Paytm Vs Razorpay Vs Instamojo
SimplyGuest tenants pay rent at the beginning of the month. We started with cash and netbanking. Occasionally people would give me cheques. But that's too cumbersome. Now we have moved most of the guests to online payments. Occasionally we accept cash and netbanking transfers; but that's an exception.
We started with HDFC, but that was a terrible choice. They delayed the process by 6 months and they said, on the day we were to go live, they want 8 lacs of fixed deposit as a security. Apparently we were too risky for them. That bitter experience made me integrate three separate vendors for payments: Razorpay, Instamojo and Paytm. I switch between these 3 every month; randomly initially, but now I am narrowing it down to just 2. I'll probably select one vendor in the coming months to make operations easier.
SimplyGuest customers click on a 'pay' button; there are 2 primary ways to present the payment options:
- A modal popup is shown without leaving SimplyGuest.com. All payment related actions happen within this little window. When customers make the payment, the popup is closed.
- Customer is navigated away to payment gateway's screen. When the payment is made, they are navigated back to SimplyGuest.com.
I like the first approach. Customers don't notice too many changes on the screen; SimplyGuest.com is still visible in the background. That gives context to the payment they are making.
In the second approach, payment gateway rebuilds context of the payment on their screen by showing SimplyGuest logo and all the text I provide them with. And when customers come back to SimplyGuest, I have to rebuild the context of the payment they just completed.
Razorpay takes the first approach while Paytm takes the second. Instamojo takes the second approach by default, but they have provision to show a popup. But I had to build the popup myself.
Either ways, what happens within the payments popup or page is totally controlled by the vendor. They show various payment options like credit card, debit card, netbanking, wallet, etc, accept or reject payment before sending the customer back to SimplyGuest.com.
Choosing the payment gateway
Payment gateways take many actions when they receive payments; one of them is sending an email to the payer. Both Razorpay and Instamojo do this. But I don't like them sending emails to my customers. Its too obtrusive for my taste. When I buy a computer I don't want to receive one email from Intel thanking me for buying their chip, another email from Microsoft or Apple thanking me for buying their operating system, yet another email from Seagate thanking me for buying their hard disk. Who cares who manufactures a part in a finished product? I bought a computer, not a hard disk, or an operating system.
Razorpay agreed to stop sending emails but Instamojo said they can't. I don't use Instamojo anymore.
Payment gateways don't settle the amount they receive immediately. They take what they call as T+X days. If T is the day customer pays, they take X days to send that money to SimplyGuest. Definition of X is vague, it varies from vendor to vendor; but its anywhere between 3 to 7 days in practice, although they claim its between 2-3 days. They hide behind weekends conveniently. I have been running experiments over past months to know the nitty-gritty. September is probably the final experiment before I pick one vendor.
September 2016 Experiment
For September I split the payments among Razorpay and Paytm. On Sep 1, Razorpay processed Rs83,339 spread among 8 transactions while Paytm processed Rs82,827 spread among 7 transactions. First customer payments happened at 12:37am and 11:26AM for Razorpay and Paytm respectively. The last payment for Sep 1 happened at 8:55pm for Razorpay while Paytm did that at 9:55pm.
First week of September had a long, 4-day weekend. There was a Bharat Bandh on Friday, Sep 2. Monday, Sep 5 was a Ganesh Chaturthi. Banks were off on both these days. The weekend bridged the gap between them.
Both Razorpay and Paytm merged the transactions happened on Sep 1 before settling on 5th and 6th respectively. But nodal account takes another T+1 days before we can lay hands on that money.
The payment window for September was open until 3rd midnight. Any guest wanting to pay after that will have to transfer the rent directly to SimplyGuest current account.
I sent more payments towards both Razorpay and Paytm on 2nd and 3rd too. The surprising bit happened on 5th. Paytm settled transactions that happened on 2nd and 3rd too. This graph shows the timeline of all 3 days for both vendors.
T+X for Paytm and Razorpay (Mouseover for titles)
Its important for me to know precisely when the money is going to appear in my account. House owner and vendor payouts depend on this. Unlike payment gateways I want to give a predictable timeline to them. The maid servant doesn't understand any of the complexities involved in payment gateways. She just needs her payment on the day I promise her, holiday or not.
Paytm settled the last payment on 6th; Razorpay settled Sep 2 transactions on 7th and Sep 3 transactions on 8th. Adding nodal account's T+1 this became 8th and 9th respectively. 9 Sep was a holiday again in Bangalore due to Karnataka Bandh, but settlement wasn't affected as the HDFC branch that's settling the amount is in Mumbai.
Nodal Account and final settlement
All the money payment gateways send to SimplyGuest is deposited into a nodal account. Its a special kind of account. Unlike current or savings account, we can't hold money in it for more than a day. But at the same time we can't utilize the money on the day it arrives. Nodal account takes one day to clear the money accumulated in it. They call this T+1. Me and Ambarish sat down on 6 Sep to upload instructions to disburse money collected on 5th. This can't be automated; instructions must be manually uploaded using their portal and someone in the bank reads these instructions and approves them manually!
We could save one day if we use a current account directly in place of nodal account, but that's not an option due to the way SimplyGuest business is structured.
Clearly, Paytm has the shortest T on all 3 days. They processed payments on holidays too. Holidays in India are unpredictable; for example, Bharat Bandh and Karnataka Bandh happened from nowhere, so we'll have to see how Paytm behaves on unscheduled holidays.
I like Razorpay's user experience more than Paytm's. Is UX more important than a happy house-owner? I think yes — in the long term it pays off — but for now, I am going with a happy house-owner!
Oh wait! Isn't making users happy a goal in UX? Getting money sooner than later makes people happy.
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