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Subscription & Recurring Payment Gateway in India for Online Payment without OTP

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Customers from all walks of life look for ways to simplify their life by subscribing to services or goods that they need on a regular basis. Therefore subscriptions and recurring payments have become part and parcel of our busy lives. If you are looking for a recurring payment gateway to receive subscription payment from your customers in India or overseas, read on.

This article will help you identify ways to collect money on an auto mode. This Auto Mode is a monthly subscription and recurring payment system enabled by subscription payment processors.

What is Recurring Payment (Recurring Payment meaning)

Recurring Payments are a type of transaction that allows the merchant to process multiple authorizations for the same buyer. Recurring payment can be either multiple payments for a fixed amount or repeated billings.

Global Digital service providers such as MailChimp, Aweber, AWS, etc. have been offering services where a user pays for subscription of the services on a monthly or quarterly or yearly basis.

Service providers based outside India charge in US$. Their payment processors charge a subscriber on a regular interval without any intervention from the service provider.

Such an automatic subscription fee payment facility was not possible for Indian service providers. In India, a buyer needs to authenticate payments with the second factor of authentication.

Recurring Payment Processing in India

The situation in India is a little tricky as we have 2FA (Two-factor authentication) system for online payment processing. Therefore you need a specialised recurring billing payment processor in India. Recurring payment processors enables online payment without OTP.

All of us in India have gotten used to OTP (One-time Passwords) to authorise any online transaction. Therefore, when we are exposed to the one-click transaction on amazon.com, we think it is some particular application of Amazon, which enables them to do it.

Have you noticed that on amazon.in one click transaction facility does not exist.

Startups building subscription-based business models look for best payment gateway for recurring billing. In this article, I will answer the following questions that you may have.

  • How to do credit card payment without OTP for my SAAS business.
  • How to enable Bebit card payment without OTP for my online grocery business.
  • On which payment processor can I accept recurring credit card payments.
  • How to charge a subscription fee on a regular basis on an online payment processor without OTP.
  • Is it possible to collect credit card recurring payments in India?
  • How to take recurring payments online

While others, who have explored payment gateways or bankers believe that OTP is a must and an online transaction cannot be done in India without it.

This impacts the viability of e Commerce businesses who want to provide subscription-based services for their SAAS application or magazines or even products in India.

Have you noticed that Amazon India’s subscription model does not have prepayment facility? You have to opt for Cash on delivery necessarily.

Therefore, if Amazon India is not able to do it what can you do as a start-up business.

RELATED ARTICLE : Top 10 Payment Gateways in 2017 – Choose the Best for your Business

CHOOSING THE RIGHT PAYMENT GATEWAY ebook-product-f3
CHOOSING THE RIGHT PAYMENT GATEWAY

The need for Subscription and Recurring Payments System

Subscription vs One Time Payment

When we buy a product or service, we pay for it. Most of the time we pay for it once and it can be done online through a payment gateway. Several such payment gateways exist and one can use them to grow their business.

However, today we encounter several business models when you might need to pay at a regular interval. For example for your Netflix subscription or your online newspaper subscription. With a subscription and recurring payments system need for manual intervention by customers cease to exist. A customer can authorise its bank to make automatic payment for such services or products thereby saving a lot of time. For businesses, it is a great proposition as they do not need to follow up with customers on a regular basis.

How Recurring Payment Processing Works:

  • A customer buys or signs up for a product or service online through a payment gateway.
  • The customer agrees to pay for the services or product at a regular interval.
    • Generally, such intervals are weekly, fortnightly, monthly and even yearly.
  • Customer provides his payment details such as Credit card or Debit Card while making the first payment.
    • In India, at this juncture, he also provides an OTP.
    • International customers or payment processors do not require an OTP for any transaction.
  • The payment details and authorisation are recorded by the payment gateway (and not by the merchant).
    • As the bank approves any transaction, Subscription and recurring payment gateway service providers have a pre-arrangements with the banks for offering such a facility.
  • At the time of subscription renewal, merchants subscription system sends a request to the payment gateway for payment. Based on previous authorisation payment gateway secures the transaction and remits the money to the merchant.

Recurring Payment Gateway In India

After a lot of research I have found Seven payment gateways providing Recurring Subscription payments in India:

1 CCAvenues recurring Payments:

CCAvenue Recurring Payments
CCAvenue Recurring Payments

CCAvenue offers recurring Invoice processing. For the processing to happen, the merchant needs to set up a recurring invoice once along with its schedule. CCAvenue will automatically generate and send them out weekly, monthly, quarterly or annually as per the schedule created by the merchant. The merchant can also add payment terms, invoice items, tasks, descriptions, and taxes, etc.

2 Razorpay recurring payment

razorpay recurring payment
Razorpay recurring payment

Razorpay: With Razorpay a merchant can collect recurring payments in India or abroad. This happens without manual intervention of the merchant or the customer. Below is the process flow of how Razorpay does this:

  • A subscriber signs up on the merchant site for the subscription and selects a payment plan.
  • At the time of the first payment, the customer fills up the card details and agrees to apply for recurring payment through a checkbox.
  • If the customer has an Indian issued credit card, the first transaction will go through a standard 2FA flow (OTP / Mastercard Secure password / Verified by Visa Password)
  • If an international customer, the transaction will go through without 2FA.
  • Through backend APIs, at the initiation of the transaction, merchant automatically let Razorpay know transaction specifics such as amount, schedule and the duration of the recurring plan.
  • Razorpay deducts the amount automatically (without any intervention from the customer) on the specified date from the customer’s credit card and sends them a confirmation of the same.
  • To use this service you need to reach-out to Razorpay team through this form.

