Will Your Salary Structure Change this April Due to the New Tax Regime?

new income tax slabs

I have to admit that when our Finance Minister announced the new personal income tax slabs in Budget 2020, I felt like it was a very good initiative to reduce tax outgo of the middle class and thereby, increase their disposable incomes.

However, after having taken time to compare the new income tax slabs with the current ones, I believe that the new tax regime might not be such a great idea. We also crunched some numbers from our Opfin payroll management solution to check if taxpayers will be able to save tax under the new regime. Unfortunately, data shows they won’t.

This is the first of the three reasons why we believe that most taxpayers should continue with the current regime.

No decrease in income tax outgo

Razorpay acquired a payroll startup called Opfin last year, which helps startups and enterprises manage tax filing and compliance for their employees. We looked at the data of salaried employees on this platform, anonymously, of course, to compute their income tax liability under the current and new regimes.

Here’s what we found:

  • 78% of these employees will get taxed more by an average of Rs 25,000
  • 85% of employees with an annual income of less than Rs 10 lakh will have to pay higher taxes, averaging Rs 13,750
  • 60% of the people in the income range of Rs 10 lakh to Rs 20 lakh, will pay an average of Rs 47,677 more tax
  • Among those earning more than Rs 20 lakh, 58% will have to shell out an average Rs 89,208 more

These calculations were carried out on taxpayers earning different levels of incomes and availing different types of tax exemptions. We believe this sample set is an accurate representation of Indian taxpayers, and data shows that the new regime will make them pay substantially more taxes.

Tax computation will become complicated

In her Budget speech, Nirmala Sitharaman mentioned that the new income tax regime has been introduced to ease the process of income tax filing for individual taxpayers. However, it seems like the new regime will only further complicate things.

Firstly, the current regime has 4 income tax slabs, while the new regime will have 7. This itself will require a higher number of calculations. Taxpayers will also need to compute their tax outgo in the current as well as new regimes to determine which one to select at the time of filing tax returns.

I don’t see how this will make tax computation any easier. Income tax filing is anyway something that taxpayers dread because of the various slabs, exemptions and forms involved in the process. Instead of incentivizing more people to file tax returns, the new regime might just end up deterring them. CAs will be happy, though.

Long-term savings will get discouraged 

Young India doesn’t save. Definitely not as much as it should. In fact, the younger generation is borrowing more than it can afford to pay back. Data shows that household borrowing is at an all-time high, while household savings are going in the opposite direction.

At a time when the government should promote long-term savings, it is discouraging taxpayers by giving them the option to forgo tax saving exemptions under the new regime. By design, tax saving investments encourage long-term investing because of the lock-in periods they come with. Taxpayers can also diversify their portfolio by using different tax-saving investments like ELSS funds, PPF, NPS, etc.

The forced nature of investing and staying invested through tax-saving investments is actually good for taxpayers over the long-term. But under the new regime, taxpayers won’t be incentivised to make tax-saving investments because they can’t avail exemptions. This will only hurt their long-term financial health.

Overall, we believe that the government needs to rethink the new income tax regime. With the economy doing poorly, it makes sense to increase disposable incomes. But that shouldn’t come at the cost of a decrease in long-term savings.

A version of this article was first published in YourStory.

Turnover of Over Rs 50 Crore? You Now Need to Accept Payments Using RuPay & UPI

The Indian government’s push for a digital economy is very much real. In the past couple of years, we have seen numerous endeavours from the government to drive the adoption of digital payments. The recent removal of MDR charges on transactions done using UPI and RuPay is a case in point. 

Coming on the heels of this move, the Central Board of Direct Taxes (CBDT) released a notification under Section 269SU that aims to increase the use of UPI and RuPay for business-to-business (B2B) payments. And why not? UPI has grown by leaps and bounds in the consumer payments space. Google Pay, PhonePe are now common household names and synonymous with P2P money transfers. It makes sense that the convenience and speed of UPI payments be utilized by businesses as well.

Hence, as per the government’s latest notification, businesses with gross receipts of more than Rs 50 crore need to provide the facility to their customers of making payments through UPI, UPI QR codes and RuPay debit cards. 

Here’s the circular for your reference.

Source: IncometaxIndia.gov.in

This notification under Section 269SU came out from the Central Board of Direct Taxes on 30th December 2019. It set the deadline of 31st January 2020 for businesses to install this facility into their systems. The penalty for not meeting this deadline has been set as a fine of Rs 5,000 per day from 1st February 2020 onwards.

