An E-commerce payment gateway is a merchant service provided by an e-commerce application service provider which allows authorizing the credit card or direct payment processing for online or e-businesses, retail shops, bricks, and clicks or traditional bricks and mortar. The payment gateway can be provided by a bank as well as a specialized financial institution as a separate service like a payment service provider.
A payment gateway clears the way for a payment transaction by the transfer of data/information amidst a payment portal such as a website, phone, etc, and the front-end acquiring bank.
With a payment gateway, the merchant can initiate eCommerce in-app, point-of-sale (POS) payments, etc.
The payment gateway is never directly involved in fund transfer, rather the merchant’s website or POS system is connected. A payment gateway mostly connects several acquiring banks and payment methods under one system. Hence, making funds transfer easy and less time taking.
E-commerce payment gateway: Working and insight
The main objective of a payment gateway is to make the transfer of funds effective, secure, and hassle-free. The payment gateway is never involved in transmitting payments, instead, it approves the funds transferred to the seller and does so safely and securely for the buyer.
There are 9 simple steps involved in this process, today we’ll look deep into the process and understand the safe, quick, and secure working of the gateways.
Step 1. The process begins when the customer places an order on an eCommerce website and enters his card details.
Step 2. The web browser encodes the data sent between it and the merchants’ web server.
Step 3. After that, the gateway sends the transaction details to the payment processor that is used by the merchant’s acquiring bank.
Step 4. This payment processor then sends the transaction data to a card affiliation.
Step 5. The card issuing bank acknowledges the request for the transaction, and then either ‘APPROVES’ or ‘DENIES’ the transaction.
Step 6. The processor then forwards an approval request related to the merchant and customer to the gateway.
Step 7. As when the gateway acquires this reaction, it transmits it to the interface to process the payment.
Step 8. Command called ‘Clearing Transactions’ is activated once the merchant has completed the transaction.
Step 9. The issuing bank changes the command of “auth-hold” to a debit, permitting a “settlement” with the vendors’ securing bank.
Essential factors to keep in mind, while choosing a payment gateway:
Choose an appropriate flow of the gateway:
With time as the enterprise grows, the gateway you have chosen must also be adaptive to the increasing flow of transactions, hence retailers must select the aptest payment gateway to add to the website.
Chose the right product:
A gateway provider is needed on every website which is selling products or services online. It allows the customers to buy a product/service, and the owner receives the payment hassle-free and safely. While choosing the payment gateway provider, the owner must keep in mind the adaptability and security of the payment solution.
Customers’ feeling of safety and security:
All the big companies care more for their reputation than the commerce factor, hence the owner shall make sure to keep the data and sensitive details that the customer is sharing with them on the website intact. This will build trust between the customer and the company and would attract more customers to your company.
In research, it is seen that around a quarter of customers will quit the purchase if they are compelled to register for an account to complete the purchase. Hence, the owner shall choose a gateway that uses a third-party shopping cart with an enrollment procedure built into the cart, therefore there must be an option for ‘Guest’ checkout, which will flourish his business.
Checkout: easy and convenient on all the devices
According to research, out of all the shopping done in online mode, 79% is done using a smartphone in the past half a year. Reports also suggest, that 62.24% of people possess a smartphone and use it for online shopping. Hence, as website owners explore payment gateway options, they must make sure that the choice of their payment gateway must provide an adaptable checkout experience optimized for different mobile devices and network types.
As we all know, these days everyone feels more easy and safe paying through the mobile phone with either the UPI or mobile wallet over cards or cash, hence the gateway chosen shall be open for all the options of payment, which in return would boost the business, without stagnating the process at the checkout step.
The recurring payment option helps the company to set up a monthly option for autopayment without any hassle, many serviced based companies like Netflix, Amazon Prime, etc use the same model. This model is convenient for both the service provider and the customer as the company gets a monthly for the services given, and for the customer monthly payment is much less as compared to an annual payment.
Select a payment gateway system that doesn’t botch up the website’s UX with a slow payment process.
Choose a payment gateway that makes it easy and beneficial for the customers to make payments on the website, where the customers can select a payment method of their choice. Most payment gateways give detailed instructions on integrating into a popular eCommerce platform.
In most of the payment gateway services, there is only an email or ticket support. This actually frustrates the customer as they have to read the manual and fix the problem themselves, which is not easy for all. Hence, the owner shall look for a gateway that provides live customer support, at least within standard working hours, if not 24×7.
Top 4 eCommerce payment gateways (2022):
While exploring eCommerce payment gateways, we must not only choose the most famous but also keep in mind that the gateway is reliable and trustworthy. With the high frequency of cyber attacks like hacking, data/identity theft, scams, and phishing attacks, the owner should go for a safe and secure payment gateway for his company.
Some of the top eCommerce payment gateways which are worth looking into are:
If you’ve spent time online in any capacity, you have most probably heard of PayPal at some point or another. PayPal is a leading payment gateway that was launched and established in 2002.
Ever since then, PayPal has positively grown and expanded and is now available in 203 countries.
PayPal is one of the safest and most secure payment gateways, which is why it is preferred by so many, individuals and corporations.
Advantages of Using PayPal
- No monthly fees are to be paid.
- No fee to open a PayPal account.
- The secure and encrypted solution, hence no worries.
Disadvantages of using PayPal
- A transaction fee is above average.
- Frustratingly lack of customer support.
- Lack of transparency can aggravate (in case your account is flagged or blocked for any reason)
Stripe is a newer and close competitor to PayPal that quickly gained popularity because it accepts payments using cryptocurrencies such as Bitcoin. With Stripe, it is possible to get started with accepting payments online right away, as Stripe offers a free trial period to all new customers, which makes it both easy and quick, which its customers very much like about it.
Advantages of using Stripe:
- A free trial period is available.
- Supports various currencies (24 to be exact)
- Also accepts cryptocurrencies.
- Customized libraries are available.
Disadvantages of using Stripe:
- Geographical restrictions.
- More expensive than its alternatives.
- UI is not much user-friendly.
The leading available touchless payment system available on today’s date is Apple pay. Known for its compatibility with Apple devices both in-person and online with an eCommerce store. It is simple, straightforward, and works with a single tap. All the cards like Visa, Mastercard, American Express, etc can also be used with a touchless Apple Pay gateway.
Advantages of using Apple Pay:
- Touchless payment system.
- Completely free for customers (without additional fee).
- Accessible to millions of Apple users and subscribers.
Disadvantages of using Apple Pay:
- Can limit access, hence you have to depend on other gateways.
- Exclusively available to Apple users.