this Payment Page to your Facebook, Instagram or any other social media page and accept online payments instantly

create a payment page

One-stop solution for easy GST-ation

  • Just add GST, discounts and shipping details to a single invoice and the calculation will be done automatically for you
  • Send these invoices through any channel and get paid via credit/debit cards, netbanking, UPI & wallets 

GST invoicing

Does this look like a tool designed for you? Sign up today and get started in a matter of minutes.

At Razorpay, all we do leads to a single aim: asking our customers to leave their payment worries to us while they plan and unlock growth for their business. With this launch, we are looking to empower the gig economy to work better, faster and more efficiently. 

Freelancing is no cakewalk and we’re here to help you ride over the bumps with ease.

Get started with Razorpay today!

Introducing the Payment Links Chrome Extension By Razorpay

Introducing Payment Links Chrome Extension By Razorpay

With all the ease that online payment can bring, there still remains hope and scope of hustling to keep making it better. That said, in the online ecosystem, payments are not just limited to monetary exchange. They contribute to aspects like conversion rates, trust and loyalty as well.

With multiple channels of online payments opening their gates in the market, there is a need for businesses like yours to reduce the number of hops and leave payment worries to solutions providers like us! With this, here comes one of the most simplified payment solutions: Razorpay Payment Links.

What is a payment link?

Razorpay Payment Links is the easiest way to accept payments from your customers 24*7. Simply put, payment links are easy-to-use, versatile and mobile enough to manage all your online payments. 

Creating a payment link is as simple as it could be! Just follow these steps: 

  • Login to the Razorpay dashboard and create a payment link via API or the dashboard
  • Share the payment link via SMS, email, WhatsApp etc
  • Let your customers pay you via their preferred options (credit cards, debit cards, netbanking, UPI, wallets etc.)
  • Get notified once the customer completes the payment

Here are the perks of using Razorpay Payment Links for your business:

  • Works even without a website: Don’t have an app or website ready yet? Collect online payment by these easy-to-use payment links
  • Alternative payment option: These versatile payment links can be a quick replacement for all your cash-on-delivery customers
  • Easy chatbot integration: Integrate payment links with your chatbots so that your customers can enjoy a seamless experience
  • Social media sharing: Make the best of social media platforms by using them to send these payment links and get the amount directly in your bank account

That’s not all. Here are a few things that make Payment Links the best and the easiest way to accept online payments:

  • Customers don’t need an app
  • All payment options available
  • No monthly limits
  • Easy tracking via a powerful dashboard 

Different use cases of Razorpay Payment Links

When a customer is making an online purchase, the step where the payment comes into the picture is one of the most crucial ones. Razorpay Payment Links can help you win over your customers and reduce the number of drop-offs. 

Here are some of the use cases of Razorpay Payment Links:

  • The link can be created and used by any business, no matter the size. Even if you don’t have an app or a website, you can easily create and share payment links and get amount settled directly in your bank account
  • These links reduce the hops and minimizes friction points. Let’s say you are a car rental service provider. A prospective customer calls you to enquire and plan a journey. Fortunately, the customer sounds satisfied and you sense a higher chance of him or her proceeding with you. But chances are that after he or she might get distracted or be unsure. There, you can create and send the payment link via SMS, WhatsApp, email etc. within seconds while they are on call and have a successful conversion right there!
  • Payment links are best when it comes to providing quality service to your customers. Let’s say, unfortunately, a payment method is failing and your customer is unable to complete the transaction. You can easily choose to create and send these payment links to them and they can pay as per their convenience. The best part is, you can track the status of the payment easily.
  • Another use case is for businesses that provide home delivery services. There can be multiple cases when the customer is not at home and want the parcel to be handed over to a neighbour or, he or she does not have enough cash. In such a situation, payment links can be a big help. The deliverer can simply create the link there and the customer can pay via a range of options from anywhere, anytime!

With this, we are excited to roll out one of the finest features of Payment Links.

Razorpay Payment Links Google Chrome extension

Razorpay now powers a Chrome extension to accept payments via links! 

Sounds super-simplified, doesn’t it? Read on to know more.

The Razorpay Payment Links Chrome extension lets you easily create and share a payment link with your customers right from your browser window. The only prerequisite is to have an active Razorpay account. 

Simply follow these steps to get started:

Installing the extension

To install the extension:

1. Visit the Chrome Webstore and add the Razorpay Chrome Extension

Payment Link Chrome Extension

2. In the Add ‘Razorpay Payment Links’? dialogue box, click Add Extension

Side menu options

The following options are available on the side menu:

  • Dropdown
  • View the merchant ID
  • Find the document link 
  • Log out of the extension
  • Filter By (to help you check the statuses of different payment links) 
  • Go To Dashboard (to take you to Razorpay dashboard)

Perform action

Create a payment link:

1. Ensure that you are logged in to Razorpay Dashboard

2. Click on the Razorpay Payment Links extension icon on the browser’s toolbar

Payment Link Chrome Extension

3. In the payment links extension screen, click on ‘New Payment Link’

Payment Link Chrome Extension

4. In the window that opens, enter the following details:

Payment Link Chrome Extension

5. After you enter the information in all the required fields, click on ‘Send Link’. This will generate a new payment link 

Payment Link Chrome Extension

6. Copy the link address and click on ‘Done’. You can now share the link via the option of your choice and accept online payments easily.

Payment Link Chrome Extension

Please note: If you have selected the ‘Notify via SMS’ and ‘Notify via email’ checkboxes, the links are also sent to the specified phone number and email address.

So, are you ready to simplify the way you accept online payments? Sign up on Razorpay if you haven’t and stay a step ahead while you leave all your payment worries to us!

Also read: Build Your Own Online Store with Payment Pages