The nitty-gritty of the notification is that the rule has to be followed by businesses where the turnover exceeds Rs 50 crore in the immediately preceding fiscal year. Besides any electronic payment modes you may already have, every applicable business needs to mandatorily also support:

  • Debit card powered by RuPay
  • Unified Payments Interface (UPI) (BHIM-UPI)
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

UPI and RuPay are both properties of the National Payments Corporation of India (NPCI). Apart from promoting digital payments within the country, the government also aims to increase the adoption of state-sponsored payment infrastructure through the adoption of UPI and RuPay.

As mentioned earlier, UPI has seen immense rise in usage all through 2019. It contributed to 37.7% of all digital payments through 2019 on the Razorpay platform. While most of this contribution came from the B2C space, we believe that UPI has great usability in the B2B space as well.

How to accept B2B payments in UPI and RuPay

Coming back to the CBDT notification, with the 31st January deadline looming, the best way for businesses to fulfill the notification would be by integrating with a payment platform like Razorpay.

A payment gateway is a system that is designed to handle end-to-end payments. A payment gateway, when integrated with a business’s website or app, allows the business to accept domestic as well as international payments through all electronic modes. This includes netbanking, credit cards, debit cards and the notification’s requirements of UPI and RuPay. 

The best part about the Razorpay Payment Gateway is the ease of integration. With well-documented SDKs, RESTful APIs and support for popular plugins, getting onboard with Razorpay Payment Gateway will be a breeze to help your business meet the government’s deadline.

Features of Razorpay Payment Gateway:

  • Quick onboarding and integration
  • Developer-friendly APIs and plugins
  • PCI-DSS Level 1 security
  • Support for all payment modes 

The other options that your business can explore are Razorpay Payment Pages and Razorpay Payment Links. Payment Pages allows you to build a custom-branded page to showcase your brand, products and services, and accept payments on the go. 

Features of Razorpay Payment Pages:

  • No coding required
  • Go live in minutes
  • Meet your brand guidelines
  • Create a memorable URL

razorpay payment pages

With Payment Links, your business can send individual links to customers through email, SMS, chatbots and messengers. The recipient has to just click on the link to make the payment.

Features of Razorpay Payment Links:

  • Customise to your brand guidelines
  • No coding required
  • Automate through powerful APIs
  • Get started instantly 

razorpay payment links

Both Payment Pages and Payment Links support all payment modes, including the ones stipulated in the notification, that are supported by our Payment Gateway. If integrating with the Payment Gateway would be difficult before 31st January, then the best bet for your business would be to set up a Payment Page and fulfill the government’s ask in a matter of minutes. 

The CBDT notification under rule 119AA has come into force under the Income Tax Act from 1st January 2020. If your business exceeds the turnover of Rs 50 crore, you should get the facility to accept UPI and RuPay payments right away. Write to us at enterprise@razorpay.com to expedite the process through our banking partners.

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
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
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
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

What Does a Payment Gateway Do With Your Data?

Three years, four years back, did you imagine that payment gateways would be so omnipresent in your life? Probably not. And yet, here we are. Today, you run into a payment gateway every time you’re making a digital payment. You interact with a payment gateway when you pay Rs 100 for groceries or when you buy an iPhone worth a lakh from an ecommerce company.

Payment gateways have, without doubt, made online transactions very convenient. But a lot of customers typically do face some kind of anxiety when they pay online. Even when we understand that the transaction is going to be secure, there is always a fear at the back of our minds when we enter in our card or bank details. It’s our hard-earned money on the line, after all.

However, since digital payments are not going anywhere but upwards in terms of usage, let’s understand how secure your online transactions are and what exactly a payment gateway does with your data.

Encryption through PCI-DSS compliance

First things first, a payment gateway does not store your data as is. The best payment gateways are PCI-DSS compliant. The PCI Security Standards Council is a global organization that sets compliance rules for managing cardholder data for all online payment systems. PCI-DSS is now the global standard for online security. What this means for you is that your online transactions are encrypted to ensure there is no data interception.

Basically, all the details that you enter like name, address, card information, netbanking details, etc are used only to complete the transaction. The payment gateway never stores sensitive information like CVV, pin or password. 

https:// for higher security

Coming back to the encryption bit, data security begins the second you land on a website. A payment gateway uses the highest assurance SSL certificate, which allows TLS encryption of your data. This is a lot of jargon, but in simpler words, you can just look at the URL in your browser. An https:// protocol means that the website you are on is secure.

