How to choose the right payment gateway

Choosing the right payment gateway for your eCommerce business is as important as the website design itself. Your customers expect a frictionless experience, so having a payment gateway that frustrates them during the checkout process can result in abandoned carts. Not quite sure how to choose the right payment gateway? Let’s start by getting an understanding of how they work.

What is a payment gateway?

Payment gateways process credit or debit card payments. They are what connect and authorise payments between the merchant (business) and the customer’s accounts. Some popular payment gateways include PayPal, Stripe, Square, Shopify, eWay, WooCommerce, Apple Pay and Amazon Pay.

How do payment gateways work?

The process works with the customer providing their card details. A secure connection sends this information to the processing bank. The issuer approves or declines the transaction using Visa or MasterCard’s payment network. If the transaction is successful, the payment gateway deposits the funds into the merchant’s account. At the same time, the money, including a transaction fee, leaves the customer’s account.

Choosing the best payment gateway depends on your eCommerce business model. You can choose an integrated or hosted payment gateway.

Hosted payment gateways

This includes payment gateways like PayPal. The benefits of a hosted gateway are the processing company remains responsible for all security and compliance requirements. A hosted payment gateway does not integrate into your site, so you can’t control the customer’s experience. Once customers want to make a payment, they complete the process on the hosted payment gateway’s site.

The downside of these types of gateways is that they can reduce your conversion rates. Customers who are unfamiliar with the process could abandon their purchase. We recommend that if you want to use a hosted payment gateway, find a service your customers feel comfortable using.

Integrated payment gateways

Integrated payment gateways allow the customer to remain on your site to complete the payment. You can integrate the payment gateway directly into your eCommerce website using an API. You will need to check that the eCommerce platform supports your gateway because, if it doesn’t, you’ll require some technical skills to ensure it works correctly.

An example of an integrated payment gateway is WooCommerce. You can add it to a WordPress site as a plugin. WooCommerce charges a transaction fee on every purchase. Another solution may be better for companies that process a high volume of transactions.

Another example of an integrated payment gateway is Stripe. It accepts more credit cards, integrates into your site, and costs the same as PayPal.

Ask yourself these questions when deciding which payment gateway to use:

  • Will it help me grow my business?

  • Can it be integrated with my eCommerce site?

  • What are your customers already using to handle their payments?

  • Will it improve my customer’s checkout experience?

Choosing a secure payment gateway

When selecting a payment gateway, there are many options to consider, but none more important than security. According to an Experian report, 55% of consumers say security is the most important aspect of their online experience, and 49% want businesses to have more visible security measures online.

To ensure secure encryption, you will want to work with PCI-compliant companies. The Payment Card Industry Data Security Standard (PCI DSS) is a system of standards designed to uphold security provisions online. Before choosing a payment gateway, double-check that they maintain PCI compliance to protect your customer’s data and payment information.

Should I stack payment gateways?

By stacking payment gateways, you can maximise your customers’ options for purchase.

Make it easier for your customer.

Let customers choose what they want when they want it. Using payment gateways that allow Visa and MasterCard can cover many of your bases, but what about customers with other cards like American Express or who want to make specific payments from separate accounts?
Allowing for more options for credit card transactions will translate to more convenience for the customer and less friction at checkout.

Give everyone a second option.

Not everyone has a credit card. Although more than 68% of Australians have a credit card, this doesn’t exclude broad markets of customers without them. Customers can use alternative payment options such as PayPal or Apple Pay to make online purchases. As an eCommerce retailer, your job is to accommodate these options so customers can make secure purchases any way they like.

How can I measure the success of my payment gateway?

Seeing shopping carts regularly abandoned by your customers could indicate issues with your payment gateway. If customers contact you directly to express their frustration over completing a purchase, it might be time to look for a new solution. Choosing the wrong payment gateway can significantly impact your eCommerce business. Finalising the order and making a payment requires your customers to trust your company. If they don’t trust your payment gateway, or it’s cumbersome, they’ll probably find somewhere else to do their online shopping.

Final thoughts

By having a better knowledge of price, function, and gateway security, your business will be positioned to choose the right option for your business needs and add a new level of protection that customers need when purchasing online.

We are here to help with all of your eCommerce needs. Reach out to the team today!

Written by Andrea Sevilla

Andrea is our Marketing Consultant & Copywriter who works with our clients to craft content for their websites, blog articles, promotional materials and more!

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