Primary, among other wishes of an e-commerce store owner, should be the provision of a quick, safe, and easy-to-use payment platform.

Hubspot marketing statistics say 84% of people will not purchase if they are dealing with an unsecured website.

According to Statista’s report Mobile Payment Usage in the US, in 2018 only 15.4% of mobile payment customers utilised designated e-wallets such as PayPal or Google Pay.

When it comes to mobile ecommerce, merchants are also standing up and taking notice. In 2018, 17% of merchants saw half of their sales coming from the mobile channel. By 2020, this is expected to rise to one-third. An overwhelming 92% of merchants are currently or are planning to support the mobile channel in the near future – demonstrating the commitment to mobile payments.

That said, besides security, you also want a service that is friendly to your particular business and convenient for customers. Here are some key features of an ideal payment solution:

• Supports a wide range of payment options
• Features anti-fraud protection
• Easy to use
• Synchronizes with your business platform.

Simply put, a payment gateway is a software that helps online stores authorize and process payment for goods and services from buyers.

Obviously – from the definition – a payment gateway is designed to ensure trouble-free transactions between merchants and their customers. This piece of software uses encryption and security protocols to ensure the safe transfer of data to and from applications/websites/mobile devices and banks/processors.

All online payments involve two parties –

• A payment gateway, and;
• A payment processor

While companies like Stripe and PayPal are widely known as payment gateways, they also function as payment processors.

To customers, however, payment gateways are but a tool to pay for their purchases. But to you, – merchants – these solutions mean a whole lot more. Of course, since businesses survive on customers’ payment, the medium for receiving these payments – gateways – is like the soul of your trade.

That said, customers’ payment goes through a list of processes before it is deposited into your account. Some of the methods can be somewhat complex.

67% of millennials prefer online shopping to conventional brick-and-mortar shopping, due to convenience – says, bigcommercestatistics.

Since your e-commerce business caters to the needs of buyers from wide-range customer reach, electronic payment is non-negotiable.

It is crucial to choose a payment gateway that syncs with your business. The gateway you select will determine transaction fee, acceptable currencies, speed of transaction, and available payment options.

Here are some of the processes gateway payment services go through before you receive a payment:

Verification of Buyers’ Billing Details

Payment services verify name, age, address and card information of customers.

Remember, most industries have strict age restrictions and hence make sure their buyers are within legal age. Adult and gambling niches are typical examples.

Verification of Transaction Funds

Payment services check to verify if customers’ card has enough funds for the selected transaction. Such verification determines the payment option – whether full payment before service; or installment payments, service delivered, then deduction made.

While funds processing is instant, it usually takes one day –or two – before customers are charged.

Handling Security and Legal Protections

Most payment gateways accept the responsibility to protect subscribers from hackers, fraud, insufficient funds, expired cards – and the likes. Little wonder why these payment services invest a fortune in data protection.

They also ensure they are up to date with regulations like GDPR and HIPAA. This helps you focus more on your business, entrusting safety in the hands of the payment service providers.

Payment gateways have a significant impact on every e-commerce business. Hence, it is crucial to select a reliable service provider to reduce the need for a change too soon.

Here’s a brief to look at some critical considerations to note before selecting a payment solution:

Price

The different financial institutions/organizations involved in the payment procedure make it somewhat complicated. As with other services, a fee is usually required by the gateway provider for transaction processing and authorization made through third-party tools.

Mostly, transactions are charged based on location –local or international-, amount, and the specific product – e-product or physical.

Also, charges and terms of use vary between payment solutions. Typically, you should expect a payment gateway setup fee, account setup fee, monthly fees, and per-transaction fees.

To guide against additional expenses and other hidden charges, do read all pricing terms thoroughly.

Payment Aggregators Vs. Merchant Account

Payment aggregators are third parties that ensure transaction flow between merchants and their customers with the use of debit/credit cards, bank transfers, etc.

These aggregators take over operational burdens of the e-commerce stores — good news to those who fail to fill tax forms and reports.

Aggregators withdraw the stated transaction amount from the clients’ account, confirm their validity, and transfer them into merchants’ account. Some of these aggregators charge per-transaction. So, you’re not billed until someone pays you for goods or services.

Merchant Account

For merchant account, however, one would have to apply for a merchant account at a bank. Just like aggregators, a merchant account aims at facilitating payments from customers to merchants.

But unlike aggregators, operations and regulatory compliance are managed by you – or your financial expert. Hence, many e-commerce stores prefer aggregators over merchant accounts, as it helps businesses focus on growing their business without bothering about legal concerns.

However, unlike aggregators, merchant accounts usually charge monthly fees – a big plus for stores with high sales volume.

Interestingly, Stripe and PayPal are typical examples of providers that offer both gateway and merchant account services in one. This strikes out the need for a merchant account, as payments are processed and transferred to sellers’ bank account directly.

Payment and Currency Options

A 2017 statistics rank credit cards as the most preferred online payment method to 42% of online shoppers. PayPal and debit cards come second and third, with 39% and 28% respectively. This, however, should not restrict you to these options.

Statistics say mobile payments, for example, generated about 930 billion USD in 2018. Mobile payments may include the use of e-wallets – PayPal, Apple Pay, and Google Pay are examples.

E-wallets are so-called because they save credit card information or allows you to create an account and save your money on their platforms. This enables smooth and safe transactions without a conventional bank account.

That said, your chosen gateway should support all relevant payment options commonly used in your country, region, and particular industry.

Does your preferred gateway support multi-currency? Here’s another critical consideration before choosing a payment gateway provider.

If your business caters to the need of international customers –of course, virtually all e-commerce stores do – then multi-currency support is a must-have.

Thankfully, most gateway services process multiple currencies. While some charge additional fees, others don’t. If you prefer a hosted payment platform, you can as well opt for localized checkouts.

Products-gateway compatibility

Why opt for a gateway provider that does not support your merchandise?

Merchandises are typically grouped into two: digital products and physical products

While some payment solutions support either digital or physical products, some others support both. Although the former is rare, you want to be extra sure they permit your product before you sign up.

As the e-commerce industry grows, so does payment gateway providers. Among the truckload of options out there, a few have stood the test of time – hence, adjudged reliable. Here’s a list to check out:

Payment gateways are categorized into two: Hosted and integrated

Here’s an in-depth look:

Hosted Payment Gateway

When a customer makes a purchase on your e-commerce store and decides to make a payment, they are redirected to a page where payment is built on a secured network. Once payment is complete and confirmed, buyers are directed back to the merchant’s site.

A hosted payment gateway’s set up is demanding to set up and run. However, owners of e-commerce stores can link up multiple websites to one payment system. PayU and PayPal are typical examples.

Integrated Payment Gateway

This option allows e-commerce website owners to operate the payment gateway on their website through the provider’s API.

That is, your buyers make payment directly on your websites, without being redirected to a separate pay page. This is a more professional option as it offers you an opportunity to customize your customers’ payment experience.

Choosing a payment gateway for your e-commerce store is a critical step in your online trading journey. While there is a truckload of choices to choose from, you want to ensure your pick is worth it in the long run.

If followed, the guide above will help you navigate through the seemingly daunting process – seamlessly.

Make a well-informed decision today, and start receiving online payments right away. It’s your call!