Most ecommerce companies today work with secure payment gateways to ensure that the data of their customers is not compromised. You can also check if the website or payment gateway page is secure or not by looking for the https:// in the URL, but to additionally understand how payment gateways ensure security, let’s look at something called tokenization.

Tokenization to prevent exposure of data

You enter your 16-digit card number into a payment gateway’s interface. What the payment gateway does is that it replaces this 16-digit number with a single token. This “token” is a unique set of characters that replace your original card number. This allows the payment to be processed without exposing your sensitive details. Tokens are assigned randomly, which makes it extremely impossible to reverse-engineer the actual card number from the token. 

Let’s dig in deeper with an example. Tokens can be of two types–format preserving and non-format preserving. Format preserving tokens maintain the appearance of the card number while non-format preserving tokens are alphanumeric numbers. 

Card number Format preserving token Non-format preserving token
5945 XXXX 5953 6391 4111 8765 2345 1111 25c92e17-80f6-415f-9d65-7395a32u0223

The best payment gateways use non-format preserving tokens as they are more secure. 

Beware of common payment frauds

While a payment gateway does its best to ensure that your data cannot be breached, there are fraudsters out there who are working equally hard to try and exploit your sensitive information. As someone who transacts digitally, you can also do your bit by understanding common methods of frauds to make sure you don’t fall victim to them.

Common Online Payment Frauds
Type of fraud What it is What you can do
Phishing or spoofing Process of accessing your personal information fraudulent emails or websites that claim to be legitimate Think twice before you click on links that appear fraudulent and don’t give out your personal information unless you’re 100% sure of the recipient
Data theft Card and other data stolen from businesses by dishonest employees Don’t deal with companies that you are not aware of or ones that don’t maintain stringent data security norms
Fake schemes and offers Offers that provide heavy discounts on illegitimate products  Don’t fall for offers that seem too good to be true. Verify the company and the product before you make the purchase

Over and above this, you should also use two-factor authentication to make online payments. It adds an extra layer of security to your digital transactions. For example, even if your data is compromised and someone gets access to your card details, they won’t be able to complete a transaction without the OTP that comes to your phone number if you have two-factor authentication enabled. 

In conclusion, payment gateways and online transactions are by and large secure in today’s world. You can go ahead and transact digitally with sufficient peace of mind. Just ensure that you keep your eyes wide open to not fall into any traps.

Also read: What is a Payment Gateway and How Does It Work

Why Do Online Payments Fail?

why online payments fail

When you’re initiating a payment online, there are many factors that go into making the payment possible and a single glitch in any of these entities can lead to an online transaction failing. 

This, of course, can be quite frustrating, considering that there is an immense amount of trust that goes into putting your bank details online to initiate a transaction. Often, consumers and businesses assume that the payment gateway is at fault, and this can lead to them selecting other payment gateways to conduct their transactions. 

But instead of choosing lesser-known gateways that may not offer the same level of security as some of the top ones, like Razorpay, you must understand why the transaction is failing in the first place.

The data pertaining to a single transaction goes through a series of hoops before it reaches its final destination. These hoops vary from gateway to gateway as each one has its own security measures in place.

However, if one is to look at a typical flow of data, one can consider the following as a basic example: Initiator > payment gateway > issuing bank > acquiring bank. 

Of course, this is an extremely simplified version of the data flow just designed to explain things to you, the reader. 

At each step, there are certain security measures that you may or may not be privy to. One such security measure is the usage of an OTP, which comes into the picture to authenticate the payment and ensure that the person initiating the payment is indeed the person who owns the card Once that is cleared, the payment is initiated and debited from your account. 

When you are applying coupons or card related discounts, then the data flow can have a few additional steps to it that take into account the variations and occur accordingly.

Now that you know the basic data flow, let’s take a look at why these online payments tend to fail!

There are many reasons why an online payment can fail, leaving the consumer staring at an error message while being consumed with angst. 


All banks have their own downtimes in place. Some of these are scheduled ones while others are unscheduled. 

