India is a rapidly growing economy. But that’s just one of the many feathers on its cap. With 820 million active internet users and a majority of the youth population, it’s also well on its way to becoming a global leader in digital payments.
Young Indians no longer rely only on cash. They have various digital payment options—credit cards, debit cards, UPI, mobile wallets, etc—that are faster, safer, and more convenient. In fact, over 40% of all payments made in India today are digital
But why should this concern you? Well, if your business lacks a robust payment processor to accommodate this digital shift, you will start to lose market relevance. However, many sellers are still unaware of this.
So, in today’s blog, let’s discuss the ABCs of payment processors and explore how they benefit your business. Let’s dive in!
What is a payment processor?
A payment processor is a system that enables businesses to receive digital payments from their customers. Simply put, it is a platform that empowers you to accept payments made via debit cards, credit cards, UPI, prepaid cards, gift cards, and so on. Here’s a quick example:
Suppose you have an online shoe store. Once a customer adds a product to their cart, they will move to the payment process. Since it will be a cashless payment, the website will prompt them to add their payment credentials like credit card/debit card/UPI details, which it will securely process to complete the transaction.
Now, the system that enables your website to process and execute the entire digital transaction safely and efficiently is called a payment processor.
Payment processor vs payment gateway—what’s different?
When it comes to digital payments, the terms “payment processor” and “payment gateway” are often used interchangeably. However, these are two distinct systems that serve entirely distinct functions. The table below encapsulates their core differences:
| Point of Difference | Payment Processor | Payment Gateway |
| Main function | Handles digital payment processing and fund transfer | Essentially captures and transmits payment information securely between systems |
| Role in transaction | Manages payment authorisation, settlement, and fund transfer | Acts as an intermediary between the business and its payment processor |
| Interaction with customer | Does not directly interact with the customer | Provides the interface for customers to add their payment details |
| Data handling | Processes and transfers funds | Encrypts and transmits payment data |
| Integration | Integrates with payment gateways and banks | Integrates with payment processors and merchant systems |
Benefits of implementing a payment processor in business
Now, let’s come to the crux of the topic. Here are the top six benefits of using a payment processor for a business:
1. Increased sales
Customers often abandon their carts without shopping if their ideal payment mode is unavailable. This can adversely impact your sales. However, a payment processor prevents this.
By offering customers a variety of digital payment options to choose from, the payment processor motivates them to complete their purchase with you, thereby boosting your sales and revenue.
2. Global reach
Payment processors have no geographical limitations. If you have a business that operates internationally, too, this system is all you need to handle both domestic and international customer payments simultaneously. This ensures unhindered foreign business and global reach.
3. Reduced fraud
A payment processor automates all your digital transactions, handling everything—from authorising to settling payments—within minutes. This minimises manual effort, reducing the chance of errors and fraud.
4. Better cash flow management
A payment processor not only handles digital payments for your business—it also gathers crucial real-time financial data. So, with its help, you can easily determine your sales volume, payment breakdown, total refunds, etc., to make informed, data-driven decisions and manage your cash flow more profitably.
5. Improved security
Due to concerns about data breaches, some customers may verify a website’s credibility before entering their payment credentials. While this caution is understandable, your business needs to build trust with potential customers.
A payment processor can help you do that. This system offers robust security and encryption measures that ensure every sensitive customer data is protected against unauthorised breaches.
6. Enhanced customer satisfaction
Payment processors provide flexible digital payment options to customers. From debit cards, credit cards, UPIs, mobile wallets, gift cards, and even cryptocurrency—individuals can choose any payment method to shop with you. This enhances user experience and improves customer satisfaction.
3 Common challenges businesses face when using a payment processor
The benefits of implementing a payment processor in a business are endless. But it doesn’t come free of challenges either. Here are three common pitfalls you might face when working with a payment processor for the first time:
1. Integration complexities
As a business, you likely already rely on a suite of tools and software for daily operations. One challenge is integrating the payment processor with these existing systems. If the payment processing solution you opt for isn’t compatible with your current setup, it can disrupt your workflow.
2. High costs
Payment processors often have certain costs associated with them, including setup and transaction costs. These can be a significant deterrent for businesses, especially smaller ones with fewer transaction volumes.
3. Technical issues
Just like any tool or system, payment processors are also subject to technical issues. If you are not reasonable about the quality, you might end up with a processing solution that’s prone to bugs, outages, and security issues. This can hamper your business’s entire digital payment infrastructure.
How to choose the right payment processor for your business?
Choosing a suitable payment processor is not just important—it’s the most essential decision to ensure seamless digital transactions for your business. Here are four key considerations to land the best payment processor for your business:
1. Consider your payment types
There are various payment processors available in the market. However, if you know which payment types you wish to offer exclusively, you can easily sift out the most ideal one from the lot.
To do that, check your business’s historical data, identify which digital payment modes customers generally use, and choose a payment processing system that supports them.
Looking for a payment processor that offers diverse payment support? Look no more—check out Plural by Pine Labs! With our cutting-edge Payment Gateway, you can enable your business to process payments made via credit cards, debit cards, UPI, online wallets, and much more. Sign up to start your journey with us today!
2. Compare transaction fees
One of the most common challenges some businesses face when working with a payment processor is bearing its transaction cost. Since it is a recurring expense, affording it can get difficult after a point if you don’t consider factors like your sales volume, total revenue, etc.
So, it’s always wise to compare the transaction fees of different payment processors before making a decision, especially if cost can be a deal-breaker for you.
3. Check integration capabilities
After choosing a payment processor, you most likely don’t want to rebuild your website or digital payment infrastructure. So, thoroughly check your payment gateway integration features to ensure they can seamlessly merge with your existing workflow.
4. Evaluate security features
Lastly, it’s crucial to ensure the payment processing solution is secure. Since it will handle sensitive customer data, make sure it offers strong security and encryption features to reduce the risk of data breaches.
Wrapping up
With the sudden burgeon in digital payments, every Indian business needs to have a robust payment processor integrated into its system. It facilitates sales, enhances security, and improves customer satisfaction.
However, there also are a few challenges associated with using a payment processor, especially if you’ve never worked with one before. Therefore, navigate the landscape carefully and choose a payment processor that’s tailor-made for your business.
In this context, you can check out the Plural Payment Gateway. A solid payment gateway solution, it can bolster the efficiency of your payment processor. With its help, you can enable your business to deal in 100+ payment modes, receive cross-border payments, split settlements instantly, and whatnot! Interested to know more? Drop your queries, and we will get back to you soon!
Plural by Pine Labs has received an in-principle authorisation from the Reserve Bank of India (RBI) to operate as a Payment Aggregator.
