Will CCAvenue’s Free Pricing Model turn out to be a Game Changer?

Leading Payment Gateway, CCAvenue recently launched its ambitious Free Pricing Model waving off the initial setup cost for the payment gateway, which should come as a boon for startups & ecommerce companies. The new pricing model is solely a function of transactions, charging 5.5% per transaction. It compensates for the relatively higher Transaction Discount Rates (TDR’s) by waiving off the annual software upgradation fee for the first year. This move is expected to garner great reactions from early stage ventures that intend to test their product appreciation value.

With the competition between top payment gateways like EBS, Zaakpay and PayU, that is turning out to be neck-to-neck, this new pricing model by CCAvenue might just be the ideal first step towards revamping the decade-old pricing model followed by most payment gateways in India.

Lets look at the implications of this move by CCavenue on startups & entrepreneurs:

Pro’s:

• A good kickstarter for people who want to go lean and bootstrap. A lot of present-age entrepreneurs will be encouraged to test their ecommerce ideas, assuming the paper work is as smooth as the price model.
• Free initial setup and no software upgradation charges for the 1^st year will compel most early stage startups with minimal funding to choose this price model over other Payment Gateways.

Cons:

• CCAvenue’s Zero plan pricks where it hurts the most i.e., at every transaction. So the taker of this plan is reminded to upgrade on each transaction. A startup with 10% profit margin will not be able to afford 5.5% TDR.
• The new model still maintains ambiguity over its Transaction Success Rate that varies between a paltry 50-60%. Their checkout process is often criticized for being censurable and time-consuming. Other competitors like EBS, PayU have far better user experience in checkout process.

Overall, the new free pricing model is an ideal step in the right direction that was much awaited and came sooner than later. Yet, CCAvenue has to take care of a lot of issues like Transaction failure and customized API that makes it fall short of being the most preferred Payment Gateway in Indian ecommerce market.

Let us know below in the comments what you think about this new move by CCAvenue? Do plan to signup for it?