How to Choose the Right Payment Gateway
With the increase in the number of ecommerce websites, the number of payment gateways has also increased. You now have a variety of options to choose from. Online payment gateway providers provide a complete solution, so you do not need to maintain the software, hardware or security. How to choose a payment gateway largely depends on your business requirements. Our web development experts from Perth list out a few tips to get you started.
What is a payment gateway and how does it work?
In simple terms, a payment gateway (PG) is a technology interface between your business and the customer. It acts like a bridge between the merchant (your business) and the issuing bank (the customer’s bank, which issues funds for the card used). While an online payment may seem very simple on the surface, there are a lot of processes working at the back-end. We’ve simplified the process in a few steps.
Step 1: Customer hits Checkout button like ‘Buy now’ or ‘Place the order’ on your website.
Step 2: The customer is taken to the Payment Gateway platform, where he or she will enter the card details. The customer is then taken to the issuing bank or a secure page, where the transaction needs to be authorised.
Step 3: Once the transaction is authorised, the bank will check if the customer has sufficient funds and respond back ‘yes’ or ‘no’ to the PG accordingly.
Step 4: The payment gateway interface will send the information to the merchant. If it’s a ‘Yes’ the merchant will ask for the settlement from the issuing bank. If the answer is ‘No’ the merchant sends an error message to the customer stating the reason.
Step 5: The settlement is done between the issuing bank and payment gateway.
Step 6: The settlement is then done between the payment gateway and the merchant.
Factors to consider while choosing a payment gateway
Here are a few factors to consider while you look for a suitable payment gateway for your business.
What are the preferred modes of online payment of your customers? What type of cards or payment modes do they use? Look for a PG provider that offers the types that are most commonly used by your customers.
Which countries does your business serve? Does the PG provider accept payments from those countries? If you plan to expand your business to other countries in the future, it is a good idea to check the serviced countries list. This will help you avoid changing payment gateways later on.
What are the currencies that the majority of customers may use? What currencies are acceptable for your business? It might be interesting to note, that a PG provider may accept payments from a certain country, but not it’s currency. So, you will need to pay extra attention to this factor.
Security and Compliance
One of the major reasons why businesses opt for a PG provider is security. Online payments need a whole new level of security, as it deals with sensitive customer information. Look for a provider that is fully compliant with Payment Card Industry Data Security Standards (PCI DSS) requirements.
Your online business may need to integrate with various third-party tools like Accounting software, Customer Relationship Management (CRM) software, eCommerce platforms, Sales tools and more. List out the third party platforms you need to use and compare with payment gateway provider’s integrations.
Hosting plan for a payment gateway means where the checkout process happens. Does it happen on the PG site? Does it happen on your site? In that case, how is the security managed? Hosting the checkout process on your site gives you the option of customising the page. But you also need to consider the trust that popular payment gateways like PayPal provide. A customer is likely to trust a recognised PG more than your own customised one.
More than 50% of online purchases are done through mobiles and the numbers are increasing. Does the payment gateway support mobile payments? How easy is it to use on a mobile device? You will need to test the payment gateway on actual mobile devices to check how well it functions.
Most PG options don’t charge any fees for set up, monthly fees or monthly minimums. The fees are charged per transaction basis. However, the least fees may not be the best option always. You need to look at other factors and make a decision based on the overall performance.
Payouts and Transfers
In addition to collecting payments from customers, you also need to consider how the payment gateway provider settles your payouts. Most popular providers don’t require you to have a merchant account. The payout is transferred to your active bank account that is linked to the PG account. You will also need to consider the number of days it takes for the provider to settle your funds.
User-friendliness and Merchant Support
It is important that customers must find it easy and quick to use the payment gateway. It is equally important that you, as a business owner, find it as easy and quick too. Would you prefer to stay away from the technical requirements? Do you prefer to customise the payment process? If you do need to get custom solutions, it is advisable to get professional help.
PCI DSS – Payment Card Industry Data Security Standards – a set of requirements to ensure all payment companies that deal with credit card information maintain a secure environment.
CRM Software – Customer Relationship Management software is a tool that keeps track of all customer interactions. CRM helps to build better customer relations and offer better solutions.