Factors to Consider While Choosing a Payment Gateway Provider

Similar to the number of eCommerce websites in the market, there was a scarcity in the number of online payment gateway providers anyone could opt for earlier. Thankfully, with evolution of digital commerce landscape, that isn’t the case anymore

Setting up online payment methods for products and services is no longer a challenge for eCommerce businesses.

According to research, 86 percent of customers make online purchases via credit or debit cards, and more than 60 percent consider it to be their favored payment method when making a purchase.

A payment gateway refers to software that securely interfaces between an eCommerce website and a customer’s preferred mode of payment, which can be their bank account, credit card, debit card, gift card, or any online wallets.

Some of the examples of recognized payment gateways are BrainTree, PayU, Amazon Payments, Stripe, PayPal, Skrill, to name a few.

Watch out for payment gateway providers list at the end of the article.

With the help of an online payment gateway provider, it becomes easy to accept several types of electronic payments. Instead of you having to set up and run all the software, hardware, connections, and security, online payment gateway services offer a complete all-in-one solution. For many small businesses, the ease of a payment gateway is an excellent way to run custom eCommerce Solutions.

Here are some of the questions you should ask yourself before choosing a payment gateway provider:

• What will be the service cost?
• What features do they provide, for example, fraud security, virtual terminals?
• Is it compulsory to have a merchant account for your chosen gateway?
• Does the payment gateway support your online store’s country?

To better understand the importance of these questions, let’s get into further details about how payment gateways work.

What is an eCommerce Payment Gateway?

A payment gateway is a software application that enables the secure transfer of credit card information from a website to the credit card payment network for eCommerce payment processing. Then it returns transaction details and responses from the payment network back to the website.

Although online transactions appear to be quick and straightforward on the plain surface, in reality, a number of processes work together at the backend to move funds seamlessly and securely from buyer to seller.

The Javelin Strategy & Research, 2018 monitored and evaluated the consumers’ payment preferences, which indicates the need to integrate an eCommerce payment system to any online site.

How does an eCommerce Payment Gateway Work?

The motto behind payment gateways is to make payment-processing effective, secure, and hassle-free. Instead of transmitting payments, payment gateway approves the funds that are transferred to the seller, and do as such in a safe and secure way for the buyer.

Payment gateways even observe PCI compliance standards, introducing myriad security techniques as expected, to prevent fraud. Below are the steps showing how payment gateway for eCommerce works:

Step 1: The process starts as soon as a customer places an order on an eCommerce website and fills their credit card essentials.

Step 2: The web browser encodes the data to be sent between it and the merchants’ web server.

Step 3: Next, the gateway sends the transaction data to the payment processor used by the merchants’ acquiring bank.

Step 4: The payment processor sends the transaction data to a card affiliation.

Step 5: The credit cards’ issuing bank sees the approval request and “approves” or “denies.”

Step 6: The processor then forwards an approval related to the merchant and customer to the gateway.

Step 7: Once the gateway acquires this reaction, it transmits it to the site/interface to process the payment.

Step 8: ‘Clearing Transactions’ is activated once the merchant has completed the transaction.

Step 9: The issuing bank changes the “auth-hold” to a debit, permitting a “settlement” with the vendors’ securing bank.

12 Important Factors to Consider when Choosing a Payment Gateway Provider

Before you make a decision to choose an eCommerce payment gateway provider, depending upon your business and functional requirements for your eCommerce business, given below are the factors you need to consider:

1. Choose an Appropriate Payment Flow

As your business grows, your eCommerce payment gateway should be able to scale along effortlessly. You need to select the most appropriate payment flow for your business to add a payment gateway to a website.

• A site with an integrated payment form used to send information to a secure payment gateway: With this option, payment details are sent through a secure form. The form contains all the required information and passes it to the gateway provider through API calls. This may require additional programming, and therefore, boosts the overall cost of payment gateway integration process.
• iFrame or redirect for payments: Either customers are redirected to a secure, hosted payment page, or they are required to enter their information in an embedded iFrame on the website. Developers can leverage this option as it takes less time to integrate.
• Having an Escrow system: This payment gateway option suits certain types of businesses. A secure escrow system, built within your eCommerce platform, can withhold funds before the admin grants the right authority. For example, if your platform works as an intermediary in trading operations, or serves as another type of online marketplace (like a bidding portal), you might need to create a dedicated on-platform store, where the traded funds of the two parties will be stored safely, and arbitraged while the deal is in process.