For instance, when you are trying to initiate an RTGS payment after banking hours, your transaction might fail because these payments only occur within specific banking hours. This is not technically a downtime, but more on the lines of a ‘banking holiday’ 

On the other hand, if you’re trying to initiate a UPI payment, you are less likely to see an error message as these payments occur at all times of the day and night. However, UPI also has scheduled downtime for certain periods, which is usually stated in advance by the bank.

Sometimes, banks may also have an unscheduled downtime that has occurred due to a server error. When this occurs, the reason for the transaction being declined is very simple – the payment gateway simply cannot reach your bank for authentication and is, therefore, declining the transaction.

Incorrect data 

Often, the reason for a declined transaction can be a simple one – you entered incorrect data, due to which the transaction could not be authorized. This occurs most commonly when we’re in a hurry and aren’t really paying a lot of attention to the information we’re punching in. 

The following are examples of the transaction being declined when you enter the wrong data:

  • Entering the wrong OTP or password can lead to an error message saying that your transaction could not be authorized. You can click the button that says ‘resend OTP’ and try again
  • It might also happen that OTP does not get delivered to your messages inbox and the transaction time expires. In this case as well you can click on the ‘resend OTP’ button
  • If your card does not have the required balance, or if you have entered an incorrect CVV number or expiry date, then you’ll see a message saying ‘not captured’

Security concerns

Finally, another reason why an online transaction can be declined is because your transaction has flagged a few security concerns. 

The parameters for being flagged vary from bank to bank and some may have highly aggressive measures in place when it comes to security, while others may be a little laxer in comparison. 

Something as simple as a bank feeling that a transaction does not match your typical spending patterns can lead to the transaction being put on hold or declined altogether.

There are many reasons why the transaction can be declined. Some of these are:

  • Risk: If there is a security threat from the side of the issuing bank, this can lead to the transaction being declined. An example of a case when this happens is when a card is only marked for domestic use and is being used for an international website. In such cases, the transaction is declined
  • Payment gateway rejection: At times, the payment gateway that you are using may reject your transaction. This often happens because certain merchants may have an upper limit on transactions. If the transaction exceeds that amount, it gets declined. In such cases, the consumer has to make multiple transactions until the desired amount is reached
  • BIN rejections: The BIN stands for Bank Identification Number and is generally the first 6 digits of the card. These digits generally signify the network and the bank that the card in question comes from. Some BINs are blacklisted due to the threat of fraud. If your BIN belongs to the Blacklist, then the transaction gets rejected

There can also be a range of other issues that may occur, for instance, poor internet connection, the two-factor authentication not occurring correctly, or the connection timing out due to a slow response from the initiator’s end. 

In such cases, the customer must start from the payments page again by clicking the retry button to initiate the payment process again. Once the process is completed, you will receive a text message saying that your payment was successful. 

Your bank will also text you to inform you about the amount that has been debited, and the amount left in your balance!

Overall, try as we might, failures in online payments are not entirely avoidable. But understanding the reasons can help you make payments in a much easier manner.

Also read: Why do refunds take time?

What is a Payment Gateway and How Does It Work

what is a payment gateway and how does it work

Online payments have become a part of our daily lives in no time. We’re transacting online not only through debit or credit cards but through numerous other modes like UPI, netbanking and wallets as well.

Paying online is a fundamental feature that every e-commerce platform in the world offers. And they can provide this facility by integrating with a payment gateway.

Online payments are swift and convenient. They allow you to buy products and services from all over the world. If you are a seller, you can sell to anyone in the world with a decent internet connection. Your customer doesn’t even need to have a computer; a smartphone is enough.

But what exactly is a payment gateway? Is it safe to transact through a payment gateway? Does it make sense for your business to have a payment gateway integration? Let’s find out.

What is a payment gateway

An online payment gateway (PG) is a tunnel that connects your bank account to the platform where you need to transfer your money. A PG is a software that authorises you to conduct an online transaction through different payment modes like net banking, credit card, debit card, UPI or the many online wallets that are available these days.

A PG plays the role of a third party that securely transfers your money from the bank account to the merchant’s payment portal.

To explain this in simpler terms, at the time of buying a book from a popular digital platform like Flipkart, when you make the payment for the book, a payment gateway helps you in the process by transferring your money to Flipkart.

How a payment gateway works

A payment gateway focuses on securing the sensitive information given by the user throughout the process. It ensures security by encrypting data like card and bank details that have been provided by the user.

The following are the basic steps showing how a typical payment gateway works.

