Choosing a Payment Gateway for Ecommerce
February 3, 2020 | Merchants | Dustin
Digital payments are expected to grow by 12% in the next three years. By 2023, online transactions are set to reach $6,699, 201. If your business doesn’t provide online purchases then you are missing out on the future of merchandising. Luckily, adding the best payment gateway to your web site has never been easier. Most companies offer seamless integration options. The only thing you need to do is decide on which payment gateway to use. To help you decide, read this guide to make your Ecommerce web site competitive in the digital world of shopping.
What is a Payment Gateway?
If you have ever bought something online then you have used a payment gateway. It is the transferring of funds from your customers’ credit, debit card, or other digital methods of payment to account for processing. Think of it as the bridge between your web site’s Ecommerce payments to your bank. The gateway also communicates with your payment processor which validates the legitimacy of your sale. It confirms that the payment method is accurate and funds are available.
You can choose to only include a payment gateway on your web site that directs customers to a payment processor. Or you can set up a merchant account on your site to include the payment processing without redirecting transactions. There are some advantages and disadvantages to both options as you will see later in this article.
How Does a Payment Gateway Help Your Business?
A payment gateway handles your transactions so you don’t have to. This includes security features like encrypting personal data as it travels through the internet. When you choose the best payment gateway it should safeguard your business from data breaches. Most payment gateways have built-in Frau detection software and suspicious activity alerts. It also allows your customers to check out of your store using an Ecommerce payment system. This makes it easy for them to use a range of payment methods without your company directly dealing when each one.
When you offer a seamless checkout process customers are more willing and free more secure to buy something from your store. The top reasons for costumers abandoning their online shopping carts include the check out process. About 23% of shoppers say that they gave up their orders after the checkout process took too long or was too complex. And 17% of shoppers didn’t trust the web site enough to use their credit card.
Payment Gateway Process
The payment gateway process can get technical as it uses several integration methods such an API redirection. To use a payment gateway you do not need to understand its technology.
All you need to know is how it processing your transactions and keeps your customers happy. Here is how it works:
- Your customer adds an item to their cart.
- They click on the checkout option.
- A form asks for their personal, billing, and payment information.
- Once the customer clicks the buy button this information is sent through the payment gateway via a secure pathway.
- The customer will either be redirected to the payment processor to confirm the payment or they will stay on your website if you own a merchant account to verify the payment with the credit card or bank.
- It is the payment processor that will either approve or deny the charge then return the customer back to your web site.
So, think of the payment gateway as a cash register in a physical transaction. It holds the payment and customer data only until it reaches the bank to be finalized.
Choosing Payment Gateway
The type of Ecommerce payment gateway you choose will depend on your business’ industry, size, and traffic. Some companies also have a brick and mortar location so they already have a payment processor and merchant account.
Other stores operate solely online and need to implement a brand new payment gateway. With somewhere between 12 to 24 million online shops in the world, each one has different needed when it comes to a payment gateway. Here are a few things to consider when choosing a payment gateway.
Does Your Platform Support it?
Your online shop could be using one of many different platforms. Not all platforms support every payment gateway. However, the major shops like WooCommerce will most likely be accepted by major gateways like PayPal. If you use a lesser known platform and are not sure which gateways accept them then visit their site where you purchased it. Their list of features should include integration information.
At PayKings, we are compatible with dozens of Ecommerce platforms and plugins.
Hosted or Integrated Payment Gateway
The way customers check out of your store depends on which type of gateway you choose. A hosted payment gateway is easier to set up as you just need to provide the third party with an API to link your web site. With this option, your customers will be redirected to the payment processor to complete their transaction. The advantages of this are a quick set up, keeps customer data off of your server, and is less of a responsibility.
The disadvantages are the lack of control of your transactions, mismatched design leading to customer confusion and mistrust, and slow and impersonal customer care. An integrated payment gateway allows customers to stay on your web site t complete the entire transaction. The customer feels safer when they are not redirected to a different site. You can also keep your brand and web site style consistent through the payment process. However, you are responsible for customer data as it is transferred through your server. Maintenance and processing errors are also handled by you.
