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Indian Ecommerce Startups & their travails with Ruthless Indian payment gateway providers!


Arun’s Note: I got this email in my inbox today from an entrepreneur detailing out his frustrations regarding the how ecommerce startups are at mercy of Indian Payment Gateway providers – This is not the first time I have heard and more or less most early stage startups are experiencing this kind of frustration! I am reproducing his mail verbatim which gives a detail account of his experiences!


Internet Payment Gateways in India have been a complete let down (from my experience) who are now working akin to governmental agencies! And I am not the first one. Even today’s biggest successes like had to face them in their early start-up stage.

While internet start-ups are mushrooming by the day, there is a dearth in the supply of internet payment gateways in India who are now dictating their own terms. It’s also ironic to note that getting a VC or angel investor is easy now in India! But the basics like internet payment gateway is a hell-ride experience!

And here is what I learnt from my experience:

My site launched last year, still in its start-up stage, was doing 6 digit business per month via online sales. Our refund ratio was <1%, and charge-backs 0%, which, by industry standards is pretty good. While we are also ethical in running our business and comply to all statutory requirements sets by payment gateways.

However, trouble began when our existing payment gateway provider (India’s 2nd largest Internet payment gateway provider) ‘suddenly’ discovered that we do not fit in their accepted business models and disconnected the gateway to our site without prior notice. 

Beaten and bruised, we approached other payment gateways and here is what we got from them:


Payment Gateway Their Responses

CCAvenue (India’s largest payment gateway provider)

“Your website has been declined because our Risk Assessment Team does not approve this.”

On further contacting over phone, they change their entire version saying, “Our bankers are denying a gateway to your nature of business.”

I then reminded them that one of my competitor is using their service and I am no different. To which they replied, “They are our old customers. And bankers do not have problems with them”.

Stupid as it may sound, bankers follow RBI guidelines and if rules are for me, rules are for everyone.

End result: No progress till date. My bankers, who do not have any issue with it, are still trying to convince them because CCAvenue is their aggregator.



“We do not support your style of business”. And when you ask why, they have no answer.


Direcpay (Times of India)

“There is one particular feature on your site which is not acceptable to us. We will not give you the gateway if you keep that feature on the site”. And when I reminded that there are dozen other sites with the same damn thing, they stopped responding to my calls. So, will these payment gateways dictate terms to businesses to change their style of business?


Atom Technologies

Sent them my request. They haven’t revered back till date neither they pick my call. Trying to get in touch with their other offices.



“We will not be able to provide you a payment gateway. However, we can provide you net banking”. When I asked them that I am ok with it, they still did not respond with the net banking list nor approvals.



Sent them my request, they sent me the proposal but after that they seem to have disappeared.



Approved our business model. Their compliance team is finishing the formalities. Will take 20 days to integrate.


Federal Bank

In process.


Axis Bank

Approved. Wanted a Rs. 5 lac deposit. When I said I was an Axis customer for 10 years, they reduced it to 3 lacs!



Approved. In process.




Now, do let me know if I missed out contacting any Indian payment gateway!

So I have a few questions here which doubt the basic intention of these ‘private players’ or ‘aggregators’?

  • Are they too busy to respond to potential customers?
  • Do they intentionally do not respond because we are start-ups or because their coffers are filled?
  • When banks are directly approving payment gateways, why are private players shying away? Are they worried about their image? Or want to please their loyal customers by not accepting competitors?
  • When banks have outsourced the job of payment gateway processing to private players, why are they acting monopolistic?

These circumstances leave a very wide gap of questions unanswered:

  • What is the future for start-ups if they are meted out such treatment?
  • Why is it so difficult to convince these private players to accept your business model who have no time to listen to you?
  • Where will start-ups go if they are meted our such treatment?
  • What can a start-up do when they face such a situation? When their only source to accept payments is denied without valid reason?
  • Are not these start-ups being nipped in the bud by such egoistic private players?

