India is one of the world’s fastest-growing digital economies. With the rise of internet users, smartphones, and digital banking, more Indian consumers are shopping online than ever before. A major contributor to this shift is the growing use of UPI payments, digital wallets, and cards. However, international businesses looking to tap into this vibrant market often face several challenges.
While India offers a promising customer base, the country’s unique payment gateway landscape can pose a challenge for global merchants. PayU International Payments provides a seamless solution for international businesses to accept UPI payments from Indian customers, while facilitating settlement in their preferred local currencies.
By integrating UPI into payment flow through services like PayU International Payments, businesses can better connect with Indian consumers and improve overall transaction success. Let’s explore the challenges faced by international businesses when accepting international payments from Indian consumers, and most importantly, how to overcome them.
| Table of Contents Why India Matters to International Businesses Key Challenges Faced by Global Merchants in Indian Payment Systems How to Fix These Payment Challenges How Payment Systems Solve These Issues for Global Merchants India’s Payment Landscape Is Evolving Conclusion |
Why India Matters to International Businesses
India’s consumer market is massive. With over 600 million internet users, and a significant portion of them shopping online, India offers exciting opportunities for international businesses. What makes this market even more attractive is the rapid adoption of UPI payments.
However, tapping into this market requires more than just offering a product or service. The payment experience plays a critical role in user satisfaction. A failed transaction, an unfamiliar payment method, or a delayed refund can quickly turn a customer away, leading to cart abandonment, lower payment success rate, and reduced conversion rates.
Key Challenges Faced by Global Merchants in Indian Payment Systems
1. Limited Acceptance of International Cards
One of the most significant challenges for international businesses is the low acceptance of foreign-issued cards in India. While many Indians use Visa or Mastercard, their domestic versions are often limited to Indian payment networks.
For example, if a payment gateway doesn’t support domestic cards through local acquiring banks, the transaction may fail, lowering the payment success rate.
2. No Access to UPI Payments
UPI payments have become the preferred mode of payment in India. It is fast, free, and trusted. However, many international businesses do not integrate UPI into their checkout systems, which creates a gap between what Indian customers prefer and what is offered.
3. High Cart Abandonment Rates
Indian shoppers are highly price-sensitive and driven by convenience. If a checkout experience is slow or lacks local payment methods, such as UPI or popular wallets, customers often drop off. This contributes to a high cart abandonment rate, which affects the overall conversion rates.
4. Complicated Refunds and Disputes
Indian consumers expect fast refunds. However, when international payments are routed through global systems, refunds can take up to 7–10 working days. This delay not only irritates customers but also affects the credibility of merchants.
5. Regulatory and Tax Complexities
Operating in India means complying with stringent RBI (Reserve Bank of India) guidelines on foreign exchange, data localization, and other regulations. International businesses often struggle to navigate this regulatory maze without local support. Incorrect handling can even lead to blocked payments or fines.
How to Fix These Payment Challenges
To successfully capture the Indian market, global merchants need to localize their payment gateway setup and optimize for Indian consumer behaviour. Here’s how to fix the common issues:
1. Enable Local Payment Methods Like UPI
Adding UPI payments to your checkout is one of the most effective ways to increase conversion rates and improve customer satisfaction. UPI is available 24/7, supports instant payments, and is used by a broad demographic.
According to market experts, Businesses that enable UPI on their platforms witness a 35% increase in payment success rate and a 20% drop in cart abandonment.
2. Use Indian Payment Gateways with Local Acquirers
Partnering with a domestic payment gateway is crucial for resolving card acceptance issues. These gateways can process domestic cards, wallets, UPI, and even net banking—all of which are popular in India.
A local payment gateway ensures that transactions are routed through Indian acquirers, which results in better success rates, faster refunds, and compliance with local regulations.
3. Offer Multi-Payment Options to Increase Success Rates
It’s important to offer a wide variety of international payments and local options like:
1. UPI Payments
2. Net Banking
3. Debit/Credit Cards
4. Mobile Wallets
5. EMI Options (popular in India)
4. Enable Smart Retry Options
Failed transactions can be rescued. Intelligent retry systems, where the payment gateway attempts to retry the transaction using an alternative method, help recover lost sales.
For example, if a card payment fails, the gateway can prompt the customer to try UPI or net banking instantly. This smooth retry mechanism reduces cart abandonmentand improves success metrics.
5. Display Prices in INR with Local Tax Handling
Displaying prices in Indian Rupees (INR) can significantly enhance trust and streamline the checkout process. Many Indian customers drop off if they see a different currency or are unsure about the final amount.
6. Offer Instant Refunds and Easy Support
Indian consumers expect fast refunds, often within 24–48 hours. By working with Indian payment gateway partners, international businesses can ensure that refunds are processed quickly through UPI or local banks.
How Payment Systems Solve These Issues for Global Merchants
Many international businesses have successfully optimized their operations in India by integrating international payment solutions.
Some of the key improvements seen include:
1. UPI payments integration leading to over 30% increase in conversion rates
2. Localized payment gateway reducing failed transactions by 40%
3. Streamlined refunds help improve customer retention
4. Smart routing of international payments through Indian acquirers is increasing the payment success rate.
India’s Payment Landscape Is Evolving
India’s payment ecosystem will continue to evolve. Innovations such as UPI AutoPay, cross-border UPI, and digital credit are expected to experience growth. NPCI’s plans to take UPI global are already underway, with countries such as Singapore, the UAE, and France exploring integration. For international businesses, this means even more opportunities, but also the need to stay flexible and informed.
Conclusion
India offers huge potential for international businesses, but only if the payment experience is seamless, localized, and efficient. Integrating popular options like UPI payments, selecting a local payment gateway, and ensuring a seamless refund process can significantly increase conversion rates, reduce cart abandonment, and enhance your overall payment success rate.