Step 1: A customer places his or her order and then presses the Submit or Checkout button, or its equivalent button, on the website

Step 2: Once this happens, the website or the e-commerce platform takes the customer to a payment gateway where he or she enters all the relevant information about the bank or the card they are using to pay. The PG then takes the user directly to the page of the issuing bank or a 3D secure page, asking for the transaction to be authorised.

Step 3: Once the payment gateway gets the approval for the transaction, the bank then checks whether the customer has sufficient balance in the account to make this transaction a success or not

Step 4: The payment gateway sends a message to the merchant accordingly. If the reply from the bank is a “No’”, then the merchant subsequently sends an error message to the customer, telling them about the issue with the card or the bank account. If the response is a “Yes” from the bank portal, then the merchant seeks the transaction from the bank

Step 5: The bank settles the money with the payment gateway, which in turn settles the money with the merchant

Once this process is completed, the customer gets a confirmation message of the order being placed.

As mentioned earlier, the transaction of money involves sensitive information about a person’s bank and card details that are entirely personal to him or her. Therefore, it is imperative to make sure that this information stays safe.

How a payment gateway keeps information secure

A payment gateway ensures the security of the information you put in. Here is a list of things that a PG does to keep your data safe:

  • First things first, the entire transaction is carried out through an HTTPS web address. This is different from the HTTP as the S in the HTTPS stands for Secure. The transaction takes place through this same tunnel
  • As a result of the hash function, the system often uses a signed request from the merchant to validate the request of the transaction. This signed request is a secret word, which only the merchant and the payment gateway know
  • To secure the payment page result of the process, the IP of the requesting server is verified to detect any malicious activity
  • Virtual Payer Authentication (VPA) is something that the acquirers, issuers and the payment gateways are backing to secure the process even more. VPA, implemented under the 3-D secure protocol, adds an additional layer of security and helps the online buyers and sellers to authenticate each other easily

Benefits of using a payment gateway

Using a payment gateway is not just for transferring money, but it has other benefits as well. A PG can allow a merchant to give the user get a better experience.

  • PCI-DSS Wallet – The PCI-DSS compliance makes it secure enough to allow the user to store their personal data in the portal or gateway for recurring payments. For example, if you are a frequent customer on Swiggy, then you can save your bank or card details on their site or app, and the gateway will keep it secure from any cybersecurity threat
  • White-Label Wallet – Some payment gateways allow you to make digital transactions through mobile wallet apps. This is the current trend, as it enables the user to make all his transactions by just sitting at one place. You can bring in your money from the account balance to the mobile wallet app and then further use it to make payments on other apps or websites
  • Fraud Screening Tools – Many payment gateways provide you with fraud screening tools to reduce the risk of losing information. These tools include the Card Code Value (CCV), Card Verification Value (CVV) or even the Address Verification Service (AVS). These tools ensure that there is no fraudulent transaction

A payment gateway focuses on creating a secure pathway between a customer and the merchant to facilitate payments securely. It involves the authentication of both parties from the banks involved.

The most significant advantage of a payment gateway is the fact that it allows millions of users to use it at the same time, making it possible for you to purchase or sell goods and services whenever you want.

TL:DR? Check out the video below.

Ready to Start Accepting Payments Online?

  • Quick Onboarding
  • Saved Card Database
  • Razorpay Checkout
  • 24×7 Support

RBI’s Digital Payments Ombudsman Will Help Boost Consumer Confidence

UPI transactions have seen 20x growth since last year.

The transactions have gone into millions, but what we found to be even more impressive was the average transaction value of Rs 1,700 and total transactions worth Rs 1.33 lakh crore in March this year.

This is no mean feat, especially when you consider the fact that a year ago, in March 2018, the average transaction value was Rs 787 and the number of transactions were just around 3 lakh.

India is transacting digitally using several other methods using netbanking, UPI apps, and e-wallets. The ease of transactions is there thanks to the technological innovations that we are witnessing.

However, the problems are not few either. Payments tech has a long way to go in making digital transactions more seamless and secure. We, as an ecosystem, have a long way to go and we are doing well in the journey so far.

Of course, we are ably guided and supported by government bodies like the Reserve Bank of India (RBI). All of us in this ecosystem–companies, merchants, government bodies–want the retail users to benefit the most from the ease of transacting digitally. Moreover, RBI’s latest initiative will aid in this in a big way.

The Ombudsman Scheme for Digital Transactions, 2019 aims to quickly and resourcefully resolve complaints and grievances related to digital payments.

