How to choose the payment gateway for your E-commerce
With multiple options available at various prices and benefits, choosing the right payment gateway for your e-commerce can feel an exhausting process.
While some payment gateways are good options for all businesses, there are some integrations which inspire more trust, while some others are better suited if you have a physical shop too, or can be customised. Some integrations can boost your conversions and drive revenue growth, while a wrong, poorly performing payment integration can harm your business and its reputation by discouraging potential clients.
How to choose the best payment integration for your e-commerce?
To ensure a long-term and sustainable investment for your business, it is important to take the right decision when choosing the best payment integration for your online store, no matter your e-commerce platform.
With this blog we want to share our knowledge and experience in a short guide for choosing and setting up the right payment gateways on your e-commerce website. We will guide through how a payment gateway works and what minimal requirements to expect from a well-performing payment integration, so that at the end of this article you can be ready to make an informed decision.
If you continue reading, you will find:
- What is a payment gateway?
- How does a payment gateway work?
- What are the benefits of a payment gateway for your business
- How to choose the right payment gateway for your business: what to consider
What is a payment gateway?
A payment gateway is an online third-party service designed for merchants that is integrated in your website to handle payment authorisation and processing. Applied to the concept of an e-commerce website, a payment gateway allows it to accept and process payments.
Payment gateways can differ in features and functionality, but they are usually used for payments with credit or debit cards, as well as bank transfers and direct payments.
They facilitate the transfer of information between the payment device or portal i.e. a mobile phone or a website and the front-end processor, such as a bank.
A payment gateway works as a bridge between you and the customer. It handles your customer’s credit card numbers, expiration date and personal information of each transaction without you having to think about it. All you need is just to have a merchant account to link with the payment gateway in your e-commerce platform. It also acts as the bridge between your online store and financial institutions/payment processors, enabling the secure processing of online payments.
Acting as an intermediary between e-commerce sites and payment processors, the payment gateway ensures the card is legitimate, encrypts and transmits payment data, and facilitates the authorising/declining of transactions.
Payment gateway reports if the card has been approved or not, and it deducts the amount from your customer’s bank to the store account in case of a successful transaction.
All the transactions processed by the payment method will be routed to your merchant account automatically.
There are two different types of payment gateways available for an e-commerce platform:
- Direct: it allows customers to complete the transaction directly on your website. With this option, you are responsible for handling your customers’ personal and credit card information, however you shorten the checkout process.
- Redirect: it redirects customers to the payment processor’s website for the transaction, making them leave your website. It’s a good option for small businesses as it combines the convenience and the security of the external platform, but requires additional steps for the customers, and less control for the merchant.
When dealing with an international online shop, your payment gateway must be able to accept multi-currency transactions from your country and from your customers’ country of origin, without any conflict. The best way to handle this is by testing, eventually mix and matching your gateways.
How does a payment gateway work?
Practically talking, your e-commerce website needs a merchant account and a payment gateway to accept payment online.
Usually, you can count on a Payment Service Provider (PSP) to get both, avoiding the big headache of finding a solution yourself, and it is common to use the term “payment gateway” referring to any solution that integrates the services offered by a PSP.
Most payment gateways available online cover the services offered by a PSP, so now we use payment gateway as a synonym for an e-commerce payment integration that offers the services of a PSP.
When operating in your online store, a payment gateway performs several operations helping your customers to perform their payment, and your business to register it, returning a receipt and a confirmation.
- First, it passes the payment through the store’s server, transfers it from the payment portal to the issuing bank and asks for the confirmation.
- Depending on the bank’s response, the request can be accepted or rejected, with a ping to the payment gateway through the merchant server that allows or blocks the purchase.
This can sound long and complex, and practically it is. However, a good payment gateway allows these operations to happen within the matter of a few seconds, with a small probability bad user experience.
The type of payment gateways how they respond, and their security has a major impact on the way your customers experience and perceive your business, and this is why the choice of a payment gateways is among the most important business decisions the store owners can make.
What are the benefits of a payment gateway for your business
When selecting a payment gateway, understanding the benefits it offers is crucial. A payment gateway is more than just a tool for processing payments— it is a cornerstone of a seamless, secure, and user-friendly online transaction experience. Here are some key benefits to consider:
1. Secure Transactions
Good payment gateways employ advanced encryption techniques and comply with industry standards like PCI-DSS (Payment Card Industry Data Security Standard) to ensure the protection of sensitive customer data. This security layer not only safeguards your business from potential fraud but also builds trust with your customers, encouraging them to complete transactions without hesitation.
2. Enhance the Customer Experience
Payment gateways streamline the checkout process, making it quick and convenient for customers to complete their purchases. Features like one-click payments, saved payment details, and smooth mobile integration contribute to a frictionless experience. A positive checkout experience can lead to higher customer satisfaction and repeat business, and can increase the number of sales.
3. Automated Payment Processing
With a payment gateway, transactions are processed automatically, reducing the need for manual intervention. This not only speeds up the payment process but also minimises errors, ensuring that payments are accurately and promptly credited to your account.
4. Comprehensive Reporting and Analytics
Many payment gateways provide detailed reports and analytics on your transactions. These insights can help you track sales performance, identify trends, and make data-driven decisions to optimise your payment process.
5. Scalability
As your business grows, your payment processing needs will evolve. A robust payment gateway can scale with your business, handling an increasing volume of transactions without compromising on performance or security. This scalability ensures that your payment infrastructure can support your growth, whether you’re expanding into new markets or launching new products.
6. Integration Capabilities
Payment gateways often integrate seamlessly with other business systems, such as e-commerce platforms, accounting software, and CRM systems. This integration simplifies operations by ensuring that all payment-related data is synchronised across your business tools, reducing the risk of discrepancies and enhancing overall efficiency.
