The State Bank of India (SBI) plans to target government agencies and municipal corporations for its newly launched payment gateway, which, it says, will bring down transaction costs.
Over the next three years, SBI plans to bring on board all major public sector banks to use the payment gateway for their debit, credit card and Internet banking transactions.
Launched last month, SBI ePay is an aggregator service from SBI, which provides electronic connectivity with various banks and financial institutions, on the one hand, and merchants, on the other.
The bank said it has already tied up with nine banks, including its subsidiaries like State Bank of Mysore and the State Bank of Bikaner & Jaipur. So, for every transaction, a customer now has to pay a convenience fee as is the case with online ticket booking. However, the services to government agencies will come much cheaper, a senior SBI official said.
SBI plans to bring down the transaction cost so that the customers have to pay less as compared to other gateways like Billdesk and CC Avenue.
The online payment scenario in India is still not very promising as a report by the Reserve Bank of India pointed out last week. The central bank said out of the 37 crore debit and credit cards in the country, only 10-15% are used for online transactions.
Popular online aggregators include CCAvenue, PayU and Citrus Pay. Indian private sector banks like ICICI Bank, Axis Bank and HDFC Bank also have such services. However, no public sector bank has an aggregator yet.
Every online merchant needs to pay two kinds of charges to a payment gateway. It has to pay a one-time fee and, apart from that, it needs to pay a maintenance fee every year. For SBI ePay, a customer will have the option of opting for silver, gold and platinum services depending on the kind of services they require.
The official said that SBI will charge more for payments made through credit cards as the chance of frauds is the highest there and, thus, the bank will earn more commission from such payments.