I am sure I am just one of those untold stories of start-ups who had such experience with Indian payment gateways.


Prima-Facie, this person is not the only one from whom I have heard these travails in regards with Indian payment gateways. There are many out there facing similar issues

Note:  I did little research on the person who sent me this mail, and looks like his startup is one of the recent start-ups who are into online match-making / dating sites. I browsed through it and it looks clean. I am not sure why any payment gateway would find them risky!

  1. Nancy Patil says

    For Indian Startups I will suggest fethr, Zaakpay or best Citruspay.

    – All of them have lesser than 3% transaction fee.
    – Almost no (or minimal) setup fee.
    – No AMC.
    – Good customer and technical support.

    Some more points to consider..
    – Zaakpay has 2 steps payment process.
    – Citrus has one step payment process.
    – Zaakpay as well as Citrus have Mobile payment options.
    – Fethr is a startup.

    – Nancy (Bringing All Stores at One Place)

  2. Milind says

    Go to

    One of the fastest e- commerce growing company……….with a young and energetic team…………

    Get a wide range in apparels, wrist watch, sports, guitar, shoes and much more……….

  3. Cibol Web Solutions says

    What you have mentioned is pure truth. Our clients and we ourselves are at the mercy of these payment gateways 24×7. Not on the issues pointed above, the transaction success ratio of most of these (especially the top ones) is 50-50. I mean just a 50% chance that the transaction done through them would be successful. Believe me Indian payment gateways are pathetic. Compare this to international payment gateways – they are flawless. Its a long time these payment gateways have been functioning and they should grow up not technologically, and not look like wimping half hearted services.

  4. Jayant says

    Dear Mr Prabhu, Re quoting a part of Arun’s Dialogue ” I then reminded them that one of my competitor is using their service and I am no different. To which they replied, “They are our old customers. And bankers do not have problems with them”.
    Stupid as it may sound, bankers follow RBI guidelines and if rules are for me, rules are for everyone.”
    My Question is: if it is not your selfish (almost monopolistic) greed then why don’t you take back the privileges from similar category competitors who are getting an unfair advantage just because (as you guys say) they are old customers. Please be Clean in that matter, it hurts to see a competitor enjoying the benefits just because they are old. Rules are Rules and should be applicable for everyone, Please set a good example here.

  5. Jayant Maheshwari says

    Dear Mr Prabhu, Re quoting a part of Arun's Dialogue " I then reminded them that one of my competitor is using their service and I am no different. To which they replied, “They are our old customers. And bankers do not have problems with them”.
    Stupid as it may sound, bankers follow RBI guidelines and if rules are for me, rules are for everyone."
    My Question is: if it is not your selfish (almost monopolistic) greed then why don't you take back the privileges from similar category competitors who are getting an unfair advantage just because (as you guys say) they are old customers. Please be Clean in that matter, it hurts to see a competitor enjoying the benefits just because they are old. Rules are Rules and should be applicable for everyone, Please set a good example here.

  6. Raghav says

    I have had interesting (Terrible experiences ) with payment gateways in India including EBS.Most of them will communicate but they do not look at providing customer service.They want to dictate entrepreneur business model,they want all details (Why should an entrepreneur reveal his business model?)They will suddenly raise the set up fees if you are on mobile space,what difference does it make to the Bank/gateway provider?
    Then there is a company with International credentials(South Africa/China) in India ,they will claim to give you a gateway access within a certain date,their country manager no less,and no sign of the gateway even after 60 days of the application.Sad to see India trailing in e-commerce/m commerce while China is zooming ahead.

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  8. Rahul Karan says

    @Arun Prabhudesai: Wonderful article about current Indian E-Commerce situation. I don’t own a company or business in India. But I had a great plan for Indian e-commerce market. After reading your article I’ve changed my plan. I’m going to sell groceries in the street instead of selling in online.

