May 13, 2000|
Payment Gateway - Revolution in Indian Banking System
Indian banking system is in the midst of a technological revolution. The alternatives to the conventional model of over the counter banking are upcoming payment gateways, which will facilitate inter-bank fund transfer and settlement over the web. Fund transfer over the payment gateway platform will substantially reduce the period for processing transactions, making it a forceful alternative to the electronic fund transfer (EFT) system of the central bank. The gateways will become operational as soon as the cyber laws are passed.
Among the banks, HDFC bank is the first to launch the payment gateway and ICICI is likely to be the first among financial institutions.
Payment Gateway of HDFC Bank
Recently HDFC Bank has announced the launch of its payment gateway solutions for use in Internet transactions. It will facilitate the users to shop online and pay by the credit card by entering the card number. The bank has tied up with Global Tele Systems for setting up the gateway. It has 40,000 customers conducting Internet banking and is targeting 150,000 to 200,000 customers in the current fiscal. Some of the features of its payment gateway are:
- It allows Visa and MasterCard credit card holders to do transaction online and realtime. The credit card details of the customer travel in a secure channel to VISA for authorisation and the customer gets online confirmation of the transaction. The confirmation takes about 10 seconds and the customer can then proceed to actually carry out the purchase.
- The gateway will ease the process of payment and settlement considerably as earlier the process of payment for transactions through the net was cumbersome.
- The bank will be receiving service charge for every transaction conducted through the gateway. It is planning to break even on the payment gateway project within a year.
- The bank has implemented payment gateway solutions on the easy2shoppe.com shopping portal. It has also tied up with fifteen other portals, including satyamonline, indiainfo, Fabmart, mantra, cyberITmall, cricketnext, indiacar and VSNL, and is in talks with 20 more to offer similar payment systems.
Implementation of payment gateway will positively impact HDFC Bank’s bottomline in terms of cost reduction. The cost of doing transaction on the Internet is fraction of over the counter transaction (estimated to be 1% of the physical fund transfer cost). Also the topline growth will get a boost with the increase in user base.
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