November 19th, 2017 | Updated on December 19th, 2017
Whenever customers buy products online, they like the option of making their payments online as well. This is a faster process and is also a lot more convenient than waiting to pay for the product when it comes home.
This is where payment gateways come into the picture. They help your customers to make payments online, improving the customer and helping you expand your business.
What Is A Payment Gateway?
Before you understand this, you will need to understand what merchant services are. Merchant services is a broad term given to all types of financial services that are related or intended to be used by businesses. Most times it refers to services where a business is able to accept payments from its customers through an encrypted channel.
A payment gateway is an interface through which these merchant services take place. It is an e-commerce application that accepts different types of online payments like credit or debit card payments, net banking payments, and payments through online or e-wallets. This is applicable to both physical and online stores.
Why A Business Needs A Payment Gateway
Payment gateway integration brings you several benefits.
Customers like it when they have several options laid out to pick and choose from. You can set up several merchant services that allow your customer to pick the gateway of their choice.
- You can accept payments in different types of currencies.
- You can offer 24/7 purchase and payment facilities to your customers.
- Payment gateways make transactions reliable and flexible.
- They safeguard mechanisms help protect all the data related to the transaction.
- Some payment gateways even allow you to process withdrawal and refund systems.
Payment Gateway Types
There are two types of payment gateways depending on how they process the transactions, direct and external. An external or off-site payment gateway redirects your customer onto another secure website to further process the payment. However, a direct or on-site payment gateway allows your customer to make the payment without checking out of your website.
Both direct and external payment gateways have their own pros and cons, but some pros of external payment gateways can even slightly outweigh those of an embedded gateway.
Direct Payment Gateway
An embedded payment gateway will make your website look more professional and enhance your customer’s experience on your website. They give full control of the entire process and also help enhance your sales as an external payment gateway is one of the reasons many people abandon their carts. You can also receive notifications in real time if anything goes wrong and work on the matter immediately.
When you have a payment gateway embedded into your system, you will have to ensure that it follows all the PCI DSS rules to the word. Even a single violation can lead to heavy fines and can even put you out of business, so you need to take utmost care that you don’t miss out on anything.
External Payment Gateway
Contrary to a direct payment gateway, when you use an external payment gateway, the third-party merchant service provider takes care of all the requirements that a payment gateway needs to have. Which means that you can forget about the PCI DSS standards entirely. However, this can also fall slightly on the expensive side.
Although it looks like you’d be taking a risk if you use a direct payment gateway on your website, following the PCI DSS rules is not very difficult. The security council provides an assessment questionnaire that helps you determine the level of security your website needs and you can set up a payment gateway accordingly.
There are several factors that affect the functioning of a payment gateway on your website. You need to look into each of them before you pick a payment gateway for yourself.
- The currency you want to accept payments in.
- The different modes of payment, i.e., debit or credit cards, net banking, cash transfer, or e-wallets.
- The payment gateway costs like transaction fees, setup and maintenance costs, etc.
- Your business volumes.
- The support offered in the case of an external payment gateway.
- The various payment types offered by the gateway.
- The ease of payment gateway integration.
- The settlement period, i.e., the difference between the settlement date and the transaction date.
- The user experience.
With several payment gateways out there, you will need to do plenty of research to understand the right payment gateway for your business. One great payment gateway that accepts all types of credit card payments is the Shopify Payments. It is a simple gateway that integrates easily into your Shopify website and helps you accept payments from anywhere in the world.