    One more new payment gateway start-up you missed in this article. That is ZaakPay. You should pay monthly maintenance fee and it is not small for small business start-ups.

    @Prabhu Ram: We know RBI and Indian Banks are set strict rules for e-commerce transactions. Of-course we should discuss all of our experience in the public. This can help someone in this country to develop revolutionary payment gateway for small business start-ups.

    All the above payment gateways are well settled with big e-commerce sites. They don’t need to look for a new start-up, even though they have legal products to sell in online.

    At EBS, if possible please do something with innovative ideas (including pricing). If you are really looking for small business customers, don’t relax with big players.

  9. Prabhu Ram says


    I am Prabhu, representing EBS.

    I am surprised to know there is a post which is indirectly commenting on the business process of EBS which I thought of replying.

    Before me going into the specific issues with this entrepreneur, I would like to highlight certain policies/regulations which is market specific to India.

    While accepting the fact that India is not as liberal as other western countries when it comes to e-commerce, we also understand about the responsibilities/commitments of RBI and other regulatory bodies in regulating the fastest growing Payment eco-system.

    Yes, compared to other developed E-commerce markets we are bit more regulated owing to the guidelines by card associations/member banks and RBI.

    However for any genuine business models this will do no harm as all the regulations stipulated are only to ascertain the genuineness of the merchant who is selling the products/services which will give a comfort feeling to the end user/customer in transacting online.

    Now let me share some cases where we are not comfortable at company level in approving the merchants.

    1. If the business model doesn't guarantee the delivery of the Products/services as per the specifications mentioned at the time of sale.

    Example:Remote desktop merchants who offer lifetime services to their clients for an amount of 499 USD which is collected upfront.

    In this case, the merchant is committing that he will be providing lifetime services for an upfront onetime charge. we at the Payment processor level don't accept this because of the fact that say after a period of 6 months time for what so ever reasons if the merchant chooses to shut his shop, based on the service offering, the customer can raise a charge back under the services not rendered as specified category, for which the payment processor is liable to take the onus and pay it back. it will be very tough for companies like us to run behind start ups and collect these monies.

    2.A Gift Merchant selling wine bottles along with their gift hamper.

    This is a very normal thing in western countries but in India, as per the guidelines stipulated we are not suppose to allow this because at policy levels Indian banks are not comfortable in they accepting payments for tobacco, liquor and other related products.we at the companies level are exposed to a very large quantum of fines if we permit the merchant to sell these products.

    3.Companies without proper documentations like Proper company, address, identity proof and complaining in public forums that Private companies are not start up friendly.

    Friends Pls remember, EBS was a startup 7 years back.These are the hiccups any start up will face if we don't organise ourselves at initial levels.I would also like to take this opportunity in sharing one of our merchants thoughts on us.

    out of top 50 hottest e-commerce start ups in India we partnered with 30 last year, and we are so proud in doing that.

    4.Business Models:

    In India No banks are interested in partnering with a company which is into gambling/dating/escort services/pharma because of moral/ethical and legal values associated.

    It might be easy for a merchant from these categories to say its also one of the valid business, the bank/payment processors like us has also the right to say that we are not comfortable in accepting those cases.

    As Flipkart's name is mentioned, I take this opportunity in emphasizing the fact that Flipkart was using EBS for the first 4 years of their business and still they continue to process payments through us.

    Friends, This makes ample clear that we are very start up friendly if the start ups understand the facts that they are operating in India and they need to follow the guidelines created by various regulatory authorities in order to keep the eco system clean.

    5.If the Merchant has any uncleared pending dues with the banks:

    For example if we are receiving an application from a merchant and when we try to process the application say through Citibank, on the verification process when the banks comes to know that the promoters of that said company has some pending dues in form of Credit cards, personal loans, corporate loans, the banks will not be comfortable in going ahead with the merchant unless those dues are being cleared.
    This we completely accept and we are conveying to the merchants.

    The above said are the very major reasons of we rejecting or not entertaining the accounts.