2. Choosing the Correct Product

When it comes to selling products and services online, a payment gateway provider is required on every website. It allows customers to buy a product or service, while business owners receive these payments hassle-free. To choose the right product, you should consider how adaptable your payment solution is while keeping its security in mind.

It’s also very important to figure out how to add a payment gateway to your website – this doesn’t mean you have to do it yourself, you should hire an expert to take care of this. Select the best online payment method for your business and for your customers.

3. Make your Customers Feel Safe and Secure

Big companies have taken the online shopping experience above and beyond – raising customer expectations from all eCommerce websites. Even if you are running a small business, your customers will expect a high-quality website that runs on the most secure payment options.

If you’re selling online, you are directly or indirectly competing with the likes of Amazon, Walmart, etc.

For instance, some payment gateways allow you to customize the whole payment experience to reflect your brand’s typeface, logo, and color palette. Some customers don’t even realize that they might be redirected to a third-party website temporarily to process their transactions safely.

Make sure your payment gateway provider is certified for following information security standards like PCI-DSS. PCI Standard is mandated by the card brands but administered by the Payment Card Industry Security Standards Council.

4. Consider Fees and Service Agreement Requirements

Pricing’s for payment gateways are commonly based on the type of transactions a business conducts (online or in-person), and even business sales, revenue consistency, transaction frequency, and the markets served.

It’s crucial to compare how the business model coincides with the payment provider, or a gateway’s fee structure. A few services may require setup fees and contracts, or they may charge transaction fees if a certain order and transaction volume isn’t met.

5. Ensure Effective Transactions

According to a survey conducted, more than 25 percent of customers will abandon a buy if they are compelled to register for an account to complete it. If your checkout procedure uses a third-party shopping cart with an enrollment procedure built into the cart, ensure that you can make it an optional factor that allows for a “guest” checkout.

Likewise, your payment gateway should enable you to remove unwanted form fields for a simpler checkout process. Big eCommerce businesses expect online retailers to boost conversions by up to 50%, by eliminating redundancies, such as wanting the customer to enter both billing and shipping information, even if the postal addresses are the same.

6. Make Checkout Easy on All Devices

Marketers believe that approximately 15 percent of e-commerce sales have happened on a mobile device in the past 2-3 years, and that figure is increasing steadily. As you evaluate your payment gateway options, make sure that you can provide a working checkout experience that is receptive to different mobile devices, and network types.

7. Multiple Features to Choose From

Online payment gateway service providers offer several features, depending on your business needs. For example, if you need to provide your products and services around the world, your payment gateway should provide a global solution, and accept several credit cards, debit cards, and currencies, based on different countries.

Payment gateways also impact your efficiency. Be sure to find out if your chosen payment gateway supports electronic invoicing, all payments types, text/email reminders for customers, smart charge back management, etc.

8. Easy Integration Process

Online payment gateway integration definitely isn’t a DIY process. Most payment gateways provide detailed instructions on integrating to popular eCommerce platforms like WooCommerce, Shopify and Magento, etc.

The ideal solution is to select a payment gateway system that doesn’t botch up your website’s UX with a slow payment process. Select a payment gateway that makes it easy and beneficial for your customers to make payments on your website where they can select a payment method of their choice.

9. Merchant Account

It is crucial to have a merchant account to receive funds through an online payment gateway.

What is a merchant account? It’s used when customers make an online payment through a payment gateway; the money is temporarily transferred to a separate retailer account. This is different from your actual bank account.

The cash stored in a merchant account has to wait until it gets approved by the customer’s processing bank. After approval, the money is transferred to your bank account.

Even though it seems to be an extra task, merchant accounts provide an extra layer of security and funds management for both sellers and buyers. As an alternative, some payment gateways do not require a merchant account, and transfer money directly to the seller’s account. In such cases, payment gateways can charge a higher processing fee.

10. Recurring Billing

Recurring billing allows you to set up an automatic billing cycle for your customers, making it an absolute necessity for companies with monthly payment plans. Subscription-based services like Netflix run on a recurring payment model.

Moreover, non-profits have found utility in recurring billing, as this functionality enables organizations to collect funds from regular contributors consistently.

11. Mobile Payments

In the coming years, mobile payments will replace credit card buying, even in point-of-sale environments. Payment gateway providers, with the help of mobile payments, enable buyers to transfer money using their mobile phones, either with top branded apps or with a mobile-optimized site.

