The best payment gateway for 2021

We dig into what you need to consider when choosing the best payment gateway for 2021 and how to swing open the doors for your customers 24/7.

With the evolution of the online marketplace we’ve seen a shift in how transactions are completed. Early on, the sole priority may have been the security of the transaction, new priorities are emerging. Payment gateways must provide increased levels of convenience , streamline processes and pain free check-outs for our customers. As business owners, we must also examine how they integrate with other functions of our business. 

First up, what is a payment gateway?

A payment gateway is a system that runs in addition to your website. It allows you to capture and transfer funds in exchange for your products or services, 24/7.

The sheer amount of payment gateways available today can make comparisons a challenge. Each provider has its own take on the most appropriate pricing structures, fraud protection, ease of set up and native integrations.

We focus on two important, yet sometimes overlooked perspectives that must be considered when choosing your payment gateway for small to medium businesses in Australia:

  • Accounting efficiency
  • Customer preferences

How your customers like to complete transactions and how those transactions interact with your accounting process will determine how effective your payment gateway is.

Accounting, invoicing, websites and payment gateways

It is fair to say that any tool that saves time is a worthwhile investment, so assessing how your proposed payment gateway will integrate with your accounting software should be measured accordingly.

‘Native Integration’ describes the way separate pieces of software are able to seamlessly work together. In this context, we use it to understand the ease of communication between your accounting software, website platform and payment gateway.

Diving into your current processes can help us gauge which payment gateway may be most suitable for your business. In most instances you can split your transaction into 2 parts:

  1. Invoicing
  2. Remitting

 

Let’s assume you are using Xero as your accounting software and your website is built using WordPress. We can quickly discover the supported gateways for both Xero and WordPress.

The integration of your accounting software, website and payment gateway can do away with several manual and time consuming steps. When a customer completes an online purchase, an invoice is generated. The payment gateway ‘talks’ to the accounting software to automatically reconcile the account and funds arrive in your account, clever right?

Check this out:

The benefits stretch well beyond instant payment data sync. You have an accurate snapshot of your accounts receivable and cash flow. Today’s software providers give you access to internal support where development teams have spent countless hours getting their integrations just right. The result is a seamless function between each piece of software. You will often get access to an entire community of customer and industry leaders. If you have a question, chances are someone has already answered it.

What’s the best payment gateway for my customers?

How does the proposed payment gateway look and feel? How likely are my customers to enjoy the transaction process?

By getting a solid feel for what your ideal customer is comfortable with and most likely to use, choosing your payment gateway becomes easier. Trends and patterns in buying behaviour appear when you consider simple things like your customers gender and age. Get comfortable asking around. Aim to find out what they like to use when shopping online. Regardless of the results, your research will help guide your decision. Take care to avoid defaulting to what your own preferences are.

Consider offering your customers additional ways to acquire your product or service. Sometimes it is possible to make your offering more accessible without sacrificing margins. Services like afterpay and Zip offer the ability for customers to split their payments like a lay-by except they take delivery of goods immediately. Although costs are passed on to the vendor, typically as a percentage, the risk stays with the service provider and not you.

When you increase customer convenience your chances of completed checkouts and return purchases increase. Look for options that compliment each other and avoid double ups. For example two credit card facilities will just confuse your customers at check out. Studies show this is likely to decrease the chance of them returning.

Test and review the process you expect your customers to go through. How they interact with the payment gateway start to finish is incredibly important. Assuming the position of your customers allows you to get front row seats to any potential headaches and a really clear idea of how simple the process is. If you get frustrated, imagine how they will feel? The more streamlined the checkout process, the greater the chance of a completed checkout.

Our recommended payment gateways

We have used quite a few payment gateways over the years. Here’s our top picks based on your audience and their requirements:

Best credit card option: Stripe

Why? It seamlessly integrates with websites, has amazing reporting features and provides visibility of all transactions (successful and failed ones). The admin features enable instant refunds and the ability to automatically charge a customer’s credit card for future purchases. In more recent times, it has also introduced the ability for automatic subscription payments. These are ideal for any business owner looking to generate predictable recurring revenue in their business. .

Best non-credit card option: PayPal

Why? It’s popularity and ease of use (for the customer). Although it’s interface for business owners and ease of setup is lacking, this is still a very popular option. It reduces checkout friction by only requiring a customer to login with their email address and password. Perfect for the ‘couch surfers’ looking to make a quick impulse purchase who don’t have to go hunting for their credit card. They also offer favourable security features for your customers.

Best ‘pay-later’ option(s): Afterpay and Zip Money

Why? These two options enable the customer to take immediate receipt of their goods or services. They allow the customer to pay back the money directly to them at predetermined intervals. As both companies send the funds directly to you, there is little to no risk involved. Why both, it depends on which of the two brands most resonate with your audience. We generally only recommend offering one of the two. Noting that Zip Money will allow for more than the $1 to $1.5k limit that Afterpay deploys.

What about my bank? It has a payment gateway

Having worked with all the offerings (big four included) we find they are slower to move when it comes to the latest features, smoothest integrations and customer experience. Third party payment gateways providers exist in a different market to banks. In a lot of ways they aren’t comparable to traditional financial institutions. Take Stripe for example and their account partners, their primary goal can be assumed to be something like “our customers must have access to the biggest range of accounting integrations”.

With a third party payment gateway like Stripe, you have someone to sit between your website and your bank account. It allows you to give your customers a modern interface that will integrate with a greater volume of third party systems. When business survival is determined by agility, this is a significant factor. Third party payment gateways also offer a raft of useful features for business owners. These include reporting, forecasting and the ability to view failed payments in real-time.

Most payment gateways offer same (or close to) day settlements so perceived advantages of sticking with the big four are less relevant.

How do I address payment gateway fees?

You will need to decide if the fee is passed onto the customer or not, in the same way you set pricing for any of your products or services. We recommend the ‘absorb it into your price’ approach. It allows you to cover your cost and keep the checkout clean and uncluttered of service fees.

Studies show buyers are likely to exit a transaction where a small shipping fee is present, compared to a transaction where shipping is ‘free’. In all likelihood the shipping fee has been absorbed into the product. Remember it is about how it looks and feels to your customers. ‘A perceived saving is favoured over a disclosed cost’.

What next?

By mapping your online transaction, how it comes together and the implications on internal processes and customers, you get a solid feel for how to choose the best payment gateway for 2021. 

Reach out if to chat about integrating a payment gateway for your business.

Written by Chris Paradowski

Chris has a diverse background in business management. Having worked in highly competitive and process oriented industries, his ability to model, prototype and hypothesise is uncanny.

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