Struggling to choose the right payment gateway? The perfect fit can boost sales, streamline transactions, and build customer trust, but with so many options, it’s tough to decide. Let our experts guide you through the key factors to find the best solution for your needs. Contact us today and make the right choice for your business!
By understanding these benefits, you can make an informed decision when choosing a payment gateway, that aligns with your business goals and customer needs.
Fortunately, there are several great options that can integrate well with your e-commerce and provide a great experience for your business and your customers.
How to choose the right payment gateway for your business: what to consider
Choosing the right payment gateway is a serious matter for your business, as it should align with your business model, transaction volume, your target audience and your product and services.
The decision will impact the efficiency of your transactions, but also the customer experience and their own satisfaction.
Below, we share some important factors we advise you to consider when choosing the payment gateway for your business:
Platform integration
This first and most important thing you need to check when considering a payment gateway, is making sure that it is available in your e-commerce store, it works well on it (and so it has a good reputation online), it is easy to install, to configure and to maintain.
It is also important to evaluate the time needed to onboard and implement the gateway, factors which also impact the financial resources necessary to set it up and make it operative.
Target market
Nowadays there are hundreds of physical and online purchase channels all over the world, from the large circuits including Visa, MasterCard, Google Pay and Apple Pay, to systems that are spread in specific geographic regions. When choosing the right payment gateway for your business, always consider the location and the habits of the audience you want to reach.
Cost
When choosing a payment gateway, cost is a crucial factor to consider. Some gateways charge a monthly fee, while others may only charge for the transactions you process. It’s essential to evaluate your business model and transaction volume to determine the most cost-effective option. If you’re just starting out or have a smaller business, you might prefer a gateway that doesn’t require a high monthly fee but instead charges per transaction. Conversely, if you have a high transaction volume, a gateway with a flat monthly fee could save you money in the long run.
Transaction Fee
Transaction fees can vary significantly between payment gateways, and this can impact your profit margins. These fees are typically a percentage of each transaction plus a fixed amount. Some gateways might offer lower fees if your sales volume is higher, making it crucial to consider your current and projected income when choosing a gateway.
Understanding these costs upfront will help you avoid any unpleasant surprises and ensure that your payment processing remains within your budget.
Fraud Protection
Fraud protection is vital for safeguarding your business against unauthorised transactions, especially with the increasing prevalence of online payment fraud. A robust fraud protection system in your payment gateway can protect you from chargebacks and disputes related to stolen or cloned credit cards. Look for gateways that offer advanced security features, such as encryption, tokenisation, second factor authentication and real-time fraud monitoring, to keep your transactions secure and your business reputation intact.
Support and Customer Service
Reliable customer service is essential when dealing with payment processing, as any issues with your gateway can directly impact your sales. Ensure that the gateway you choose offers 24/7 customer support with experienced agents who can help resolve problems quickly and efficiently. This support can be crucial in maintaining seamless operations, especially during peak business hours.
Functionality
When evaluating the functionality of a payment gateway, consider the following aspects:
1. Digital Payments
The ability to accept digital payments is increasingly important as customers become more accustomed to using mobile wallets and other alternative payment methods. Ensure that the payment gateway supports popular options like Apple Pay, Google Pay, and PayPal. These payment methods not only offer convenience but also add an extra layer of security through features like two-factor authentication (2FA), which can help build trust with your customers.
2. Express Checkout
Express checkout options can significantly enhance the user experience by allowing customers to complete purchases quickly. If your business supports express checkout directly from the Product Detail Page (PDP), ensure that your payment gateway can integrate seamlessly with this feature. However, the availability of express checkout may depend on your specific business restrictions and needs, so consider whether this functionality aligns with your customer journey.
3. PCI Compliance
PCI compliance is a critical requirement for businesses that handle credit card transactions. Ensure that your payment gateway complies with the Payment Card Industry Data Security Standard (PCI DSS), which is designed to protect cardholder data during transactions. This compliance not only safeguards your business from potential security breaches but also helps you avoid hefty fines associated with non-compliance.
4. Needs of Your Physical Store
If your business operates both online and through a physical store, it’s important to choose a payment gateway that can handle both environments seamlessly. Look for gateways that offer card machines and support for in-store payments, ensuring consistency across all your sales channels. Additionally, consider how the cost of integrating a unified system for both online and offline transactions will impact your overall budget.
5. Hosted Gateway (for Small Businesses)
A hosted gateway can be a great option for small businesses that need a simple, cost-effective solution. With a hosted gateway, the payment processing is handled entirely by the gateway provider, reducing the burden of security and compliance on your end. This setup is particularly useful for businesses with lower transaction volumes or those looking to minimise technical complexities.
6. Refunds from the Backend
The ability to process refunds directly from the backend of your e-commerce is an important feature to consider. This functionality simplifies customer service and helps maintain a smooth user experience. Make sure the payment gateway you choose offers easy-to-use refund processing tools that can be managed from your business’ admin dashboard.
7. Flexibility and Customisation
The flexibility and customisation options offered by a payment gateway can make a significant difference in how well it integrates with your business processes. Consider whether the gateway allows you to customise the checkout experience to align it with your brand and customer expectations. A flexible payment gateway can adapt to your evolving business needs, offering features like custom payment flows, multi-currency support, and integration with other business tools you use.
Which payment gateway will you choose?
Choosing the right payment gateway to integrate into your e-commerce is an important step for your company.
Take some time and carefully evaluate your choices. Understand your business’s current online payment requirements and anticipate how these might change as you grow.
For any questions contact info@autify.co.uk or +44 0115 778 6950. We are happy to help you find the best payment gateway for your business!
