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How to choose a payment gateway?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20232 min read

If you want to accept customer payments on your website, you’ll need a payment gateway. From PayPal to Stripe, there are dozens of options out there to choose from, which might leave you wondering ‘which payment gateway should I choose’? While we can’t definitively answer that question for you, here’s a summary of what to look for when choosing a payment gateway.

What are payment gateways?

Payment gateways enable merchants to accept online and mobile payments directly from their ecommerce website. This is beneficial both to customers, who enjoy an easy checkout process, and merchants, who give their cash flow a boost.

A payment gateway is used to accept and authorize card payments. It does this by validating card details, ensuring there are sufficient funds to complete the transaction, and completing the transaction. Card details are encrypted and sent using secure servers, ensuring PCI DSS compliance.

Modern vs traditional payment gateways

One of the first decisions you’ll need to make when choosing a payment gateway is whether to use a traditional or modern service.

To use a traditional payment gateway, you would first need your own merchant account used to receive credit card payments. Examples of traditional gateways include services like Authorize.net and WorldPay. These take slightly longer to set up and do require that you register for a merchant account.

A modern gateway bypasses this step and deposits card details directly into your business bank account. Examples include gateways like Stripe and PayPal, which offer a quick setup and integration process. However, you can expect to pay slightly higher fees per transaction to cover the costs of this convenience.

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What to consider when choosing a payment gateway

Apart from whether to register for a merchant account, what else is involved with the question of how to choose a payment gateway? Here are some of the most important factors to keep in mind.

1. Hosting

Hosted payment gateways redirect customers to a separate processing website, where they must enter their card details. With a non-hosted payment gateway, the customer enters their card details directly on your website. There are pros and cons to each option. While hosted gateways add an extra step to the payment process, they also take care of all the security and maintenance on your behalf. By contrast, non-hosted gateways offer an all-in-one checkout process and greater customisation possibilities.

2. Cost

Cost should be at the forefront of any business decision and choosing a payment gateway is no exception. There are three types of costs involved with gateways, including initial or set-up fees, monthly fees, and per-transaction fees. You should think not only about the start-up costs but also about your trading volume and average transaction value.

3. Processing time

From the customer’s end, payment gateways enable immediate payment approval. However, the money might take some time to make it from this approval stage into your bank account to account for chargebacks or refunds. Holding periods might range from 24 hours to a full week, depending on your service provider.

4. Payment types

Another major factor to consider is which types of payments are accepted by each gateway. Most will enable Visa and MasterCard transactions at a minimum. However, you should consider the payment methods preferred by your customer base. Do they prefer to pay using debit cards or mobile payments? Do you need to set up recurring payments for subscription services? Do you need a payment gateway that supports multiple currencies? Be sure that your selection can handle the right type of payments.

5. Security

Finally, payment security is vital for your business success. A customer data breach can tank your reputation, so be sure that the payment gateway offers full PCI DSS compliance, encryption, and fraud detection. If you choose a non-hosted service, will you able to protect your own website from hacking and fraud?

Which payment gateway should you choose?

Ultimately, the right payment gateway for you will depend on your business’s size, structure, and typical transaction. Some will prefer the convenience of a fully hosted service, while others will prefer greater control over the checkout process. Be sure to compare cost, security, and payment types carefully before choosing your gateway and you’ll be well-placed to find the perfect fit.

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.