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How can a merchant in India conduct e-commerce? There are several approaches.

A merchant account through a major bank is best for larger companies but a bit pricey for small businesses. PaySeal (www.payseal.com) is the payment gateway for ICICI Bank. Citibank India (www.citibank.com/india/) and HDFC Bank (www.hdfcbank.com/wholesale/sme/Payment_Gateway_Services.htm) also offer a payment gateway and merchant account, but details aren't on their websites.

A second approach is to use third parties that take credit cards for your sales. CCAvenue (www.ccavenue.com/indianrupees.jsp), an Indian company, provides direct debiting for customers in India with accounts at: HDFC, Citibank, ICICI, IDBI, UTI, Global Trust Bank, Centurion Bank, and the Federal Bank Ltd. In addition, credit cards can be received from customers outside India. Typical costs are a Rs. 7,500/- set-up fee, Rs. 1,200/- annual fee, and 7% to receive credit cards, 4% for net banking transfers. Transecute (www.transecute.com) includes fraud detection and risk mitigation. They charge a Rs. 30,000/- set-up fee and 5% per transaction. Also consider companies mentioned in "E-Commerce When You Can't Get a Merchant Account," Web Marketing Today, Feb 15, 2006. (www.wilsonweb.com/art/ecomm/3rd-world-ecomm.htm)

A third approach is to set up a PayPal account (available to residents of India) and use PayPal's merchant tools to accept credit cards and sell online. The downside is that you can't directly withdraw PayPal funds to a bank in India (though you can request a check). But you can transfer US dollars in a PayPal account to Remit2India (www.remit2india.com), a service of the Times of India. They convert it into Indian Rupees and deliver it to your designated recipient. Costs are the PayPal recipient fee of 2.95% plus 3% to 5% fees for Remit2India. See details in their FAQ. (www.timesofmoney.com/remittance/jsp/toi_faq.jsp?uiId=TOI&partnerId=TOML&faq=paypal)

As with many online transaction companies, most of the companies mentioned above have received some complaints that can be found by searching on the Internet. Let the buyer beware!