Have you recently built an online store and are thinking of selecting suitable payment gateways for it? Are you familiar with the leading online payment gateways that most eCommerce sites use? Do you just need a little bit more information on choosing a payment gateway?
If your answer to any or all of these questions is ‘Yes’, you have come to the right place. This post will discuss different online payment gateways and guide you on how to use a payment gateway once you select it for your website.
What is a Payment Gateway?
A payment gateway is a mechanism or service that authorizes debit or credit card payments for online and offline purchases. Payment gateways are simply secure online links between the customer and merchant’s bank. They keep sensitive information, like credit card numbers, secure and protected from fraudulent entities. They keep this information encrypted, securely passing it among the merchant, customer, and payment processors.
Payment gateways are not only needed for online transactions. When merchants accept payments by fax, phone, or post, they still need to use a payment gateway. If you want to sell products online, you definitely need to use a payment gateway.
How do Payment Gateways Work?
You need to understand how online payment gateways work before you start using one on your website. As soon as a customer places an order, the selected payment gateway carries out several actions. This process is similar to a physical point of the sale process in a restaurant or shop.
To understand better, let’s go through the steps involved in this process.
A customer places an order for a product or service. To do this, the customer keys in their credit or debit card details.
The details will be encrypted and delivered to the web server of the merchant.
The merchant forwards these details to the payment gateways that the website is using.
The details are forwarded to the merchant’s bank linked with the card association (MasterCard or Visa).
The card issuing bank receives the authorization request. The bank then checks and verifies the details and sends a response code to the online payment system.
The payment system sends forth the response to the website where the order was placed. The merchant and customer receive the response on the ecommerce store.
Once the merchant fulfills the order, or before it is fulfilled, the money is deposited into their bank account.
This whole process, even though it sounds lengthy, takes only 2-3 seconds to complete.
Difference Between Merchant Accounts and Payment Gateways
People usually assume that merchant accounts are the same as online payment gateways. But this is not true. For an online transaction to go through, you need both of these. A merchant account is an entity that holds the funds before they are deposited into the merchant’s bank account. Online payment gateways are the mechanisms that approve or decline transactions.
Hosted versus Non-hosted Payment Gateways
Hosted payment gateways redirect customers away from the ecommerce site to make the payment on a securely hosted web page. After making the payment, the customer returns to the same website to get confirmation of their order.
Non-hosted online payment gateways allow customers to key in the payment details on the same website to buy the product or service. If the eCommerce site meets the technical requirements to enable this and has an SSL certificate, it can allow its customers to process their payments in this manner.
How to Choose Payment Gateways for Your Online Store?
Here are the factors you need to consider before choosing a payment gateway for your online store.
Image taken from Strikingly
1. Choose a Suitable Payment Flow
As you grow your business, different payment gateways can help you scale your sales transactions effortlessly. If you are a retailer or an ecommerce website owner, you need to select the most appropriate flow for your business. Here are three different payment flow options to consider.
When a website has an integrated payment form, it can send the payment information to a well-secured payment method. In this option, the payment details go through a secure form. All the required information is filled in the form and passed on to the gateway provider. An advanced web developer is usually needed to build this kind of form. The cost of creating this payment integration process is thus high as well.
The next option is to use a redirect for payments. This is the option where hosted payment gateways are used. The customer is redirected to another hosted page where they key in their debit or credit card details. This option takes relatively less time to integrate and thus costs less.
The third option is to go for an escrow system. This option is suitable for certain kinds of businesses. If an eCommerce site functions on an escrow system, it can withhold funds before the site admin gives the authority to release them. This is common for platforms that work as intermediaries between two trading parties, such as freelancing websites.
2. Choose the Correct Product
Payment gateways allow your customers to buy products or services from your online store. Before choosing a payment gateway, consider how adaptable it will be to the kind of products you are selling. At the same time, it is also essential to keep the security factor in mind.
Image taken from Strikingly
3. Make Your Customers Feel Secure
If you want to compete with the big players in the eCommerce market, you have to make your customers feel safe and secure when they shop on your site. Even if you are running a small business, your customers will expect a smooth shopping experience and easy-to-use payment gateways.
If you are selling anything online, you are competing with the giants like Amazon and Walmart. Thus you need to let your customers know that your website uses the most secured online payment gateways.
Customers feel safer if you use a payment gateway that allows you to brand your checkout page. Some payment gateways allow you to customize the entire payment process to reflect your brand’s theme, logo, and colors. If you can do that, then if your customers are redirected to a third-party hosted payment page, they will not realize they are out of your website to key in the payment details.
Another way to make your customers feel secure is to use a payment gateway certified for abiding by the information security standards.
4. Consider the Fees and Costs
Payment gateways are likely to charge you based on the type and frequency of transactions your business conducts. Other factors that affect the service charge of online payment gateways include your revenue consistency, the type of markets you serve, the average worth of your sales transactions, and the business model used on your eCommerce site.
It is critical to compare how different business models affect the fees of other payment gateways. A few types of models might require you to pay a certain amount as the setup fees. Some payment gateways might change their fees if your orders or transactions do not meet a certain specified amount.
5. Ensure Effective Transactions
The last thing you want as an eCommerce site owner is to get lots of shopping cart abandonments. This can happen if your customers do not find your payment process convenient to go through. A survey revealed that over 25% of customers abandon a purchase if asked to sign up for an account on the checkout page.
You have to make sure that you offer an easy and smooth checkout process to your customers. For this to happen, the payment gateways that you use on your site should function efficiently. Remove any unwanted fields from the forms of all the online payment gateways you use. Eliminate any redundancies, and keep the process as short and straightforward as possible.
Image taken from Strikingly
Another important thing is to make sure that the checkout process flows smoothly on all types of devices. For this, you would need to check the responsiveness of your site.
6. Compare the Features of Different Payment Gateways
Different online payment gateways can offer various features. Choose one that suits your business needs the most. If you are making international sales, use a payment gateway that provides a global solution and accepts several debit or credit cards and currencies.
Payment gateways also affect a website’s speed and efficiency. Use a payment gateway that supports all payment types, electronic invoicing, email reminders, and smart chargeback management.
Payment Gateways Available on Strikingly
Image taken from Strikingly
If you build your eCommerce website on Strikingly, you can select from many online payment gateways that we offer. We have Paypal, Stripe, and Square and also allow other offline payment methods. You can choose the ones you want to use by going into ‘Settings’ in your Strikingly editor and clicking on ‘Accept Payments’.
To conclude, payment gateways are an essential component of an eCommerce website and should thus be selected carefully with your business needs in mind. Choosing a payment gateway that does not suit your target market or product type can hurt your sales to a great extent. Therefore, it is best to do a little bit of research on the different options available before spending time and money on integrating the most suitable payment method.