Payment Gateway and Merchant Accounts Differences in India and why?

Payment Gateway and Merchant Accounts Differences in India and why?


India is a growing market in terms of payment processing. The Online Transaction is less than 5% in comparison with Cash transactions. This is changing and soon we can see a higher online transaction in the subcontinent.

In the USA Merchant Accounts and Payment Gateway are promoted and referred separately. In the case of India, it’s all different. Here the payment gateway and merchant account are considered the same.

I would say that because of 2 major reasons

1. Very low online of Offline Credit Debit Processing (Includes Card Present and Card Not Present Scenarios)
2. Very low sales volume of the average merchant.

These 2 Factors result in the utilization of a very simple processing solution that requires the Merchant to interact with only one acquiring bank via the PSP(Payment Service provider). This is done by utilizing Simple HTML Code integration(Buy Now) or API/Plugin integration. The above mentioned relates to the current scenario in India.

In The US the scenario is different Merchants require multiple acquirers as they have massive sales volume and they also want to do the load balancing. The Load Balancing helps the merchant input limited amount of sales volume on each MID. In case a merchant has got 2 Merchant ID then they can put 50-50 volume on each account. This is majorly used by high volume and high-risk merchants. These merchants generally use high risk merchant accounts in us. The Payment Gateway allows the merchants to integrate multiple mids or Merchant ID to the same online interface.

As the market grows we will see players in the market offering them separately soon. We hope that soon in India there will be solutions like Charge-back alerts also.