Choosing the right gateway takes a little time, but we’ve found a few ways to narrow down your options and make the process of choosing a little easier. Let’s explore how you can find the best payment gateway so you can get back to focusing on what matters more.
- The first and foremost requirement for any service that collects payments are adherence to Payment Card Industry (PCI) compliance standards. The PCI Security Standards Council is a global forum for the ongoing development, enhancement, storage, dissemination and implementation of security standards for account data protection. Anyone who also accepts credit card payments needs to comply with PCI-DSS rules.
- Regardless of the many other features they provide, the payment gateway integration process has to be fast and easy. There are still many solutions that require weeks of setting up before you can start charging your customers.
- Not all payment gateways support an authenticated tokenization process, which is required when accepting payments from a mobile app. And if this tokenization functionality is not provided by your Gateway API then you will have to handle the process yourself.
- A payment gateway should be chosen according to the company’s long-term business goals and transaction volume. It’s even more important to study the features of all payment gateways carefully before making any decision. Small business and startups look for the Cheapest Online Payment Gateways if their transaction volumes are low.
- If you’re a business having considerably low transaction volumes and low average transaction values, then you should probably look towards working with the most economical and cheapest online payment gateways that suit your business needs.
- Businesses that have expanded their reach in different countries and established customer relationships in many parts of the world must have Payment Gateway with Multi Currency Support. Multi Currency Payment Gateways let merchants offer their international customers the ability to pay in the currency they know best – their own.
- Digital wallets are the new future of payment technologies. The days of using liquid cash are coming to an end. Payment gateways also offer digital wallet facility and this is an added feature that you can expect from one.
- You may also want to consider the purchasing price of the gateway, if there is one. Free gateways are awesome, but they may have higher fees. Nearly all payment gateways have per-transaction fees or monthly usage charges. The gateways you evaluate may charge one or both, or may even scale their fees depending on how much you use it.
- If your business will be offering subscriptions or giving customers access to content via paid memberships, you’ll want to check if the gateways you’re considering support automatic payments for recurring plans. If they don’t, your customers will need to renew manually each month, which can be a huge pain.
- Application process and time frames are also something you need to enquire before choosing a payment gateway. It is important to find out how long the application process with a new payment gateway will take. And once approved, how long will it be before you’re able to process payments from your paying users.
- Some payment gateways impose specific time frames for contracts, such as a one year contract. If there are time frames specified by a contract, you’ll also want to find out if there are early termination or cancellation fees you’ll have to pay if you become unhappy with the payment gateway.
- Many payment gateways also offer a card updater feature for free or an additional fee, which automatically updates your customer’s credit card information when a new card is issued. That translates into a reduction of lost revenue due to failed payments from changed or expired credit cards. In addition to saving you money, the card updater is convenient for your customers.
- Some payment gateways offer advanced fraud protection tools that go beyond CVV and AVS. Every business is going to lose money to fraud, but fraud prevention tools help you reduce your losses. So, be sure to ask potential payment gateways about all the fraud prevention tools they provide.
- If you chose to leave your payment gateway, would you be able to take your customers’ data with you? Because if you choose to leave one where you don’t own your customer data, you would need to ask your paying customers to provide you their billing details all over again to set up with the new gateway. And this can get really troublesome.
- When reviewing potential payment gateways, find out the type of support they offer. While your startup may not need a payment gateway that provides 24/7 live support, you do want to make sure you can speak to a live support person when needed.
HOSTED VS INTEGRATED PAYMENT GATEWAYS
Hosted Payment Gateways
If you’ve ever used PayPal, you’re already familiar with a hosted payment gateway. Hosted gateways redirect your customers to the payment processor’s platform to input their payment information.
The biggest perk of this setup is that the offsite provider is responsible for all PCI compliance and data security. This is one less thing for you to worry about, and the major hosted processors will have information on their compliance and security methods available if you need it.
There are some potential downsides, however. In some countries, offsite payment processors aren’t trusted; in others, they’re actually preferred.
Also, the experience of directing a customer off your website can sometimes feel jarring, and can potentially harm your conversion rates if it’s not a gateway they know and trust.
The bottom line: hosted gateways are easy to set up and are fantastic for new stores, but can potentially hurt conversion rates if customers aren’t familiar with the processor.
Integrated Payment Gateways
An integrated payment gateway connects to your eCommerce website via the gateway’s provided API. The biggest advantage of this is that customers never have to leave your store to input payment information and submit orders — it’s a smooth, seamless experience.
The downside of this is that you’ll need to have the ability to integrate with the gateway you choose. Many eCommerce platforms are set up to smoothly integrate with a variety of gateways via API, but if you choose one that isn’t supported “out of the box,” you might have to do some custom programming to get it functioning properly.
Integration also makes you responsible for securely storing cardholder data and complying with your country’s rules and regulations, including the PCI Security Standards. A lack of security could put your customers at risk, or subject your store to an audit.
The bottom line: gateways integrated via API offer a seamless ordering process, but can be more difficult and time-consuming to set up, and will add one more responsibility to your plate.
PAYMENT GATEWAY COSTS
As you continue to narrow down your choices, try to be conscious of how each gateway will appear on your store, and what kind of experience it will offer your customers.
Think about the number of steps a shopper will have to take to get from their cart to a confirmation screen. If you’re asking too much of them, they might abandon their purchase.
Most payment gateway providers either have a demo on their website, or will be happy to show you a demo if you ask. This is a good way to get an idea of how the process will actually function on a store like yours, what screens customers will see, and what information will be requested.
Any payment gateway imposes 3 kinds of fees on a merchant:
- Setup Fees – A one-time amount you pay to start receiving the services of the payment gateway
- Annual Maintenance Fees – A maintenance charge for the operational costs of a Payment Gateway
- Transaction Fees – Amount deducted per transaction through the payment gateways
To understand what the merchant is liable to pay the payment gateway in a course of 1 year, let’s take an example of Rinkler Private Limited, a small enterprise with an average monthly transaction of 500 products and an average transaction value of Rs. 1000/-.
Let’s calculate the Average Yearly Income of the company,
Average Annual Income = Average Transaction Value * Average Transaction Volume* 12
1000*500*12 = Rs. 60,00,000
The Complete Fees to a Payment Gateway for a year would be,
Payment Gateway Fees Per Year = Setup Fees + Annual Maintenance Fees + Transaction Rate% (Average Transaction Value* Average Transaction Volume Per Month*12)
Suppose Rinkler Private Limited chooses PayUMoney, with a transaction rate of 2%, then Rinkler is liable to pay:
SF + AMF + TDR(500*1000*12) = 0 + 0 + 2%(500*1000*12) = Rs. 1,20,000 Per Year
Although you’ve likely already heard that switching eCommerce platforms is a pain, the same isn’t necessarily true for gateways. You can always work with a developer to prepare for a transition to a bigger and better gateway behind the scenes, or on a staging site.
You have plenty of things to focus on at this stage, so don’t be afraid to make the choice that fits your budget right now — you can always scale it up later if you need to, once you have more time or resources available.