Payment Gateway Integration

Payment gateway integration permits businesses to receive payments electronically, whether through credit cards, debit cards or digital wallets. It acts as an intermediate between the customer and the business, transmitting payment information securely.

When a customer enters payment details, the gateway securely encrypts the information and sends it to the bank for approval. If the transaction is successful, the gateway informs the merchant, and funds are processed.

For businesses, integrating a payment gateway helps expand their reach, providing a more convenient and secure way for customers to make payments. A smooth integration of a payment gateway offers both the business and customer peace of mind regarding payment security and transaction processing. Additionally, integrating a payment gateway reduces friction in the purchasing process, leading to a better customer experience.

What is Payment Gateway Integration?

An online payment gateway integration is a designed technology that helps e-commerce companies manage digital payments from customers via online channels, like a website or mobile applications. It serves as an intermediary, bridging the gap between the customer, the merchant and the financial institutions binding them together. By way of example, it ensures the safety and security of transactions. 

Having an online payment gateway comes with innumerable benefits, which ensures convenience and promote a more user-friendly approach for the customers. You need not worry about the painstaking procedure like traditional payment methods, as it guides you to complete the transactions within a few clicks. Most importantly, this technology scores a hundred per cent in terms of enhancing the security of transactions. Where authorized gateways are seen employing advanced procedures to safeguard the data, and keep it intact, just by reducing the risk of fraudulent activities. Therefore, the payment gateway integration process comes with various features and will surely enhance the payment processes. 

Payment Aggregator: What is it all about?

As per the Reserve Bank of India definition entity that facilitates e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create separate payment integration systems of their own. It facilitates merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them to the merchants after a time period.

Payment Aggregator Operation Model:

It handles the funds on behalf of the user, platform and merchant via a designated Bank Account i.e. Nodal/Escrow Account. Therefore it required the authorization from Reserve Bank of India under the Payment and Settlement System Act, of 2007.

Users do shopping on digital platforms. Now users need to make payments. Payment modes can be Wallet, Bank-Net Banking, Debit or Credit Card etc.

The platform is a marketplace of various service providers, sellers, financial services etc. They are defined as merchants. Merchants are on board by Platform on their agreed terms and conditions.

It involves the user, platform, merchant and Bank to complete any payment transaction. A user who does purchase or use the services listed on the platform is required to pay which is landed in the entity doing payment aggregation business. Users make payment forms available/listed Bank or Wallet or any acceptable payments mode i.e. POS, Card, UPI, QR to Platform of Aggregator. It has to manage the payment receipt from the user and bifurcate the amount into commission and actual to be reimbursed to Merchant then after releasing the payment to the merchant. It has a step on step process to ignite and close the transaction.

How to get a Payment Gateway License in India?

Security is an essential component of all payment gateways, as sensitive information such as credit/debit card numbers needs to be secured from any fraudulent possibilities. The card associations have formed a set of guidelines and security standards, which must be followed by payment gateway providers. This set of instructions and security standards is recognized by the name of Payment Card Industry Data Security Standard (PCI-DSS or PCI).

PCI Audit & Final Certification Activity

• PCI DSS Scoping & Gap Assessment
• PCI DSS Formal Risk Assessment
• PCI DSS Policy & Procedure Review, Template sharing
• PCI DSS Final Audit & Certification
• PCI DSS Final Certificate Report Attestation & Issuance (ROC, AOC, COC)
• Application Security Testing/VAPT for 2 applications Web, Android & iOS
• Application Secure Code Review for 2 applications Web, Android & iOS
• ASV Scan for up to 5 IPs (Pre-certification)
• Internal VA for up to 10 IPs (Pre-certification)
• External Penetration Test for 5 IPs (Pre-certification)
• Internal Penetration Test for 10 IPs (pre-certification)

Infrastructure Setup

• OS Hardening
• DB Hardening
• Patches Update
• DMZ and Internal Zone
• Centralized Antivirus Server
• NTP Server
• FIM Server
• MFA Server
• VPN Setup
• Firewall Rules

Network Architecture Diagram Documentation

• Firewall Configuration Policy
• DMZ & Internal
• Asset Inventory Detail
• Antivirus Policy
• Patch Management Policy
• Change Control Policy
• DB Access Policy
• Physical Security Policy
• Security Logs and Events Policy
• Backup Policy
• Data Retention and Disposal Policy
• Data Control and Access Control Policy
• Password Policy
• PCI DSS Awareness Training Policy

It is very much necessary to check whether the required documents/information are in order or not so the tentative basic checklist to begin with this registration process is:-

• Demand Draft of INR 10,000/- (non-refundable)
• The applicant is Company and The Company has the requisite Net Owned Fund.
• The Board of Director understand the business and legal and technical complexities involved to do this business. Educational Qualification and Experience Certificate of Directors.
• Members' funds are clear and clean. Net Worth and ITR of Members.
• Net Worth Certificate from Statutory Auditor
• Unaudited/Audited Financial Statement of the Company
• Incorporation Certificate along with Memorandum and Article of Association
• Details of Statutory Auditor and Banker
• Banker Report of Company, Director and Member.
• System Specification
• IS Audit Report and Cyber Security Audit Report

