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Best e-commerce payment system for a small business

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Last editedFeb 20234 min read

A speedy, reliable payment system is the backbone of any e-commerce store. You can offer amazing products at attractive price points, but any sale can fail at the final hurdle due to a poorly designed checkout page. Fortunately, there are many different types of e-commerce payment systems out there to choose from. In this guide, we’ll dive into these various options to help you find the right e-commerce payment system for your business.

What are the different types of e-commerce payment systems?

In traditional brick-and-mortar settings, businesses use a point of sale (POS) system to take customer payment details and send them through to the processor. E-commerce payment systems serve a similar function. Some use virtual terminals, which allow businesses to take in-store payments as well as over the phone and via email.

However, most businesses will use some form of payment gateway. Like a traditional POS, these connect your digital storefront to the payment processing network. The payment gateway provides the customer-facing interface needed to take online payments. Some integrate into your website while others redirect to a third-party hosted page to take secure payment details. The main role of a payment gateway is to receive and authorize payment details while safeguarding against fraudulent activity.

The best gateways let you take payment from any location, at any time, all with reduced transaction costs. Within this framework, you can choose from a variety of different types of e-commerce systems.

1.  Credit and debit cards

Many e-commerce payment systems focus on card payment collection. When a customer proceeds to checkout, they’ll input their card payment details including the unique number, security number, and expiration date. The payment gateway securely transmits these details to the card issuer for authorization and approval. In the case of credit card transactions, the issuing bank pays the merchant on the customer’s behalf. The customer then repays the bank over time, usually with interest. In the case of debit card transactions, the payment processor must ensure the customer has sufficient funds in his or her checking account to complete the transaction. Examples of this type of e-commerce payment system include services like Stripe, Adyen, and WorldPay

2. Digital wallets

A second category of e-commerce payment system, digital wallets include services like Visa Checkout, PayPal, and Apple Pay. These let customers store a variety of different bank account and card details online in a secure location. When they wish to make an online purchase, they simply log in with their username and password.

Benefits of digital payment services like these include a high level of security and convenience. Customers can log in and verify their details with multi-factor authentication including biometric data like fingerprints and face ID. These types of payment systems are also convenient for merchants, providing a frictionless checkout experience that can boost conversion rates. However, they do often come with higher fees that can cut into your bottom line.

3. Global banking solutions

A third category of e-commerce payment systems bypass cards altogether, instead focusing on bank account transfers. GoCardless offers a global banking solution that lets you take either recurring or instant bank payments directly from customer accounts. When customers are ready for checkout, they can complete the sale with a one-time mandate form to authorize payment collection on the preferred date.

Solutions like GoCardless are advantageous for cross-border businesses, handling transactions in multiple currencies using global banking networks. This gives an e-commerce business broad coverage with better performance. However, this type of system doesn’t cover 100% of payment preferences. If you have customers who prefer to pay with a wallet or card, you’ll need to use more than one solution. For this reason, the best e-commerce payment systems integrate with multiple partners for a fully customizable solution.

What to look for in an ecommerce payment system

Every business is different. Some might need a system with global reach, while others are purely budget focused. Here are a few of the key features to look for in any ecommerce payment system.

  1. Affordable costs: Most systems will charge per transaction but beware of hidden fees and start-up costs. Are there monthly subscription fees? Are there discounts for high volumes of transactions?

  2. Low failed payment rate: Card payments are prone to failure. Does the system use payments intelligence and smart routing to give customers a backup when their first payment attempt fails?

  3. Good for conversions: Does the system offer a fully hosted checkout page to improve conversion rates? Is it user friendly? Customers want a frictionless payment experience without too many steps involved.

  4. Payment tracking: A good solution offers full visibility over incoming and outstanding payments, so you can track e-commerce payments and see which invoices have been paid.

  5. Security features: If you take card payments, you’ll need a solution that’s PCI compliant. Look for additional features like fraud protection, multi-factor authentication, and encryption.

  6. Mobile optimization: Does the system integrate with mobile apps? If you choose a gateway that’s clunky on smartphones, you’ll lose sales.

How do I choose the right payment system for me?

The features above serve as a great starting point to help you choose the best e-commerce payment system. Perhaps the first question to ask yourself is whether you wish to use an all-in-one solution or open a separate merchant account. Another issue to consider is whether your payment gateway is hosted or not. A hosted payment gateway redirect customers to a separate page for processing, while non-hosted gateways integrate directly into your website. A non-hosted solution eliminates the extra step and offers wider possibilities for customization. However, this means you’ll need to take care of security and maintenance.

You should also consider value for money, considering your average transaction value and volumes. Customer support must also be top of the list when it comes to selecting a payment system. Is there 24/7 service if something breaks down or goes wrong? Is there a backup system so that your business doesn’t go offline? Are you protected from cyberattacks, hacking and fraud?

Ultimately, you should look for a payment system that caters to your customers’ preferences. This might include accepting multiple payment methods in multiple currencies. Today’s savvy online shoppers expect a smooth customer experience no matter the product or service. Make sure your solution works across multiple platforms, including smart devices.

How can GoCardless help with your ecommerce payment system?

GoCardless offers a fully customizable payments solution for small businesses. Collect customer payment details using a choice of drop-in modules and fully hosted checkout pages designed to fit your payment flow. Take one-off or recurring payments using ACH bank debit and open banking technology. By taking payment directly from customer bank accounts, you reduce the chances of late and failed payments.

There’s no need to choose just one solution, either. GoCardless integrates seamlessly with over 300 partners, including billing and invoicing software to fully customize your workflow. This gives you the chance to fully customize your e-commerce payments page.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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