Payment gateway license has a cost that you have to bear in India. As a permit to start a service that facilitates people with the ability to conduct electronic transactions, this license can lead to profitable business. However, how equipped you are handling the business? And, how willing you are going through the steps of obtaining the license for it? Are some of many questions that comes to RBI’s mind when the cost of this license is the matter of discussion.
Through this article, we are sort all of these costs. You’ll know the
- Technical cost of get a payment gateway license
- The eligibility cost to get a payment gateway license,
- and the legal cost to obtain the license.
Technical cost of getting payment gateway license in India
When we talk about technical cost of starting a business, we generally refer to infrastructural costs. Starting a payment gateway is a very hardware oriented business. Thus, you need to bear the cost of:
- Maintaining a transactional tunnel that allows the users to pay and receive payments without any delay.
- And, ensuring that the personal information of these users isn’t compromised at any point during the transaction.
There are three steps of how electronic transaction takes place:
- Encryption: When the user enter his or her payment information on the payment gateway portal, it’s instantly encrypted. Once encrypted, the data is sent to the user’s bank where it is verified. There are many types of encryptions available for payment gateways. Choosing the most powerful one is going to cost of appropriately.
- Authorization: After receiving the data from the user, the bank’s software implements a private key to decrypt it. As a payment gateway designer, you have to create an encryption that banks can understand. That means fostering a trusting relationship with these financial institutions.
- Finalization: If the decryption verifies the user information, the banks start the transactions. And if everything is right, finalize it.
All the above three processed are happening inside a secure tunnel. It doesn’t allows anything but the encrypted data and transactions to go through them. To hold the payment gateway license, you have to make RBI confident in your abilities that your system can create and maintain such a tunnel.
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The eligibility cost to get a payment gateway license
In order to obtain the payment gateway certification, you have to become eligible for it. And it will cost you. Following are the eligibility criteria points referring to the cost that you have to bear:
- Your minimum net worth should be INR 15 Crore: RBI, in order to provide license to only those capable of dealing with the critical business of payment gateway in a serious manner, has established that only those with net worth above INR 15 Crores are allowed to apply for it.
- Your business plan should give you guaranteed results: If you think a plan is not definite, and can change as per the circumstances, think again. Reserve Bank of India has established that your business plan should turn that initial net worth to INR 25 Crore after three years of operation. Not only that, your business plan have to guarantee it.
The above two eligibility points have deterred many from applying for the payment gateway license. However, what people miss to get is that the above particular criteria is only meant for NBFCs, and Banks.
If you don’t fall in any of the above category, your eligibility criteria is as follows:
- Initial Net worth should be INR 15 lakh
- Net worth after 3 years of operation should be INR 25 lakh.
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The legal cost of obtain the RBI payment gateway license
Let’s not talk about the legal cost of obtaining the payment gateway certifications. The cost is divided in the steps to acquire the license:
- First, in you need to pay the MCA to incorporate your business as a company.
- Then, you need to bear the cost of getting PCI DSS certification for your payment gateway.
- Afterwards, you have bear the professional charges of the following:
- Putting the required documents together.
- Filing the offline application of payment gateway license.
- Conducting a follow up with the Reserve Bank of India
- The above cost exclude the government charges of processing your application that RBI asks for.
It’s the final cost that you’ll pay to get the payment gateway license in India.
Once you’ve paid the price, have adhered to all the eligibility criteria, and have followed the proper steps, RBI will grant you the license.
You pay the technical payment gateway license cost to establish a secure electronic transaction portal. You’re asked to pay the eligibility cost to be considered worthy to obtain the license. And finally, you’re asked for the legal costs to get the application made by a professional and processed by the Reserve bank of India. Starting a payment gateway is a series, and cost-centric business. Only venture into it if you can afford to.
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