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What's A Payment Gateway and How To Choose The Right One

Choosing the right payment gateway

If you are an e-commerce store owner, then a payment gateway service is a must to process credit card payments. It is the equal of a POS (point of sale) device used to swipe a credit card for payments in a physical store.

How Transaction Takes Place

A buyer purchasing from an e-commerce website at one point needs to enter credit or debit card details to make a payment. The payment gateway is an application that communicates this data securely with the payment processor set up by the bank. The payment processor verifies the card details with the card company (MasterCard, Visa etc.), ensures funds are available, and authorizes payment to the bank on behalf of the store owner. This information is transmitted via the payment gateway back to the buyer. The whole process takes place within a matter of seconds.

High Security Standards

Any company, business or online store handling cardholder data must follow sets of rules and standards called the PCI-DSS (Payment Card Industry Data Security Standard). It ensures that all companies that process, store or send credit card information maintain a secure environment.

There must be a secure connection between the customer's browser and the web server. The payment gateway encrypts cardholder data and sends it to the payment processor using HTTPS protocol. The authorization result is also sent back encrypted. This ensures that the security of extremely sensitive information is not compromised by hackers.

Choosing the Right One for Your Online Store

Depending on the size, nature and reach of your business, payment gateway requirements for your online store may vary. Here are certain features you should check out for in a quality payment gateway for your e-commerce website:

  • Set-up and Transaction Fees: Payment gateways charge a one-time set-up fees when you sign up for their service. But, the more important thing to know is how much the payment gateway charges for transactions. Is it per transaction fees or monthly charges? The lower, the better as these costs can eat into your profit. However, transaction fees may be on the higher side with most of the popular payment gateways. Providers may offer transparent pricing but will charge extra for fraud protection and features like recurrent billing.
  • Currency Options: Where are you selling your products? If it is globally, then your provider should support foreign currency and language at checkout to offer a familiar local buying experience. Customers buy with confidence when they are able to select their native currency.
  • Multiple Payment Methods: Check if the provider accepts multiple payment methods including credit cards, debit cards and cash cards. The more options you provide, the more customers you gain.
  • Recurrent Billing: Does the provider offer automatic billing support for recurring payments, one-time payment, subscriptions etc.? These options will allow your customers to avoid manual payment renewals and optimizes checkout experience and grow customer retention.
  • Checkout Experience: Are the checkout options customizable and does the payment gateway provide flexible integration with your shopping cart software? It can be disruptive for the customer's shopping experience when redirected to a third party pay site. Integrated checkout keeps the entire payment process on your site, is secure and offers a seamless checkout experience. Small businesses choosing a hosted checkout can customize the hosted page to mirror their own e-commerce website and brand settings.

  • Mobile Optimization: Does the service provide mobile optimization so that customers can buy from any device? The checkout display page can adapt to customer's device while maintaining your brand settings and allow customers to shop from their smart-phones.
  • Security: What level of PCI compliance does the payment gateway follow? Researching on the extra measures taken by the payment gateway to prevent fraudulent activities can protect your business and reputation.
  • Payout Policy: Modern payment gateways do not need you to have a separate merchant account. Payouts are made directly to your bank account in batches and the frequency may be weekly or monthly. However it makes sense to open your own merchant account if you have a large business as per transaction fees are lower.
  • Support: Be sure to check out the level of customer support the payment gateway provides. Support may vary across service providers from 24/7 support to live chat or direct e-mail responses. Since payment processing is so crucial to your business, it is important to resolve problems immediately. These services are chargeable according to the level of support provided.

If you are reading this article, you are likely setting up a brand new online store. We understand that the process of selecting a payment gateway may be quite confusing but we are here to help you out. We specialize in high-end e-commerce website development and mobile application development and are perfectly placed to provide you solutions.

You can talk with our experts.

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