More than 80% of all purchases in the US were expected to be cashless by 2022. Further, the entire value of online payment transactions is projected to increase by more than 15% from 2020 to 2025.
Payment gateways are progressively driving the payment process, with the trend of going cashless and digital payments gaining greater acceptability. Therefore, they optimize the payment experience for both the company and the customer. Using a credit card or another digital payment system speeds and simplifies payments, allowing transaction finalisation.
Whether they manage an online business or a physical location, a payment gateway lets retailers take credit card payments. Consider it the digital selling equivalent of a cash register in digital form.
A payment gateway must be secure and simple, just like a physical register. Before you choose one, you should learn how it works from the fundamentals, what will work best for your situation, and what types of gateways are available.
There are three common types of payment gateways typically used by businesses:
This type is usually used by large businesses that could handle those resources and the payment process on their servers. On-site payments mean that everything from checkout, authorization, and payment all happen on your website.
Control is the main advantage. You supervise the entire client experience, ensuring that you can personalize and maximize every aspect of the transaction. Those with a high volume of sales, particularly stores, most certainly have the best chances for improved performance and greater profit.
More control brings more responsibility. You will be in charge of a safe environment, data usage, and performance of the servers, reporting, and compliance will help to ensure their dependability.
With this setup, the client will stay on your website for checkout, but the payment will be dealt with in the background by the gateway provider.
This strategy gives you a good blend of independence and security. You get to keep the shopping experience smooth while the gateway handles the payment in a more complicated, secure manner.
The negative is that you will not have complete control over the entire process, especially the back-end aspect, so you'll want to make sure that if you pick this option that you use a genuine and safe gateway provider.
While there are many positives, payment gateways may not be without their cons. Understanding limitations is essential before selecting a solution for your firm.
Payment gateways occasionally guarantee compatibility, although very few support all card types or payment methods. A couple may exclude entire card issuers or payment processors. This could be a problem if your clients prefer specific ways to pay and you cannot satisfy their preferences.
Tip: Before deciding on a gateway, be sure to check to see what payment types your customers commonly use, and ensure the gateway supports them. Do not assume complete coverage; ask all the right questions about exclusions.
If your objective is capturing a worldwide buyer base, your payment gateway must allow for global eCommerce as well as local contextual payment options. For example, while clients in the U.S. will pay using credit cards, customers from China commonly pay with Alipay.
You should also be cautious of additional expenses. Certain gateways charge more for international/cross-border transactions, which merely add to the overall cost of your products, both for your customers and yourself.
Tip: You may utilize services like Webinterpret to help you localize the checkout experience. These solutions will interface directly with your eCommerce store and allow transactions in up to 25 different currencies, making it easier for international shoppers to make their purchases.
As more people move to digital payments, it's increasingly important to ensure payment systems are protected. A recent study shows that nearly two-thirds of consumers will avoid the retailer if they experience a data violation. Therefore, it's important to know some of the potential security risks in payment gateways, even when using a reputable provider.
Even the best-quality payment gateways might have mistakes. The following are some of the most common flaws to be aware of:
Most payment gateways will protect card and transaction details with TLS encryption while processing. However, once such information reaches the merchant's server, there could be flaws. The merchant's server could be a possible target if it is improperly secured.
A payment system can be extremely secure, but you cannot control your clients' gadgets to the same degree. If a mobile device is compromised, it could allow unlawful access (such as the usage of a payment gateway) unless the payment gateway is compromised to begin with.
Malware can also manipulate user devices that can access the web, which can easily result in the loss of financial accounts or login credentials. The hacker can occasionally use malware to initiate fake transactions that look to be real. Even a highly secure payment system can be bypassed if someone has already been hacked by malware.
Security is the most crucial element in picking a payment gateway. According to research by Experian, 55% of users feel security is the most important concern when shopping online. Additionally, roughly half of users expect to see real proof of online security by the organization.
To choose a payment gateway that is secure and trustworthy, consider asking the following questions:
Choosing a payment gateway is about more than convenience, it’s about compatibility, security, and pricing. To help you with the decision, consider these key questions:
Understanding how your consumers want to pay for their products is one of the most significant components of choosing a payment processor. Are they paying via credit card, mobile wallets such as Apple or Google Pay, or local payments such as PayPal or regional bank transfer options?
By providing payment methods that your customers are already familiar with and trust, it make the experience less painful for customers at checkout. By supporting payment choices that consumers already use, clients will have a lower possibility of a failed transaction, and it minimizes the chance of payment security issues.
Tip: Stack payment methods by turning on multiple gateways or methods. This will allow customers options and help facilitate a better overall experience.
Before you start using a particular payment gateway, ensure that it can easily integrate with any existing systems you already use- be it your eCommerce platform, mobile apps, or any other back-end technology.
Unfortunately, a gateway that has no integration is going to slow you down, make mistakes, or even cause you to lose your payment; instead, try to find providers that have flexible APIs, plug-ins, or integrations that work with popular platforms like Shopify, WooCommerce, Magento, or custom-built sites.
Tip: Find a customized gateway that has full integration in your tech stack to save time & money on development and improve your customers' checkout experience.
Cost is an important consideration when choosing a payment gateway service. Several costs may apply to payment processing, including:
However, it isn't always safe to simply choose the cheapest price. Some low-cost gateways may not offer real-time monitoring, or they may not offer sufficient fraud prevention, which could lead to costly security breaches or increased refunds.