Mobile payments are powered by payment gateways, but are optimized for mobile devices like phone and tablets. The rise of digital mobile wallets like Apple Pay, Google Pay, Samsung Pay, etc. has changed how customers pay through mobile, and payment gateways are adding support for all major digital wallets.

12. 24×7 Customer Support

Several payment gateway services limit their support to tickets, or emails. In this situation, users need to follow manual instructions to fix a problem. If you feel more comfortable talking to a person instead of sending emails, check whether the provider offers live technical support, at least within standard working hours, so that you can quickly resolve any technical problems.

Best Payment Gateway for Small Businesses and Startups

Small businesses or startups that rely on CMS’ like WordPress/Shopify, and don’t want to invest in larger e-payment gateways – can choose simpler, more CMS-integrated payment solutions for their business.

1. WooCommerce Payments

WooCommerce is a plugin that turns WordPress into an eCommerce platform. With $0 billed annually and no monthly fees, WooCommerce Payments is a convenient way to manage your transactions.

Due to the CMS-wide integration with WordPress, you can use all the features, which were previously available on third party websites, straight from your WordPress dashboard.

2. Shopify Payments

Shopify is perhaps the most widely used eCommerce platform in the world right now, so it makes sense for Shopify to provide their own payment gateway for its customer.

Along with all the basic payment gateway features, Shopify Payments supports stores in most of the countries that run Shopify. Similar to how WooCommerce integrates with WordPress, Shopify Payments is a native feature that can be accessed straight from your Shopify dashboard.

However, Shopify Payments doesn’t provide free service and comes with a starting plan of $29/month.

Dig a Little Deeper

Questions that cross almost everybody’s mind: What is the cheapest payment gateway? Are there any hidden costs? How long does it take to process the money? How much will Chargebacks cost?

Dig a little deeper to find the answers and ask vendors about:

1. Rates for rewards, business, and international cards: These rates are not the same as standard transaction fees. Find out if they’re higher than your budget allows.
2. Minimum limit and annual fees: A minimum limit means your eCommerce website has to make a sale of that set minimum amount, otherwise you can be charged extra. Some payment gateway providers also charge annually, instead of charging on minimums.
3. Chargebacks: Chargebacks are transactions with dispute. Customers can raise a dispute and have their money returned to them. A merchant receives this request and reverses the transaction.
4. PCI compliance: PCI compliance is an information security standard for secure card payments. All businesses may not be in a position to undertake this compliance due to heavy costs, in that case you can go with a payment gateway vendor that offers affordable rates. Make sure you ask your payment gateway provider about PCI compliance before finalizing anything.

Top 10 Payment Gateways for Your eCommerce Business

While choosing your payment gateways, ensure it meets all the requirements of your business and depends on experts’ suggestions based on reviews or feedbacks. Here are the top 10 payment gateways that we recommend to suit your business needs:

Braintree

Established in the year 2012, Braintree presently tops the mobile payment gateway platform. Financed by venture capitalists and enthusiastic investors, Braintree is different in its programming and the code can be set specifically into a merchants’ online site.

As a PayPal service, it offers a secure checkout experience to customers, thus encouraging them to return to the website. It is an ideal payment gateway for eCommerce businesses looking to process payments proficiently and enhance their order management.

Braintree Processing Fees: Standard 2.9% + $0.30 fee for every transaction you process through it.

Top Brands Using Braintree Payment Gateway: Uber, Dropbox, GitHub, and Yelp

Pros of Braintree Payment Gateway:

• Predictable flat-rate pricing
• Availability of extensive integrations
• Multi-currency options

Cons of Braintree Payment Gateway:

• Businesses without developer resources can’t use Braintree’s API
• No integrated online and offline solution
• Long setup times for account

PayU

PayU, a product of an Indian payment-processing corporation, is one of the easiest eCommerce payment solutions designed to fill in the gaps left by complex service providers. PayU is favored because of its best conversion rates and acceptance over several other payment methods. The PayuBiz APIs and SDKs help connect this platform to any website, application, or associated third-party systems.

PayU allows payment with just a single tap. It made an important technological breakthrough by allowing second-time/repeat customers to skip keying-in their CVV repeatedly. The platform even allows reading and submitting OTP on behalf of the customers, and conforms to the highest PCI and DSS standards to ensure payment information.

