Payment Gateway Solutions for Indian Startups

Update: Fast Spring seems to be an expensive solution and they try to hide the amount of fees they charge you. I have seen charges being put on my account that I was only able to figure out after much digging. all in all Fast Spring has been screwing me and I could not figure it out for long. I am trying Paddle now and they appear to be amazing. I will do a detailed post soon once I am sure.

I recently read a blog post sharing the litany of difficulties entrepreneurs in India face when they want to offer recurring subscriptions. The article was published on Your Story, titled “My challenges with running a SaaS startup in India” and can be found here. While I do not agree with a few points raised in that post, I find the rant about payment gateways in India genuine. I myself was in the same boat a few months ago before my mentor and friend Gaurav Mantri played the savior. Paying it forward, I am here sharing the solution in hope that it will help some people.

Monthly Subscriptions and Indian Payment Gateways

Since I have a solution now, I did not look much into the issue. However, it appears that to charge a credit card in India you need authorization from the credit card holder every single time. Getting it at the start of your subscription is not sufficient.

Having worked with startups that use recurring subscriptions, I know the pain of high churn rate. Asking your users to visit your website to pay you every month will only lead to a much higher cancellation rate.

I have even heard from some entrepreneurs that they created companies in USA for the sake of being able to accept payments within USA, which they later transfer to their Indian bank accounts. This costs somewhat to the tune of $1000 – $2000 and involves dealing with a third party to set it up for you.

Is Paypal a Good Option as an Indian Payment Processor?

Paypal is close but no Cigar. While Paypal APIs are easy to integrate, it lacks a lot of features that you would want in this day and age. Specifically, I would love Paypal if they added the following features

1. Coupons: If there was a way to create customized coupons to give discounts easily, that would make it so much better to run frequent promotions without tinkering with your existing setup. If I could create a coupon on Paypal and share with my customers to give them X% off their second month (or month X for that matter), that would make it so much more attractive for me.

2. Notifications: If I could get customized notifications for various events on my servers, such as Payment Skipped or subscription cancelled, that would help me automate a few more processes. I can’t really believe it is not there. If I am the one who is clueless about this, please leave a comment. I could totally use this.

3. Seller protection: When something goes wrong with a transaction it is usually the seller who is getting screwed over by Paypal. This is because unless you have a proof of shipping, you are not eligible for seller protection. SaaS startups don’t have anything to ship and hence you will never have a proof of delivery to show.

Even if you win a dispute, the customer can file a chargeback with their card issuer bank. In that case, not only you need to refund money, which is rightfully yours, there will be a fee levied on top of it.

Which Payment Gateway works well for India?

I have done some research on various options including Stripe, BrainTree and Dwolla, but nothing so far appears to support India. When I went to meet Gaurav, he recommended Fast Spring to me. I looked into it and at first glance it looked like a system made by engineers. It appears to lack any and all aspects of UI/UX. Only after working with Fast Spring for past few months, I know for sure that it is a system made by engineers. It lacks any and all aspects of UI/UX. Nonetheless, I prefer it over Paypal any day, because it has every feature you can think of backed by a great support team.

Here are some of the things I love about Fast Spring:

Coupons: Yes you can create coupons. You can create a coupon that gives X% off for certain period and Y% for another period. You can be as creative as you want with your setup. Make it date restricted, product restricted, limited number of redemptions or one redemption per code and variety of other features when it comes to coupon redemption. You can create coupons independently without tinkering with your code.

Shopping cart management: While I prefer shopping cart to stay on my site so that I can control its look and behavior any way I want, I find it easy at times to let Fast Spring handle it for me. Saves me from setting up the security to safeguard things.

Download management: If your offering allows users to download something, Fast Spring allows you to setup your download process from within the system without coding for it. For instance, if you want your users to be able to download a product after they purchase something, that is possible. If you want to customize how they can download it, you have extensive options for that too.

Affiliate management: Fast Spring allows you to manage affiliates as well. You can ask your affiliates to create an account and that will give them a special link to send users to the shopping cart. You can also add a small code to your website and then create deep links to your own site rather than the shopping cart.

Not all is great though. These are the things I don’t like about Fast Spring. I have raised these issues with them, but there is not much help I have gotten in these areas.

Cancellation emails: This is the most annoying thing about Fast Spring. There are notifications sent to users before they are up for renewal telling them they will be charged in a week and how to cancel the subscription if they wanted to avoid being charged. This obviously is not good for business. One thing we have done to avoid this is to change the notification to make sure we convey the benefits of our SaaS offerings before we show them the link to cancel the subscription.

Reporting: Fast Spring does not have a good reporting system. I can’t really tell right away how many subscriptions are using which coupon and how much money I can expect per month. It does tell me how much money I am getting in next 30 days, but without knowing how many users are on my system without any Free coupons it leaves much to be guessed.

Same goes for reporting for affiliate management system. Our affiliates complain about how it does not give them much information about what is going on with their accounts and referrals. Fast Spring guys told me that they are working on a full-fledged affiliate management system that may be launched in 2015, but it is expected to be a paid feature.

Fees: Finally, the fee is little too much. Compared to 2.9% + 30 cents that I pay with Paypal, Fast Spring charges 5.9% + 95 cents or straight away 8.9%. On top of that there are some fees when you want to get paid. If you are making a lot of money, you can ask for a lower price point though.

All in all, Fast Spring is a good service when you are starting out. It does not require you to pay anything upfront. However, there is an approval process that you will have to go through.