Razorpay recurring payment Charges

  • Standard Transaction fee for Payment Gateway:
    • 2% per transaction on Indian Credit Cards, Indian Debit Cards, Net Banking from 58 Banks, UPI, Wallets including Freecharge, Mobikwik etc.
    • 3% per transaction Diners and Amex Cards, International Cards, EMI
    • *GST as applicable on fee.
    • One-Time Setup Fee: ₹ 0.00
    • No setup fee
    • Annual Maintenance Fee: ₹ 0.00
  • Additional Charges on Subscription: 0.9% Charged as an addon to every payment made towards a Subscription with Automated billing.

3 Paypal Recurring Payments

paypal recurring payments
Paypal recurring payments

An estimated 200 million global users leverage PayPal to accept online payments. Paypal controls over 35% of the global payment volume. Naturally it is a great choice to receive payments for memberships, content site subscriptions, newsletter fees, club dues and installment plans by adding a Subscribe button to your website.

4 LotusPay subscription payment processing

LotusPay subscription payment processing
LotusPay subscription payment processing

LatusPay is a dedicated subscription payment processing platform. It enables you to accept recurring payments online in an easy and transparent manner. You can automatically collect recurring payments from your customer’s bank account using NACH Debit eMandates (eNACH) and physical mandates.

When you use their service you do not need any cheques, cards or digital wallets. You can manage all your customers, plans, subscriptions, payments and settlements in its simple dashboard.

How Lotuspay works

Its NACH platform gives you simple dashboards, REST APIs and mobile SDKs for you to manage your customers, plans, subscriptions, mandates, payments and settlements. Your customers authorise NACH Debit Mandates for direct debit of their bank accounts. Kotuspay collects the funds securely and payout to you quickly and affordably.

LotusPay Charges

Standard charges are: 1% Per successful transaction.

  • Max fee Rs 50, min fee Rs 5.
  • No monthly fee.
  • No setup fee.
  • + applicable GST taxes

5 PayTM Subscription

PayTM enables subscription payment flows enabling a merchant to collect recurring payments from customers without explicitly going through entire re-purchase flow. This flow is used for services/products which are consumed on an ongoing basis and payments are made periodically by the customer.

UPI will change the Recurring Subscription Payments Scenario

In India, debit and credit cards are the primary medium of a digital transaction of subscription payments. However, with UPI all this will change. UPI (Unified Payments Interface) will be a lot smoother for recurring payments as it allows pull-based transactions.

With UPI, a merchant just needs to initiate a transaction from their side to debit a recurring subscription payment. Once the demand is there, the subscriber will receive the request to authenticate with an m-PIN. Making it much more seamless without requiring the need of a bank account or credit card details.

UPI will allow a customer to stay in charge of the transaction he wants to approve. Recurring subscription payments, which happens only on credit card today may start happening on debit cards as well.

Hope now you understand the recurring payment model. Any doubts & questions are welcome. Just leave your question in the comments.

🙂

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Frequently Asked Questions

Q1 What is Two Factor Authentication

Two-factor authentication (2FA), which is also known as two-step verification, is a mechanism to build an additional layer of security in online transactions.

To make an online payment the user needs to provide two authentication factors to verify their identification.

In contrast, the single-factor authentication (SFA), a user just needs to provide only one factor typically the CVV number on their credit or debit card.

In the case of the two-factor authentication, a user provides his CVV number and a password or an OTP (one-time password) to verify that he is the one who is doing the transaction.

With the introduction of Two-factor authentication (2FA), it was difficult for attackers to do a fraudulent online transaction.

In fact, as a consumer, I like two-factor authentication. It adds to my peace of mind when I do online transactions. But yes, as a merchant it is somewhat of a disadvantage compared to the single-factor authentication.

Q2 Why 2FA was hindering Recurring Subscription payments in India

Indian vendors could not charge their customers for subscription with an India issued debit or credit card as the second transaction required re-verification again from the subscriber.

Therefore, most of them went ahead with International payment gateways such as Paypal and stripe to receive the payment. International payment gateways charged the user in US$ or any other foreign currency. As these payment gateways were based outside India, 2FA was not applicable to it.

Q3 Is RBI not allowing Recurring Subscription Payment

Please note that recurring subscription payment is not banned by the RBI. In fact, it is very much possible. However, Banks and payment gateways are not offering such services. It is a belief that allowing the single-factor authentication (SFA) could lead to an associated risk of chargebacks which could be very expensive.

So why is single-factor authentication not common in India? Because the Indian banks think it is too risky. Never mind that the whole world is okay with it.

Q4 What is the difference between one-time payment and recurring payment?

When we buy a product or service, we pay for it. Most of the time we pay for it once and it can be done online through a payment gateway. Several such payment gateways exist and one can use them to grow their business.

However, today we encounter several business models when you might need to pay at a regular interval. For example for your Netflix subscription or your online newspaper subscription. With a subscription and recurring payments system need for manual intervention by customers cease to exist. A customer can authorise its bank to make automatic payment for such services or products thereby saving a lot of time. For businesses, it is a great proposition as they do not need to follow up with customers on a regular basis.

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Branding & Digital Marketing Consultant and Founder of BrandLoom Consulting (A $1m startup). Help companies generate more revenue through digital marketing and branding. Growth Driver of Large Global Companies and Successful Startups. Built Sustainable & Profitable Businesses for over 100 Brands during 18 years long global career. Speaker at CII, CITI, ASSOCHAM and several prominent Industry Forums. Covered by TOI, ET, The Hindu, Silicon India, The CEO and many publications.

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