If you encounter failed or wrongful transactions and you are unable to get them fixed with the authorized bank or payment firm directly, then you can approach a digital payments ombudsman and put forward your complaint with it.

Data on Razorpay shows that a majority of digital transactions (close to 50%) fail because they get timed out.

In the case of wrongful transactions, the response rate is typically high when the payments company or the bank is notified of failed or wrongful transactions within a period of 24 hours.

The digital payments ombudsman comes into the picture when all else fails.

An ombudsman is a government official or government office tasked with the agenda of representing the general public’s interest in a particular area. The offices of an ombudsman have the power to investigate, address and settle the issues it receives.

The RBI has currently set up 21 digital payments ombudsman offices across India. This scheme came into force earlier this year, and in its latest monetary policy statement, the RBI stated that it also aims to harmonize the turnaround time for resolving these complaints.

This is a move worth hailing because consumer complaints should be addressed and resolved in all seriousness. Bad experiences with payment services can have a telling effect on a consumer’s willingness to transact online again.

Consumers are skeptical about online services by default, especially when it comes to services that involve their hard-earned money.

The last thing they want is a transaction failing or their money getting deducted wrongfully. RBI recognizes this, and the ombudsman scheme has been initiated to ensure that consumers know that they have an official government authority to reach out to.

Of course, the RBI also has to ensure that users who transact digitally are aware of the digital payments ombudsmen.

People need to know how their complaints can get resolved and the fact that they have a government authority to reach out to in case they are unable to get issues resolved.

With the turnaround time getting optimized as well, the digital payments ombudsman will be an essential force in ensuring that more Indians transact digitally.

Security concerns are always a deterrent, especially for consumers who are yet to embrace the convenience of digital transactions.

RBI is expected to set the turnaround time by June this year, and we hope they meet this deadline. At the same time, it should also focus equally on raising awareness about the ombudsmen.

We foresee a digital future for India and while we, the companies within the ecosystem, are working at our best to ensure that the transactions are seamless and secure, having a government body looking after their interests will drive more consumers transacting digitally.

Further reading: How to File A Complaint with A Digital Payments Ombudsman

9 Steps to Starting Your Subscriptions Business

start a subscription business

Birchbox was launched in 2010. In a single year, the brand had 45,000 members; and the seed for the modern subscriptions business as we know it today were sown.

It took a while for the subscriptions model to gain a foothold in India, but the success of brands like Amazon Prime and Hotstar has proven that there is a huge market for subscriptions businesses in the country.

Of Amazon Prime’s 100 million subscribers, one-tenth (i.e. 10 million) come from the subcontinent.

Netflix, which entered the Indian market in 2016, is already aiming to add 100 million subscribers from India to its pool. And the homegrown Hotstar is leading the pack with about 75-100 million users a month.

This is just the surface of the change around recurring payments that is underway in India.

From food-delivery companies (Zomato and CureFit) to books (The Big Book Box), and lifestyle and cosmetic brands (Nykaa) – everyone is experimenting with subscription-based services in India.

However, making the change from traditional to the subscription models isn’t easy. The challenges you face during the transition to a recurring payments model are unique to your industry and business, and there is no one shoe that fits all.

To help you with this transition, we’ve identified the nine most important steps that will help your business through the process. And yes, this comes with the blessings of the various companies Razorpay currently powers subscriptions for! Take a look.

how to start a subscription business

Subscription Links – Recurring payments now made easier!

Let’s say you are just starting out on your journey towards building a sustainable subscriptions-based business.

You can ask your customers to sign up for your offerings without any website integrations. With Razorpay’s Link-Based Subscriptions, you can mail, SMS, or send out webhooks on chat that will allow your users to sign up and subscribe instantly.

With our Link-Based Subscriptions, accepting recurring payments becomes easier and faster. To learn more about how these links work, you can access the documentation for it through the link below.



RTX Bangalore – Titbits on User Acquisition and Retention

razorpay rtx bangalore user acquisition user retention

Our 2nd RTX in Bangalore, and the 4th overall began on a very interesting note.

The primary topics up for discussion were “Customer Acquisition” and “Customer Retention,” but we broke the ice by asking the panel about that one product and one service that they had been recommending to everyone around them.

Some of the names that came out were the usual suspects like Dunzo and CRED, but the really interesting one was Google Photos.

