The current digital world requires a business to be hassle-free and secure in terms of payment. The online transactions require payment gateways that make these transactions quite hassle-free. By understanding the charges incurred by a payment gateway, businesses can effectively control costs and maximize profits.

This blog explains everything you need to know about payment gateway charges in simple terms. Let’s dive in!

What is a Payment Gateway?

A payment gateway is a technology that allows businesses to accept payments online. Such a gateway can process transactions made through credit and debit cards, UPI, e-wallets, and all other digital payment methods securely.

Here’s how it works: 

• Customer Places an Order: A customer selects a product or service and proceeds to the checkout.
  
• Payment Information Submitted: The user submits his payment information, whether it is his card number or UPI ID.
  
• Secure Data Transmission: This information is forwarded to the bank after first being encrypted by the payment gateway before final approval.
  
• Authorization and Settlement: Authorized funds are transferred to the merchant account in a secure manner.

Why Do Businesses Need Payment Gateways?

Online transactions have become secure, fast, and user-friendly due to payment gateways. The following are the main advantages:

• Enhanced Security: Protects customer data using encryption and fraud detection tools.
  
• Multi-transaction support: For instance, it supports various methods like cards, UPI, and wallets, making it easier for customers to pay.
  
• Faster Transactions: Reduces payment processing time, ensuring quick settlements.
  
• Global Reach: It supports multiple currencies; therefore, it is easy to target customers worldwide.

What Are Payment Gateway Charges?

Payment gateway charges are fees charged to businesses by the payment gateway providers for processing their transactions. They are usually a percentage of the amount of the transaction, but the provider may also charge additional fees depending on the services offered.

Key Charges For A Payment Gateway Include:

When integrating a payment gateway into your business, understanding the various fees involved is crucial. Here’s a detailed explanation of the common charges associated with payment gateways:

1. Setup Fees: Setup fees refer to the one-time cost charged by the payment gateway provider to integrate the gateway into your website or application. This fee covers the technical setup, configuration, and activation of the payment system. Depending on the provider, the amount may vary, but it ensures your payment solution is ready to process transactions smoothly.
   
   However, BriskPe charges no setup fees and offers transaction fees of less than 1%, making it an affordable and attractive option for businesses.
   
   
2. Annual Maintenance Charges (AMC): Annual Maintenance Charges are recurring yearly fees for maintaining the payment gateway. These charges ensure the gateway continues to function efficiently, including software updates, security patches, and technical support. AMC helps protect your payment system from vulnerabilities and keeps it aligned with the latest compliance requirements.
   
   
3. Transaction Fees: Transaction fees are charges applied to every payment processed through the gateway. These fees are typically calculated as a percentage of the transaction amount and can range from 1% to 3%, depending on the gateway provider and the type of transaction. For example, lower rates might apply to domestic transactions, while international payments could incur higher fees.
   
   
4. Merchant Discount Rate (MDR): The Merchant Discount Rate is the cost associated with accepting card payments, such as debit or credit cards. It includes the fees shared among the payment gateway, card-issuing bank, and card networks (e.g., Visa, Mastercard). The MDR varies based on the card type, payment method, and agreement with the payment gateway provider.
   
   
5. Refund and Chargeback Fees: These fees are charged when a transaction is reversed due to a refund request or a chargeback initiated by the customer. Refund fees cover the administrative and processing costs of returning the money to the customer. Chargeback fees, on the other hand, are levied when a dispute arises, such as a customer claiming unauthorized or fraudulent transactions. Managing these situations involves additional processing costs, and the fees can vary depending on the payment gateway provider.
   

Understanding these charges can help you evaluate and choose a payment gateway that aligns with your business needs while managing costs effectively.

Factors That Influence Payment Gateway Charges

Several factors determine the total cost of using a payment gateway:

1. Transaction Volumes: The higher volumes of transactions mean lesser charges.
   
2. Type of Business: The high-risk industries attract higher premiums.
   
3. Payments: Different payment modes charge differently, such as credit cards or UPI.
   
4. Currency and Location: The international payments would attract extra currency conversion and cross-border fees.

Common Misconceptions about Charges

Many retailers are against the integration of electronic payment solutions due to some myths associated with them. Here are several explained:

Myth 1: High Costs
A common misconception is that payment gateways are prohibitively expensive. While fees are involved, the advantages significantly outweigh the costs. Faster payments, expanded reach, and streamlined operations can lead to increased revenue and customer satisfaction.

Myth 2: Complex Integration
Many businesses believe that integrating a payment gateway into their existing systems is a complex and time-consuming process. However, modern payment gateways are designed with user-friendliness in mind. Contrary to popular belief, modern payment gateways are designed for easy integration. Minimal technical expertise is required to set up and manage these systems.

Myth 3: Limited Payment Options
Another misconception is that payment gateways offer limited payment options. In reality, today’s gateways support a wide range of payment methods, including credit cards, debit cards, digital wallets, and even cryptocurrencies. Many payment gateways now support a wide range of payment methods, ensuring a seamless and flexible checkout experience for customers.

Real-World Examples of Payment Gateway Charges 

Understanding how payment gateway charges are applied in practice clarifies much. Here are two examples:

Example 1:
Local Shop: A local shop is opting for a payment gateway that accepts UPI and card payments. On average, the size of a transaction is ₹500, and with a charge of 1.5% per transaction, the charge per transaction will be ₹7.50. With more than 1,000 transactions in a month, this amounts to ₹7,500. Even if the charge is reduced by 0.3% at 1.2% per transaction, the charge per transaction will be ₹6. With more than 1,000 transactions in a month, this amounts to ₹6,000. Compared to the previous 1.5% fee, the shop saves ₹1,500 per month.

Example 2:
E-commerce Giant: An online retailer with monthly transactions of ₹10 crore managed to negotiate a fee of 0.8%. The payment gateway charges them ₹8 lakh. Because they have high volumes, they pay less per transaction. If the fee is reduced by 0.3% to 0.5%, the payment gateway charges them ₹5 lakh. Compared to the previous 0.8% fee, the retailer saves ₹3 lakh per month.

BriskPe can be the solution your company needs!

If you are looking for a clear, inexpensive payment gateway, check out BriskPe for these reasons:

• Low Transaction Fees: BriskPe charges less than 1% for international payments, which means saving money.
• Quick Settlements: Get your international payments in 24 hours, thus improving your cash flow.
• No hidden costs: No setup fees, no maintenance charges, and no forex markups.
• Global Acceptance: Accept various currencies, increasing the possibilities of expansion to international boundaries. 
• Secure Transactions: BriskPe remains updated with RBI and FEMA standards; hence, every transaction is secure. 
• Easy Integration: Can be easily integrated with most e-commerce platforms and custom websites. 

Conclusion 

Payment gateways have become one of the must-have components for a business to carry out online transactions in smooth and safe ways. Despite the costs, knowledge about them would enable you to make the right decisions. In that way, while controlling your expenses, you could also provide your customers with a smooth payment experience. 

Whether it is a small business or a large enterprise, proper selection of a gateway significantly influences operational efficiency and satisfaction from the customer side. So, before selecting your gateway, cost, security, and ease of use must always be considered. 

Want to make your payment process less cumbersome? Join BriskPe now! Enjoy the security, speed, and efficiency in payments that will work well for your business and also save on transaction costs. Know more at BriskPe.com