To obtain the payment wallet license, an entity shall be registered under the Companies Act, 1956 or the Companies Act, 2013

• Proof of position of the business
• Detailed business plan along with review model
• A minimum of two members or directors
• PAN and Current Account of the company
• Testing Report by Software certifying agency  describing System Flow and Code
• Compliance with PCI DSS

Business Requirement:

The most popular segment to take as an example is the online shopping portal i.e. e-commerce platform. Now e-commerce has a huge market share of doing business, making offline retailers and businesses, visible across India to do business at the PAN India level. But the pain area is an easy and convenient way of settling on payment proceeds.

In today’s era, where technology speeds up the operations, payment gateway integration plays a crucial role in putting the hassle to rest. Enjoy seamless and secured online payments and how it impacts your business activities in profitable ways. Let us have a look at the benefits it has in store for you- 

• Increased Sales: Payment gateway integration permits businesses to take payments 24/7, giving customers the tractability to make purchases wherever they are. This feature encourages more sales, thereby increasing overall revenue. It also supports various payment methods, which appeals to a wide customer base globally.
• Enhanced Security: Payment gateways use encryption to protect sensitive business data. This additional coating of security reduces the threat of deception and illegal access, keeping both merchants and customers protected. Compliance with PCI DSS security standards further strengthens security.
• Global Reach: With payment gateway integration, companies can easily receive international payments. It supports numerous currencies and payment ways, virtually opening the doors to different customers and permitting companies to extend their reach globally without any hassles.
• Simplified Transactions: Payment gateways integrate businesses and customers to truly simplify the transaction process. Transactions are computerized, minimizing physical intervention and making processing faster. This ensures smooth operation and speedy payment.
• Customer Trust and Convenience: Offering secure and convenient online payment options enhances customer satisfaction and trust. A smooth payment experience, with multiple choices for payment, boosts the likelihood of repeat business, creating loyal customer relationships.
• Easy Reconciliation: Payment gateways streamline financial record-keeping and reconciliation. They offer comprehensive reports of transactions, making it simpler for businesses to track payments, manage reimbursements, and handle arguments efficiently, restructuring the accounting process.
• Regulatory Compliance: Payment gateway integration guarantees that businesses comply with the legal guidelines governing online dealings. Adherence to standards like PCI DSS ensures that both dealers and customers are protected from data breaches, building trust and meeting regulatory requirements.

To accept online payments, businesses frequently required to get a payment gateway license from the significant regulatory body, reliant on their location and the payment methods they desire to offer.

Steps to Get a Payment Gateway License: 

• Research the Regulations: Payment gateways are actually customized depending on the country's regulatory requirements. Some countries may need lawful businesses to partner with a prevailing authorized payment processor, while others may have more strict licensing requirements.
• Choose a Payment Gateway Provider: The only license required is a payment service provider (PSP). Some of the popular ones include PayPal, Stripe, and Razor Pay etc. Businesses can assimilate with these providers to avoid their own licensing requirements.
• Ensure Compliance: If you're operating in an explicit industry, like financial services, you may have to assure that your business conforms to relevant standards such as PCI-DSS (Payment Card Industry Data Security Standard).
• Submit Documentation: Arrange the necessary business documentation (e.g., legal identity, proof of business, tax compliance) and submit it to the imbursement processor or supervisory authority.
• Undergo a Background Check: The payment gateway supplier or regulator will investigate business owners and/or the company for issues like fraud or financial instability.

Need and Regulatory Framework

The need for payment gateways has arisen due to the increasing demand for valid, secure, unified online trades in a gradually digital world. Customers and merchants require solutions that actually deliver trust, reliability and security in online payments.

Regulatory Framework includes:

• PCI DSS Compliance: Businesses should ensure that their payment processing systems conform to the Payment Card Industry Data Security Standard (PCI DSS) to avoid security breaches.
• Local Regulations: Every country has its own rules which administer online payments. For example, the European Union has introduced the PSD2 Directive, the purpose of which is to enhance payment security and customer protection.
• Anti-Money Laundering (AML) & KYC: Payment gateways must fulfil the anti-money laundering (AML) laws and know-your-customer (KYC) requirements to avert unlawful activities.
• Data Protection Laws: Payment gateways must also comply with data protection laws such as the European Union's General Data Protection Regulation (GDPR), which governs the privacy of customer data.

Corpseed offers a seamless experience for businesses looking to integrate. With expert advice and end-to-end support, we ensure that your payment system meets regulatory requirements and is efficiently integrated into your business operations. Our team of experienced professionals will guide you through licensing, compliance, and setup, allowing your business to focus on growth.