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Online Payment Made Easier with Gateways

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Jacob Alex,Software Engineer

One big question for any online seller is “How do I process payments from customers?”. Most online businesses use a solution known as an “Online payment gateway”. If you want to provide the best buying experience for your customers, you will definitely need one that is good and reliable.


According to payment processing firm WorldPay, alternative payment methods (anything other than traditional credit or debit cards) will account for 59% of all transactions by 2017, up from 43% in 2012. Roughly 50% of online shoppers would cancel their purchase if their preferred method of payment was not available.


Since the checkout can make or break your customer’s ecommerce experience, choose the best payment gateway possible for your store and your checkout UX. 


What does this mean?

The more payment methods are available, the more customers an online store has access to and the more purchases can be made. Adding an array of additional payment methods means that customers are not restricted to solely using credit cards to make a purchase. If you sell internationally, your payment gateway must provide for the collection of payments that are made through international cards like Visa and MasterCard. If you have a broad domestic consumer base, your payment gateway should be able to collect payments through debit cards and net banking modes as well.


The best way is to opt for a payment gateway integration that provides for payment collections through numerous modes. A worthy payment gateway that offers you more than 100 payment collection options is better, as the customers today use numerous payment modes for making online payments. A payment gateway is a powerful tool that helps to reassure visitors to your store about your trustworthiness.


How does payment gateways work?

A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The payment gateway may be provided by a bank to its customers, or by a specialised financial service provider as a separate service.


Things to consider before setting up a payment gateway

  • Payment gateway cost (Setup fee, TDR, Annual free, etc)
  • Time to setup everything
  • User Interface of the gateway
  • Payment options (Credit/Debit Cards, Netbanking, Mobile Wallets, etc)
  • After Sales Support


How does Payment Gateway charge you?

When choosing a payment gateway, there are three major factors you need to consider: Transaction fees, Monthly fees and Setup fees. These factors will vary by processor, so make sure you choose one that meets your needs and budget.


  • Transaction fees

When you process a payment, some gateways will keep a small part of the charge for letting you use their app. You will either pay a flat fee per each transaction, an established percentage from each purchase or a combination of both charges. These charges encompass a transaction fee.


  • Monthly Fees

Some payment gateways will charge a subscription fee to let you collect money with their app. This monthly charge might vary based on the volume of payments being processed or the number of bank accounts where the payments are going.


  • Setup Fees

Setup fees include any costs that might be associated with setting up your payment gateway account. You will only need to pay this fee once.


Major Factors to consider on choosing a payment gateway

  • Does your ecommerce platform support the preferred payment gateway?

Whichever platform you’ve chosen, there will be a range of off-the-shelf plugins or extensions to help you integrate with major payment gateways.Wherever possible, choose a payment gateway that already has a plugin for your platform.


  • How do you want the customers to enter the payment details?

Technically there are three ways to take payment details from a customer.


  1. Details posted on your server from a Payment form on your site: This is the smoothest checkout experience for customers but unfortunately this is the least secure way of doing things so you’ll need to take very serious security precautions to remain PCI compliant.Unless you’re turning millions  per year, this probably won’t be cost-effective.

  2. iFrame or redirect: An alternative is to include putting the checkout form in a secure iFrame (within a page on your site) or redirecting customers to a hosted payment page. It’s harder to get the payment form to match the rest of your website with these approaches, but they’re also the most secure way of doing things.

  3. Details sent straight from browser to secure payment gateway (not via your server): A solution to the above problems is to use a payment gateway.Your customers type their card details into a form on a page served from your site, but the payment gateway code communicates directly with the payment server. The customer’s card details never pass through your web server. Your security responsibilities will be less than with a normal form, but much more involved that with an iFrame or redirect.


  • Does the provider have a good reputation?

Payment processing is critical to your business, so you’ll want to work with a provider who has a good reputation in the industry. Some payment providers have had problems with outages. Others have a reputation in some circles for blocking merchants’ money without due cause. If you haven’t heard of a particular payment provider before, be a little extra careful before signing up with them


  • Are you in a ‘high-risk’ business?

Some businesses are considered by payment providers to be ‘high-risk’. This is generally because of the sector they operate in.

Some high-risk sectors include:

  1. gambling
  2. adult content
  3. travel
  4. tobacco
  5. debt collection
  6. e-books
  7. electronic cigarettes
  8. diet programmes
  9. credit repair


A note on PayPal

You do not necessarily need to limit yourself to one payment gateway. Lots of ecommerce platforms allow you to offer multiple payment options to your customers. The most popular ‘secondary’ option to offer is PayPal. Even if you do not use PayPal as your main payment gateway, consider offering PayPal as an alternative way for customers to pay as a backup in case of any problems with your primary payment gateway or merchant account.


Some popular Payment Gateways

  • PayPal
  • Stripe
  • Authorize.Net
  • Braintree


Stripe vs Paypal - a comparison of the two leaders

paypal vs stripe


Wrapping Up!

Do not let payment gateways be roadblocks to setting up a successful online business. Make sure to choose the suitable option for your business. However, it is too easy to become overwhelmed by the plethora of payment gateways online. Hopefully this blog will provide you a fair idea about payment gateways and how to choose from what, for your business.

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