We understand that the card application is fairly long which is why we auto-save it at all steps so you can come back later to complete it. We hope you will submit your card application ASAP. We are open to constructive criticism as comments to this blog post or via email to contact@zaakpay.com.

Now let me first qualify the question a little more before I get to answering it. This question applies actually not just to PayPal.com but to all international online payment processors like authorize.net, 2checkout.com, rbsworldpay.com, etc. An international payment product like PayPal does work for those Indian merchants whose customers are based outside India because it makes collecting payments in various currencies so much easier with far superior fraud protection. However, there are a few problems associated with withdrawing the accumulated revenue to an Indian bank account that a merchant faces. For one, you have to always pay foreign currency conversion fee from USD to INR.

What I really want to discuss is why a global payment platform like PayPal does NOT work for Indian merchants whose customers are in India:

1. Paypal billing is in US Dollar - this is a problem for most Indian merchants. Showing a customer his total payment amount first in Indian rupees on the merchant site and then showing the same amount in $ on the payment processor website  is bad user experience. It scares most users and results in dropoffs on the payment page.

2. PayPal charges x% + a fixed $0.30 cents in USD as processing fees. The 30 cents in USD converted to INR just dont work for merchants where the transaction size is on the low side < INR 250. There is also a FX conversion fee of 2.5% on top of transaction fees that an Indian merchant must pay. All these eat in to the merchant’s margins.

3. None of the international players offer netbanking (enable an user to pay online from his Indian bank account in real-time). Internet Banking or real-time direct-debit or netbanking payments are about 30% of all web transactions in India, so they cannot be ignored.

4. PayPal and other international players are a few years away from providing a custom localized solution  for India; the current ecommerce volumes would not justify the investment. Also the legal and regulatory hurdles are far more significant for an international payments company than an Indian.

In essence, Indian web merchants today have 2 options:
1. Use international payment processors like PayPal, 2Checkout, Authorize.net, etc. with superior technology, lower lead times but higher transaction cost and only credit/debit card processing

2. or use Indian payment gateways like HDFC, Citi, CCavenue, EBS, TechProcess, Billdesk with card acquiring and netbanking payment options, lower transaction cost, but higher signup cost, longer lead times and inferior technology (compared to global players).