Choosing a Payment Gateway

Choosing the best payment gateway for your business will help you build greater trust with your customers, open up the opportunity for growth and expansion, and operate more efficiently than ever. Payment gateways are needed for any company looking to process transactions online, and there are a lot of factors to consider when choosing a payment gateway.

What is a payment gateway?

A payment gateway is a system that facilitates online payments. This is what connects the merchant and customer with the issuing bank and acquiring bank in order to process a transaction. When a payment is made online, the merchant’s payment gateway will transfer payment data to the acquiring bank – who maintains the merchant’s bank account. The acquiring bank then processes this information and requests payment from the issuing bank – the customer’s bank.

When payments are made online, there’s no physical credit or debit card involved. The customer simply enters their card details online, and that’s why this information needs to go through a few extra steps to be verified. The risk of fraud is a lot higher in card-not-present transactions, so we use data encrypted payment gateways to ensure sensitive data is processed and transferred securely. Without a payment gateway, it becomes a whole lot easier for fraudsters to intervene and steal sensitive information.

Furthermore, payment gateways help protect merchants from customers attempting to make payments with insufficient funds, expired cards or closed accounts. The payment gateway works to verify that the customer is able to make the payment.

Payment gateways in e-commerce

Finding a reliable payment gateway is so important if you run an ecommerce business. All of your customer interactions and transactions take place online, and this is only possible through a payment gateway.

While they all serve the same core function, different payment gateways can vary in a number of ways. You want to find a payment gateway that’s user friendly and won’t deter potential customers, while offering quick, low cost and secure payment processing. Here’s how to choose a payment gateway for your e-commerce store and the key factors to consider:

Security

Security is perhaps the most important factor when it comes to choosing a payment gateway. It’s important to ensure your customers can trust your business and your payment system; they’re giving you their sensitive data, and they’ll want to know it’s being handled securely. Look out for security features and find a payment gateway that explains clearly how data is protected. PCI-DSS certification with strong anti-fraud protection is essential for any trusted payment gateway, ensuring that card data will be managed, encrypted and transferred safely.

Processing times

Processing time is of course a major factor. Ideally, you’d want the payment to be processed in a couple of days at most, if not immediately. This won’t always be possible, but you can keep an eye out for payment gateways that boast speedy processing times. This will be beneficial to both you and the customer; they’ll get the product or service they’ve purchased sooner, and you’ll get paid for it sooner. Payment gateways that use a cloud transfer system tend to offer the fastest processing times.

Fees

Every payment gateway will come with its own terms and fees, and it’s crucial that you assess these costs before committing to any system. Fees may differ based on the type of transaction, your company’s revenue and sales figures, the frequency of sales, and more. Because of this, the most cost-effective payment gateway for your company might not necessarily be the same for others. It all comes down to how you operate and perform on the market. Be sure to look closely at all of the fees involved and how the pricing works, as well as factors like contract length, to ensure you’re using an option that will work best with the nature of your business.

You’ll need to have a solid understanding of your company’s finances in order to make an informed, advantageous decision. This might involve a bit of financial analysis, which will require a bit of extra time and resources initially, but can save you in the long run as you find a payment gateway with a pricing model that best suits your business.

Compatibility

Nowadays, many consumers shop exclusively from their phones, while others still prefer desktop for online transactions. It’s important to choose a payment gateway that’s compatible on every device. You don’t want to lose customers because making payments via mobile is buggy or disruptive. When looking at your options, make sure that you check device and operating system compatibility to ensure you’re maximising your sales potential in the digital sphere.

You might want to look at your existing customer data to see where most purchases come from. If you find that a large majority of your customers make purchases on your website via desktop, then perhaps mobile compatibility is less of a priority – but it should always be an important factor nonetheless.

Integration

Your chosen payment gateway needs to be able to slot easily into your existing online infrastructure. Whether you use Shopify, WordPress or otherwise to build and host your website, you should ensure that the payment gateway you choose offers seamless integration with your platform. This, like device compatibility, is important for user experience, which makes a huge difference when it comes to sales.

You should also be mindful of other factors that could negatively impact user experience. Minor details, like having to enter both billing and shipping addresses when they’re the same, or requiring customers to create an account before making a purchase, can dissuade potential customers. Look for payment gateways that allow you to customize or optimize the payment process to ensure a quick and painless transaction.

Recurring billing

As subscription-based services continue to grow in popularity, it’s important to have a payment gateway that facilitates recurring payments. A great payment gateway will allow you to set up and customize automatic billing cycles for your customers, helping you ensure you’re always paid on time and saving your customers a bit of admin each cycle, be it monthly, annually or otherwise. Whether you’re an SaaS company, a charity, a utility provider, a retail store or otherwise, setting up recurring billing through your payment gateway offers many benefits for businesses of all shapes and sizes.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.