Tip: Balance the cost of the gateway against the actual value. A vendor with a greater charge may be helpful if they incorporate important elements such as fraud detection, encryption, and customer support, for example.
When processing online payments, security is without question a priority. When working with a payment gateway provider, always look to work with a PCI-certified company. The Payment Card Industry Data Security Standard (PCI DSS) is a standard created to safeguard payment data as it flows from customer to merchant and processing bank in digital transactions.
Before choosing a provider, you should always confirm that the payment gateway you are using is PCI compliant, which prevents fraud and secures customer personal data and ultimately ensures the safety of your business from a breach, which can cost you significantly.
Nearly 50% of online buyers want some clear sign of security at checkout. Your payment gateway needs to be safe, but it also must be trusted.
Do not choose a provider with a negative track record or a lack of transparency about security. Using a recognizable payment gateway will go a long way in determining whether a customer completes a transaction or abandons their cart completely.
Pro tip: Popular names like PayPal, Amazon Pay, and Apple Pay include trust built into the brand. Customers know the names and feel more comfortable using them.
Today’s shoppers use many payment methods, including cards such as Visa, MasterCard, and others, as well as digital wallets like Google Pay and Apple Pay. So, the option to have flexibility with your payment gateway is vital.
Look for a gateway that rapidly takes multiple payment forms and does not slow down the checkout experience. The more payment kinds you can offer, the more possibilities you have to transform your visitors into buyers.
In short, select a gateway provider that allows customers to pay how they want to, whether by card, mobile wallet, or alternative payment methods.
One of the best strategies for optimizing the checkout experience is to incorporate more than one payment gateway. This helps you prevent a lot of problems and ensures that more customers can complete their orders without complications.
When you add more than one payment gateway, you are giving the customer options to pay. Providing options to clients gives you many benefits:
Delivering customers the ability to choose how they pay can be quite helpful. The majority of people use standard cards like Visa or MasterCard, but not everyone does. Some buyers hold on to American Express or want to finish the purchase using two different accounts.
When you offer multiple credit card options, it is easier for your clients to complete the transaction. There is less frustration on their end for a completed purchase and fewer abandoned carts at checkout.
Not everyone uses a credit card, and that is fine.
While more than 80% of people in the U.S. have at least one credit card, there are plenty of people who will choose not to use one. Some customers prefer PayPal, Venmo, or Apple Pay to make online purchases.
It's important as an eCommerce firm to support multiple ways to pay. When you provide consumers more access to pay, you allow them to buy more readily, which leads to more loyal customers and ultimately fewer check-out drop-offs.
Here are a few of the most popular payment gateways in eCommerce today.
When it comes to online payments, PayPal is a trustworthy name. PayPal is most commonly used as a redirect payment gateway and/or checkout process. It has great name recognition and a variety to offer both customers and merchants.
PayPal also has a complete hosted checkout, Payflow, which gives you two options:
There is also built-in fraud protection as part of the payment service, so you can enjoy peace of mind at no extra cost.
Square is both a credit card processor and a payment gateway. It is the recommended alternative for small businesses, especially for in-person transactions such as retail store purchases or events.
Square has shown rapid growth year-on-year, reporting a payment volume of $46 billion in Q4 of 2021. However, be careful that manual transactions may involve more fees than an automated transaction.
Stripe is a regularly utilized payment gateway that is particularly popular in mobile eCommerce, SaaS platforms, non-profits, and marketplace businesses. Stripe works excellently for companies that conduct many transactions. Lyft is an example of a company using Stripe to manage and disburse payments to its plethora of active drivers on the road. Lyft has more than 700,000 drivers.
Apple Pay is mostly used for mobile payments, allowing customers to pay with things like Face ID or Touch ID. Specifically for users who desire to keep their payment details in their digital wallet. Multiple payment gateways handle Apple Pay, which allows merchants to accept payment from up to 1 billion iPhone users globally, of whom more than half are actively using Apple Pay.
Having more than 200 million Amazon Prime members across the globe, Amazon Pay provides a trusted payment process for multiple businesses to help businesses expand sales. Customization options are given through plugins, including interfaces with BigCommerce.
As one of the oldest and most established gateways, Authorize.net operates in over 33 countries and has over 400,000 merchants using the service. Authorize.net connects to practically all payment options, including PayPal, Apple Pay, and all major credit cards, giving sellers flexibility.
Adyen provides support for in-person and online transactions, supporting multiple major credit cards and payment methods such as Apple Pay. The platform is meant to manage transactions with huge volume and has firms you recognize like Uber, LinkedIn, and Microsoft among its customers.
When you understand the costs, features, and security features given by payment gateways, you will have a better chance of selecting the correct solution for your organization. You'll also better understand the security level your consumers are expecting to be able to supply them.
When it comes time to make your choice, why not choose the best?You'll have access to over 65 pre-integrated payment systems, allowing you to accept payments in over 230 countries/regions and 140 currencies. With industry-leading solutions delivering amazing features and benefits, you'll convert your procedure of receiving payments into a competitive advantage.
CEO & Founder of DecodeUp, a tech agency helping brands scale in eCommerce and Fintech. With 12+ years of experience, he blends technical expertise with business insight to build user-focused platforms that drive growth, engagement, and lasting impact.
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