Payment Gateway vs Payment Processor
If you don’t have a merchant account then you will need a payment gateway that also includes a payment processor. The payment gateway is the wire connecting your web site to the payment processor. In order to complete the sale, you need to purchase a payment gateway that also has an integrated payment processor.
A merchant account verifies transactions directly with Visa, MasterCard, etc. If you have a merchant account then you only need the gateway to transfer your customer’s data and payment information to your account.
Terms and Fees
The length of your contract and fee structure can impact your business financially. You do not want to get stuck in a long-term agreement that charged higher fees than you can afford. This also affects your customers and your overall business practice. If you have t implement service charges to your customers they will notice the increase in prices. And with a long contract, you have no way of making changes. Most payment gateway companies charge a percentage on each transaction and may increase as your volume becomes larger. A fixed fee can be beneficial if you plan on growing your traffic.
There is also the initial set up costs of integrating your web site and approving a merchant account. The good news is that you may receive a discount if you set up a verified merchant account. Companies also charge for returning funds. You want to provide an easy return option for your customers, so make sure this is a seamless and cost0effective process. Finally, some gateways will charge extra for technical support and fraud monitoring services.
These features are all necessary for a safe and operational payment process, but they shouldn’t cost you a profit.
Choose a payment gateway that has an established reputation. They should have many years of experience and a positive image among its users. Look at their reviews online and read their “about” section to get a sense of their history and philosophy.
Of course, there will always be negative reviews when a company serves millions of clients. When there is a negative review see if and how the company responses. Do they ignore the comment or are they proactive to fix the problem?
In addition to its customer service, a payment gateway should also have a history of security. If they have had several hacking incidences since their inception then something must be wrong. Consider how they use your transaction data and personal information. And if their network is subjected to fraud how do they compensate you and your customers. You also want your customers to be happy, so look into their authorization and declining standards. Do they decline cards for no reason and do they handle payment issues with ease?
Usability and Design
Your goal is to make your Ecommerce payment gateway accessible and engaging. Look for gateways that can be customized to match your brand and website design. You also want to limit the number of steps needed for your customers to complete a purchase. The gateway shouldn’t ask for insignificant information and shouldn’t take the customer through pages of form filling. The gateway needs to be fast. Customers will assume something went wrong if they are left waiting for a payment to process. They may decide to cancel the transaction.
Supportive Payment Options
Check to see which payment methods are accepted by the payment gateway. Main credit cards like Visa and MasterCard will most likely be accepted, but you may also want to include Discover and American Express. Other methods include PayPal Easy Pay, Apple Pay, and Google Wallet. These additional options give your customers a way to make payments easy if they do not want to use a traditional card. If it makes them more secure then include it.
Multiple Payment Gateways
To give your customers options you can use more than one payment gateway during the checkout process. Your customers will choose from a list of gateways before they click on buy and enter their payment information. It is simple to add multiple payment gateways. Plus, adding more gateways will increase your conversion rate and you won’t lose people at check out.
Certain gateways will allow you to add features that can help you streamline customer retention and expand your reach to new customers. Returning customers like to use reoccurring payments for items like donations or essential purchases. Have an option to save their payment information by creating an account to save them time during check out. Other gateways have unique add ons like currency conversions or they can act as a marketplace for your customers to sell items through your web site like eBay.
Make sure the gateway reaches as many customers as possible by being a global service, reaching all nations. Finally, a short settlement period is good for you and your customers. You do not want to wait to get paid and your customers want transactions to be completed in promptly to reflect on their bank account.
Not all Ecommerce payment systems allow high-risk websites. What are high-risk websites? Sites like online casinos, adult content, cannabis or vaping products, and travel booking are considered high risk.
The reason depends on the industry but it usually has to do with a legal grey area and high priced items like plan tickets. If you fall under a high-risk category then you need to find the best payment gateways that will not only accept your business but also secure your site.
Adding the Best Payment Gateway to Your Site
Now that you know how to find the best payment gateway, it is time to implement it into your site. You can start by getting a gateway quote from us to start processing your payment quickly and easily.
February 3, 2020 | Merchants | Dustin