PayU Processing Fees: 2.9% with an additional $0.30 per transaction

Top Brands Using PayU Payment Gateway: Netflix, Airbnb, and Bookmyshow

Pros of PayU Payment Gateway:

• Tokenization allows you to store your customer’s credit card data safely
• Go live within minutes and start accepting payments in less than 5 minutes

Cons of PayU Payment Gateway:

• High frequency of crashes and lags
• Frequent changes in business model

Amazon Payments

Amazon is an eCommerce payment gateway that provides a secure and simplified payment service for customers. To facilitate their online buying, the service is available to both merchants as well as customers. It completely works on the data that is already inserted by the customer in their Amazon account to complete check-ins and checkouts.

With the help of a single login, the customer is instantly recognized and allowed to complete the transaction through either a web or a mobile. Amazon payments can be made in several languages and support all leading currencies in order to reach out to international audiences.

Amazon Payments Processing Fees: 2.9% on domestic transactions with an additional $0.30 per transaction. International fees escalate to 3.9%.

Top Brands Using PayU Amazon Payments: Lootcrate, Rothys, and MVMT Watches

Pros of Amazon Payments Gateway:

• Amazon offers no additional charges for its A-to-Z Guarantee, which makes the transaction 100% secure.
• Easy to customize Amazon Payments into the existing look and feel of your site.

Cons of Amazon Payments Gateway:

• Expensive for high-volume merchants
• Not recommended for businesses looking for one processor to handle both in-person and online transactions

Authorize.Net

Established in 1996, it is considered as one of the popular payment gateway providers for the eCommerce business. About 400,000 merchants use Authorize.Net payment gateway through credit cards and electronic checks. 83% of Authorize.Net customers are in the United States

Merchants deal with their accounts via Authorize. Net’s Merchant Interface. They can set up several accounts of a user to control access for every user. With an extra feature, Authorize.net is an easy win to maintain your online business.

Experts even consider it to be a good match for Magento stores and eCommerce.

Authorize.Net Processing Fees: 2.9% on transactions with an additional $0.30 per transaction for their “all-in-one” payment provider option.

Pros of Authorize.Net Payment Gateway:

• Wide range of currencies supported
• Robust security and anti-fraud features
• No long-term contracts

Cons of Authorize.Net Payment Gateway:

• High flat-rate pricing for an optional merchant account
• The all-in-one option may confuse customers

PayPal

Founded in 1999, both MasterCard and credit card payments can acknowledge it, and is free for buyers, while merchants need to pay transition fees while using PayPal for Visa payments. This eCommerce payment gateway provider does not require any setup expenses, gateway fees, or monthly charges.

Recently, PayPal has completed the acquisition of Honey Science Corp. (a digital shopping and rewards platform) for about $4 billion in cash.

The advantage is that merchants do not have to pay once the sale is done. While using PayPal Standard, customers may leave the site to checkout and sign in to their PayPal account or they can pay via credit card or Visa without signing up. PayPal Pro enables merchants to have and modify their entire check out process so that consumers do not have to leave the site. It also accepts credit cards via fax, mail, or phone.

PayPal Processing Fees: 2.9% per transaction, with no monthly fees

Top Brands Using PayPal Payment Gateway: Adidas, Disney, ASOS, and Etsy

Pros of PayPal Payment Gateway:

• Ideal for low-volume merchants
• Predictable flat-rate pricing
• All-in-one payments system

Cons of PayPal Payment Gateway:

• Not suitable for high-risk industries
• Inconsistent customer support

Here’s How We Launched a Unique Fashion Brand Using Magento eCommerce

Olah Inc. approached Net Solutions for the development of an e-store named The Style Library LLC. designed to serve an exclusive class of customers. The major requirements of the client were:

• Exclusivity on the site (to ensure that they work with and maintain top-notch clientele.)
• Maintaining the inventory of the store, along with sending regular reminders to customers who have items on loan
• Integrating easy payment options to make the experience pleasant and seamless for customers

Read the case study to understand how we built a personalized Magento eCommerce website for our client, integrated with PayPal Pro payment gateway for secure payment processing.

Skrill

Skrill is a UK-based eCommerce payment gateway designed for both businesses as well as consumers. With the help of Skrill, you can make international transactions, pay for products and services wherever you are with the help of a dedicated mobile app. Active users can submit a request for a prepaid Master card, and use it to pull back assets/buy products wherever they might be.

Skrill is simple to connect to any bank account globally and takes good care of the security of your payment data. There are no charges on creating an account on Skrill, but there is a fixed percentage of charges on what they are sending or receiving.