    Rather than me commenting on whether those guidelines needs to be reviewed or revised, I believe the people who are monitoring and controlling the eco system are having extensive knowledge in understanding the consumers/merchants view points and we should represent the issues and leave it to them to come to an conclusion.

    Now let me come to the specific issue raised by our friend above.

    If the merchant says that they were using our services and one fine day we have stopped their services, it means that we have identified that the business model which the merchant was having at the time of deactivation/suspension falls under any of the above said categories which they haven't disclosed at the time of signing with us.

    We don't have the habit of brushing aside our mistakes if we really committed something wrong.

    As we have 4000+ Merchants now its tough for us to identify this particular case from our side as there is no specific details shared here for us to identify.

    However, if the merchant feels he don't fall under any of the above but still something went wrong from our side, we are committed to rectify our mistakes(if any from our end) and will genuinely try to help him out.

    I am available at [email protected].

    I commented here not only representing EBS but also the industry which we are into as I feel it conveys a wrong message that we are rude and we have our own whims and fancies in entertaining merchants.

    Friends, we all are here to do business and in such a competitive world, and in a scenario that all biggies in Indian e-commerce today were once start ups, none of us afford to miss any CLEAN business.

    Hope this clarifies amply the stand of the PRIVATE PLAYERS like us.

    Happy to clarify if you have any further doubts,



    1. Arun Prabhudesai says

      Mr. Prabhu,
      A detailed and forthcoming reply – something which is rare. Thanks for that.

      I have one question to you. You have clearly mentioned all the reasons here for rejection of a company. Is it possible that you have rejected companies even though they do not fall under any of these categories?

      I asking because I know more that 1 company who has been rejected… and they do not fall under any of these..


    2. Saurabh Patil says

      "In India No banks are interested in partnering with a company which is into gambling/dating/escort services/pharma because of moral/ethical and legal values associated."

      haha ~ I don't buy this point Mr. Prabhu. If I apply the same scenario to the liquor industry you should ban United Breweries and put Mallya in jail. Entering in a gambling/casino bar in India is like entering a bakery – anyone can go in! And escort industry!! hoosh.. dude its open its everywhere ask a 17 yr old kid in any metro cities in India and he will tell something even we won't know.

      The point is moral values are built in a human being, instilled by the family culture and social culture he grows up in and of course his own principles and values – and has nothing to do with what RBI and banking system thinks about start-ups in dating/escort industry. Do you think if someone wants to try a pros and he cannot pay online he's going to stop and not try out offline options? haha! Even if he stops his thinking is going to change!??

      How about enticing kissing scenes from Murder2 and hey do you know that Indian Censor Board some days back has given permission to Titanic 3D without a single cut! Even the nude scene of Katie hottie!! Shhhhhhushh..RBI shouldn't hear this before I watch it!! So lets say if they would have cut the nude scene wouldn't you have gone online/Netflix whatever source and have seen that scene? hmmmm? :) You would have! I would have! Anyone would have!!

      If you still think you're correct, in other words you are saying that liquor, dating, gambling, casinos, sex are okay offline but hey when it comes online that's culturally wrong!! Wow! Sound logic isn't it??

      Dude, as an example, my roommate met his gf online and after being in a relationship for more than 4 years they are happily married now. And I personally have made a couple of good online friends..later met offline and are very good friends now. Now are you saying that online friendships, online relationships are culturally wrong?

      No surprise why Indian entrepreneurship industry isn't flourishing.

      I'm sorry to say Mr.Prabhu, your definition of CLEAN business is not clean.

      Saurabh Patil

  10. CapitalistDesi says

    CCAvenue support has always been a pain to deal with.
    Actually I am surprised why more companies do not turn to PayPal.

  11. Shebeeb says

    What about citibank? Don’t they provide?

  12. Kunal Gautam says

    To add more, most of them don’t accept individual customer. So as a sole propriter I cannot apply :(

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