Ecommerce payment processing through a payment gateway is an essential part of any business in today’s global market. People all around the world are using more and more online payment options, and it’s a merchant’s job to make sure that his customers are happy and safe while they do so. But understanding which gateway is the right one for you or how payment processing works can be a bit tricky at times. This is why, before committing to anything, you should do your research and understand how these things work and which ones would best work for you.
What Is A Payment Gateway?
Firstly, any e-merchant should understand how a payment gateway works. These are pieces of software that replace the POS you would typically see in a brick and mortar establishment. It is called a gateway because it lets transactions go through and enables the communication between the buyer and your merchant account. So, in theory, all you need for your business to start accepting payments online is a merchant account and a gateway. But things aren’t that simple. There are more aspects you should consider. For instance, you also need a select plugin that helps your website and gateway work together. This can be usually found relatively simple but is an essential part of the whole process.
Another thing you need to consider is that not all gateways are created equal. There are a lot of stuff gateways can do, and some can do them better than others. That is why you should focus your attention when choosing a gateway for your business, on the one that lets you do the most things. But also remember that different types of gateways, with various features, mean different fees may apply. To do so, you should know that there are three main types of gateways:
Redirecting gateways
This means that when a customer is ready to pay for their purchases, they will get redirected to a platform, such as PayPal, on which they can take the necessary steps to complete their purchase. This kind of gateway is ideal for small businesses because of the protection major platforms use for their transactions. Still, it also means that the customer has to do a few extra steps before they finish their order.
Checkout on site, payment off-site.
Some businesses may find these gateways are better for them. They work using a two-step process. The first step is the checkout, which is done on your site. The second step is the payment, which is done on the website of the platform you choose to work with. The most significant advantage of this type of gateway is that sensitive card data from the customer isn’t stored on your site. The downside is that you can’t control what happens after the customer leaves your site.
On-site payments.
This one is usually reserved for very large businesses that can afford to invest heavily in servers and security. In this scenario, the checkout and payment are made on your site, and you have full control over the customer’s experience. But, as they say in the movies, with great power comes great responsibility. You will be responsible for handling the customer’s credit data, and you have to make sure that your security is air-tight so that there are no leaks or breaches.
What to Know When Choosing a Secure Payment Gateway
When it comes to choosing the right payment gateway, there is no easy answer. Some specialists say that it all comes down to security. Others will tell you that you should take into account other issues, such as fees. You have to make sure you know what you want from your gateway before you start using it. There are a few questions you could try and answer before choosing one that might help you make up your mind.
What kind of payments do your customers most frequently use?
Once you know what the preferred methods of payment of your customers are, you can start looking for a gateway that brings together most, if not all, of them. Staking gateways is a very popular practice, but be careful not to get stuck paying fees for the ones you rarely use. Also, the more gateways, the more security protocols there are, and the safer the transactions are.
What does your payment gateway cost?
It pays to stay safe. Yes, the more security technology goes into it, the more expensive using a gateway will be. But in the long run, paying for a better gateway saves you money in avoiding fraud and other unpleasant events.
Encryption security?
This should go without saying, but always make sure that your gateway is PCI compliant. The standards of PCI DSS are here to protect both you and your customers. And the more secure your customers feel, the more they will be inclined to work with you.
Check for reputation?
As in any area of business, there are a lot of people out there looking to make a quick buck by offering cheap services. But cheap in the payment gateway world usually means uncertain and insecure. You don’t want your clients abandoning you because you chose to save a few dollars. Before starting to use any gateway, check their reputation, and see what other companies they work with. If all else fails, start looking for large providers like Amazon Pay or PayPal. At least you know where you stand with these guys.
Who’s Involved in Ecommerce Payment Processing?
Ecommerce payment processing always involves at least 3 parties. The first one is you, the merchant. You are trying to sell your products and services. The second one is your customer, which wants to buy them from you but needs a way to pay for them that is easy and safe for him. The third party is the technological solution that enables you and your customer to connect and do business.
Customer behavior has changed over the past decades, and more of them are now preferring novel ways of payment for the products and services they buy online or even in traditional stores. This means that merchants and merchant banks have to come up with ways of making those payments possible with minimal risk to all the parties involved. Ecommerce payment processing is one of the ways you can do that. The process is usually very straight forward, with the transaction being processed in a matter of seconds.
Advantages and Disadvantages of Ecommerce Payment Processing
Benefits
- Online payments require less labor from a bank employee, thusly resulting in lower labor costs as opposed to traditional payment methods, such as cheques, money order, or cash.
- There is a greater convenience to buying and selling online, and thusly a greater convenience in paying online.
- The fact that payment is automatic is one of the greatest advantages to both customers and merchants.
- Transactions are fast and so do not require extended periods to process and to move money from one account to the other
- There is a significantly lower chance of theft than in the case of traditional forms of payment.
Disadvantages
- Service fees may apply depending on who’s doing the processing.
- They’re not the optimal solution for offline sales.
- Although there is a lower chance of theft, there is still a genuine and high risk of cyber-attacks that may do even more damage than just stealing money.
- Both merchants and customers rely heavily on the communication infrastructure available to them.