Anshul Agrawal of Urban Ladder and Manu Prasad of Scripbox both said they recommend Google Photos to the people they know because the app’s tagging system makes it easy for them to find the exact picture they’re looking for.

Aravindh Radhakrishnan of Zoomcar was the first to recommend a product from the offline world–Puma. “Puma has carved a niche for itself, especially among the community of football fans,” he said.

Another product from the “real world” to be recommended was Milano Ice Cream, by Lizzie Chapman of ZestMoney. Thanks to her, all of us were craving some right away.

But the ice cream was soon forgotten when we got down to the business at hand. This RTX event was a gathering of product leaders from companies like Urban Ladder, Myntra, HealthifyMe, Scripbox, Zoomcar, CRED, and ZestMoney.

The idea was for everyone to share their insights on how they acquire and retain users–insights that the others could then take back with them and maybe, implement the very next day.

Anjan Bhojarajan of HealthifyMe began by talking about how user testimonials helped them acquire new users.

When someone sees real-life examples of how a service has benefitted others, they are more likely to try that service out, Anjan said

Another important point he talked about was reducing pricing as a barrier for new users.

HealthifyMe has diet plans that could be expensive for many users, but this price is justified by the fact that the plans are specially customized by an expert for every individual user.

But because we had so much data, we were able to build AI-powered diet plans for specific use cases, said Anjan.

These plans were cheaper and helped HealthifyMe remove pricing as a friction point for new users.

razorpay rtx event anjan

For Urban Ladder, pricing is not a barrier because their customers are the ones who are willing to make big-ticket purchases.

When customers are buying expensive items, they are fine with the purchase processes being offline also, said Anshul, citing the example of their tie-up with Bajaj Finserv. He also said that referral programs helped them acquire users. But a good referral program can get abused by one person using different numbers and email addresses,” he cautioned.

razorpay rtx event anshul

Talking about programs, Sudhakar Pandey of Myntra said that Try & Buy has been a great customer acquisition lever for them. But at the same time, bringing down returns remains a high priority.

More loyal customers tend to return more because they are more likely to try more categories and be more adventurous in their choice of products, brands, etc, said Sudhakar. And COD customers paradoxically return less often than prepaid customers. However, they are more likely to refuse to accept a shipment.

razorpay rtx event sudhakar pandey razorpay rtx event sudhakar

This is because customers in India seek value and the best product. “They have zero loyalty to marketplaces that compete only on price,”  opined Lizzie Chapman of ZestMoney. While that opened up an entirely new debate, Lizzie also said that for ZestMoney, targetted ads on social media were more effective than mass SMSes. “Our customers have lesser concerns about data privacy, compared to in other markets,” she said. “This is a concern, so we are careful not to take data from them without their consent and education.”

razorpay rtx event lizzie

Giving their customers something useful is a big part of CRED’s user acquisition as well.

As Rahul Harkisanka of CRED said, We have built CRED with a premium and tech-savvy customer in mind, and we make sure that customers feel that the support representatives understand, and appreciate the nuance of their problems.

Full-page ads in leading English dailies worked well for CRED to acquire new users.

razorpay rtx event rahul

Even I downloaded the CRED app after seeing that ad in The Economic Times, said Manu of Scripbox.

For Scripbox, giving their customers to the facility of investing through UPI has been a game-changer.

We expect 50% of all transactions to happen through UPI in the coming year, said his colleague, Ashish Malhotra.

razorpay rtx event ashish razorpay rtx event manu

With that, the discussion moved towards customer retention. For any business, retaining customers is probably more important than acquiring them. And one bad experience can lead to a customer going away for their lifetime.

Both Anshul and Aravindh vouched for this. Service, then, becomes a big differentiator for all kinds of businesses. The panel was unanimously nodding heads on that one.

razorpay rtx event aravindh

The panel was also in agreement that customer service also becomes a major focal point for retaining customers.

For Zoomcar, said Aravindh, customer service is important because every car rental is tied to a life event like family gatherings or a friend’s wedding.

What he meant was that when there is a service disruption, it’s important for product leaders to understand the impact it has on the users’ lives. And build customer care to empathise with it.

By that time, the beers and pizzas were out and everyone’s attention shifted towards more casual conversations. As is the case with such events, networking becomes an important part.

The idea behind RTX is to put forth a forum where industry peers can interact with one another and help each other with insights and ideas they can use. And this RTX had no shortage of it either.