The business is impossible to imagine without paying for services. For some, a cash register is enough, but what about paying virtually?
An online payment gateway allows to establish the optimal payment for the products or services provided with maximum convenience for the client. It helps to accept payments in any form – in person or online. There are many platforms available currently. But selecting a payment gateway that will be safe and profitable at the same time is not easy.
Each system’s price, payment of fees, transaction types, functionality, and other parameters differ. Check our guide if you want your business’s proper e-commerce payment gateway.
What are payment gateways: understanding their purpose?
A payment gateway is particular software merchants used to accept credit cards and other electronic payments from buyers. It is an encryption system that protects buyers’ confidential information: their credit card number.
The software transmits payment info to the buyer’s bank. The online payment gateway authorizes the credit card payment and transfers the payment for the service/goods from the customer’s bank account to the merchant’s account.
Providers charge a monthly fee for using this software under the tariff agreed upon, as well as a payment processing fee.
How the online payment gateway works and why businesses need it
The payment platform collaborates with several parties involved in the payment process at the same time
client – cardholder;
merchant – payment received;
credit card issuing company – is a payment system that manages the credit card (Visa, American Express, Mastercard);
issuing bank – the organization where the client has opened an account;
the acquiring bank opened the merchant’s account.
All payment gateway examples work according to a similar principle. When the client wants to buy goods or services online, this happens in several stages:
The user clicks on the Buy/Order button on the merchant’s website;
The user proceeds to the payment page, where they can select the payment method which suits them best;
Having selected credit card payment, they have to enter the details;
The payment gateway encrypts the transaction information to transmit it securely to the processor and prevent fraud;
The customer’s bank and the buyer confirm the payment;
The payment gateway sends a notification to the client that the payment has been successfully executed.
The principal task of the payment system is online payment integration. It’s crucial to almost any business that wants to develop and grow. With the help of payment gateways, transactions become more convenient, reliable, secure, and fast. The system can provide a payment page that meets customer expectations, improving the customer experience.
Choosing the best online payment gateway: points for consideration?
Every business needs a secure payment gateway to accept online payments for goods or services using a credit card. With the help of this technology, the sender bank and the beneficiary bank can exchange information to confirm and transfer the payment. When selecting the suitable online payment gateway for your business, there are several important points to consider:
Fees and service charges
There are several cost factors to consider for the best choice:
the commission percentage of each transaction;
the monthly service charge.
A service fee is a monthly fee paid for the mere use of the service. A transaction fee is a percentage of each payment for making that payment. Some portals may not charge a service fee, and the fee per payment is quite high. Also, while selecting a payment gateway, it is worth considering several factors:
whether the service has a free demo;
whether there is a gateway integration fee;
whether there are any hidden fees for additional services;
whether there is a rebate fee/commission;
what is the minimum monthly fee;
whether international payments are available and their fees.
E-commerce payment gateway usually costs between $20 and $55 per month. The fee is around 2.9%, and extra 30 cents for the payment processing.
The suitable type of payment gateway
There are 3 payment gateway service types:
Hosting (payment takes place on another website). The customer purchases on one platform (in the shop), and the provider receives the transaction data. The Square functions according to that principle.
Redirection. In this situation, the gateway only directs the buyer to the payment processor. Redirection can take place in PayPal or Stripe.
Self-hosting (payment takes place directly on the shop’s website). All transactions are made on the merchant’s server.
The chosen solution should easily integrate the chosen solution into the shopping cart. It should be compatible with your business’s financial and other software products. Choosing the right gateway reduces integration and configuration time.
It is an absolute must to consider whether the payment gateway has customization options. For example, we can customize the payment page to match your business brand shades and add a logo. Only certain systems have this option.
Security level
When choosing a suitable payment gateway, consider the security level. The system must use state-of-the-art encryption to protect customers’ credit card data against theft. The gateway must remain PCI-compliant – following the bank card industry’s Data Security Standard (PCI DSS). It is a security standard that all businesses that accept credit card payments must comply.
Supported payment methods for services/goods
The payment gateway must support compliant payment methods. Credit cards can also accept payments through PayPal, Check, and others. Clients should also be able to get/generate an invoice to complete the payment.
Transactions directly on the website or on another portal
A payment gateway can process the transaction directly on the platform. In other cases, it can redirect the customer to another portal to enter details. In the first situation, a system that offers payment immediately on the site is worth choosing. If redirecting users doesn’t cause any problems, they can go to a separate page to make a payment.
Online payment processors VS payment gateway: which is better, and what is the difference between them?
People often confuse online payment processors with payment gateways, believing they are the same thing. The processor transfers information between the issuing and acquiring banks to transfer money to the retail account. You should use the payments gateway to contact the rest of the system and confirm the transaction.
Another point to consider is a payment gateway (PayPal and similar). It refers to the payment processor, gateway, merchant account, and other payment options.
How do I know which payment gateway provider is right for me? What questions should I ask myself when making my choice?
There are many online payment gateway providers right now. Each system is suitable for its purposes. Retailers have their requirements. Though, more extensive products, specialized services, and other serious businesses need specific solutions.
It is worth considering your business’s characteristics when selecting the proper payment gateway. Ask yourself the following questions when choosing a provider.
How do customers order services/purchase goods?
There are different fees for off and online payments. The service price is crucial because you should remember that the transaction charges a certain fee for the amount. Some providers may offer better terms for processing payments depending on your chosen business area.
How do clients make payments?
Some clients may use credit cards, while others prefer e-wallets. The method influences which payment gateway is best suited to the business. Some providers may offer more reasonable rates, options, and services so that customers can pay as they prefer.
What is the workload of the business? How much do you sell per month? How many payments do you make?
The number of sales per month has a direct impact on how many payments the customer makes. This factor is worth considering when choosing the best payment gateway. Businesses with a huge customer flow are better off selecting the gateway with the lowest commission per payment.
Small companies with small volumes should focus on payment gateways with higher transaction fees. But it should provide affordable monthly commissions.
Conclusion: How to choose a payment gateway and do the right thing
When selecting an online payment gateway or service provider, it is essential to answer several important questions:
Can the system’s services operate in your country and by your customers?
How is the financial information protected – encryption or other options? Are payment cards compatible with online payment?
Would you be better off with a standalone or hosted system?
What payment methods does the solution accept? Does it accommodate your customers’ needs?
Can you integrate the chosen solutions with all the software & platforms you need?
Does the gateway have the features that your business needs?
After starting a small business, the best and easiest option is to use the payment gateway service PayPal, Square, or Stripe. These providers have full control over the payment process. The merchant does not have to worry about setting up an additional bank account or financial software.
Using the proper payment gateway means you don’t have to worry about financial security. However, if your business has specific needs, choose a suitable service provider or consider creating a custom solution. You should set up a separate bank account, configure the equipment, and implement specialized software. This way, customers can pay with their credit cards comfortably and easily.
An e-commerce gateway is the best way to get ahead of the competition. It provides businesses one of the most convenient ways to pay their customers. If you still need to implement this software application in your business, do so as soon as possible. Get a free consultation from our specialists if you need help choosing a proper payment gateway and seamlessly integrating it into your business. We will happily provide you with the best solution for your project.
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