Skrill Processing Fees: 1.9% transaction fee

Pros of Skrill Payment Gateway:

• Supports in-app payments
• Integrates with third-party shopping carts
• Hosted payment page

Cons of Skrill Payment Gateway:

• Expensive fees (Convenience comes at a price, with lots of fees, including a currency conversion fee of 3.99%)
• Account stability issues

2CheckOut

If you are looking for instant payments, there is nothing better than 2CheckOut. It is a fully-featured payment processing solution that appears on all similar top lists and classifications. This prominent US-based top payment gateway provider enables your business to be a global moneymaker with 15 different languages and 87 currencies.

It supports different languages with different currencies with a sandbox feature that connects you to the marketplaces. Keeping your business in mind, it customizes every single detail of your checkout, thereby delivering a personalized user experience to your customers.

2CheckOut Processing Fees: 2.9% + $0.30 per domestic transaction

Top Brands Using 2CheckOut Payment Gateway: Bitdefender, Advisera, and myFICO

Pros of 2CheckOut Payment Gateway:

• Accessible documentation resources make customization onto your site simple and easy
• Ideal for international merchants
• Excellent website & advertising

Cons of 2CheckOut Payment Gateway:

• Not suitable for card-present merchants
• Not good for high-risk merchants

Stripe

Set up in 2010, Stripe is one of the top payment gateway providers that provide payment processing solutions to merchants. Their wide developing tools set them apart from other payment processing suppliers. Stripe has an important commitment to your eCommerce as a capable and adaptable API, which enables you to customize the platform as per your necessities.

It counts several incorporated applications: this means that you are not required to be an expert in coding: you can begin using it instantly. This online payment takes 7 days to process your payment and has no hidden expenses.

Stripe Processing Fees: 2.9% + $0.30 per domestic transaction

Top Brands Using Stripe Payment Gateway: Slack, Shopify, GitHub, and Spotify

Pros of Stripe Payment Gateway:

• Accessible documentation resources make customization onto your site simple and easy
• Ideal for international merchants
• Excellent website & advertising

Cons of Stripe Payment Gateway:

• Not suitable for high-risk industries
• Account stability issues

Orangepay

Orangepay is one of the top payment gateway providers. It is known for assisting difficult tasks, as it can offer you comfort and reduce risks by guaranteeing consistency with laws while offering assurance from fake transactions through various highly secured tools. Orangepay reduces the risk of rebelliousness for different approaches. Likewise, it includes SSL-encryption and 3D security to secure your private information.

This payment gateway provider offers great comfort to users by supporting a vast selection of popular payment channels including VISA or MasterCard, Bitcoin, Qiwi, PayPal, and Krill, etc. In 2018, it received the ‘Great User Experience’ award by FinancesOnline. Payment options are adaptable to suit different industry standards, thus making it a perfect choice for handling FOREX market companies, freelancers, and so on.

Pros of Stripe Payment Gateway:

• Anti-DDoS
• Chargeback Control
• Remote Account Opening

Cons of Stripe Payment Gateway:

• Not suitable for high-risk industries
• Inconsistent customer support

BlueSnap

A dedicated payment processor for merchants and retailers, BlueSnap helps you enhance your eCommerce business by supporting payment types with different languages and currencies. One can coordinate it with all top marketplaces and shopping cart platforms with direct payments. One can even make use of it to create exclusive desktop and mobile applications for SaaS(Software as a Service), gaming, invoicing, and so on.

It is completely operable as well as active and interfaces naturally to a worldwide network of procuring banks to guarantee the best conversion rates for every client. It is even notable for its Subscription Billing Engine, and clients can pay without the inconvenience of entering MasterCard or credit/debit card data.

BlueSnap Processing Fees: 3.9% + $0.30 per domestic transaction

Top Brands Using BlueSnap Payment Gateway: Vodafone, Semrush, Cakemail, and Autodesk

Pros of BlueSnap Payment Gateway:

• Month-to-month contracts with no early termination fee
• Fully-featured payment gateway

Cons of BlueSnap Payment Gateway:

• Flat-rate pricing is expensive for medium or larger-sized businesses
• $75 per month account maintenance fee for merchants processing less than $2,500

Conclusion

Selecting and integrating the right payment gateway provider isn’t that tough or cost-restrictive if you understand your business needs. By doing it right, you can have an immediate and positive impact on your brand’s customer experience and profitability. All you need is to consider the above-discussed factors before choosing and implementing the right payment gateway provider.

Another good case practice is to hire an expert and let them deal with all the technical aspects of integrating a payment gateway.

If you want more clarity on how payment gateways work for small and large eCommerce businesses feel free to contact us.