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Web Development Decisions: Payment Gateways

By: Pete Peranzo | 0

Getting paid is arguably the best part of running an e-commerce business, but which online payment gateway should you use? This is a decision that used to be pretty straightforward for businesses, as there were only a couple of major players on the block. That’s all changed in the last several years as a wide variety of new payment gateways have hit the web, providing reliability and ease of use that was seemingly impossible just a few years ago. Today, companies like Venmo, Stripe, Paypal and Square are just the beginning.

Choosing the right payment gateway can be a challenge. Each of the major online payment gateways has its pros and cons, with each presenting a whole host of potential for growing your e-commerce business. With the right payment option, you’ll be able to accept both credit card payments and online payments.

Some considerations to keep in mind are:

· Fees – How much does a service cost you to use?

· Accessibility – Which countries can interact with this payment gateway?

· Customer experience – What does the customer experience when using a given payment gateway?

· Compatibility – Given your current website and e-commerce platform, which payment gateway integrates the most seamlessly?

· Processing times – How long does it take for your funds to get from the payment gateway and into your account?

These are the topline payment gateway considerations. However, as you navigate and make your decision you’ll want to think about concerns that are unique to your business.

No matter what your business type, it’s worth doing the research to find the right payment gateway for you.

Payment gateways vs. merchant accounts

A payment gateway isn’t the same thing as a merchant account, though the two are easily and often confused.

The sole purpose of a payment gateway is to communicate from your store to the consumer’s credit card company in order to evaluate if they have sufficient funds for the transaction. That fund verification is technically all that the payment gateway is for. If you were in a physical store, then a POS (point of sale) machine would be doing this. With online transactions it’s called a payment gateway.

A merchant account is more like an actual bank. This is the service that collects the funds once processed. Merchant accounts and payment gateways go together, though there are payment gateways that work without merchant accounts. Those that don’t require a merchant account often send your customers off of your site and onto another for the transaction. While it’s not the case for all businesses, this move can lower conversion rates.

Hosted vs. integrated payment gateways

Colourpop- PayPal.png

Where your payment gateway resides is a big deal in terms of how your customers experience your website. Hosted payment gateways send your customers to an alternate platform to enter their credit card information. If you’re going with a large, trusted provider, this hosted option can offer your customers peace of mind and ease of use.

A positive point about hosted payment gateways is that you aren’t responsible for security. Given the potential for breaches of security information, that can be a big deal, particularly for small businesses.

Integrated payment gateways, on the other hand, live right on your site. If you’re a larger online company, or if you’ve grown a great deal past your hosted payment gateway, then you’re probably ready to look at integrated payment gateways. The biggest benefit here is that customers never have to leave your store in order to pay for goods or services. Integrated payment gateways use the API provided by the gateway to house information right on your website. This is easy for web developers to set up.

Breaking down payment gateways

The biggest consideration that you’re going to have when looking at the difference between fees. Online payment gateways charge several different kinds of fees:

  • Per transaction fees
  • Percentage of transaction fees
  • Monthly fees

Those percentage fees are the biggest question mark. Though a one percent fee might not sound like much right now, you’ll find that these fees start to add up quickly and can take an uncomfortable chunk out of your bottom line. That might well be worth it, but you want to know ahead of time what you’re getting into with any payment gateway.

Here’s a quick breakdown of the major payment gateways and how they work:

Paypal Payments StandardPayPal Payments Standard-1.png

  • No startup cost
  • Hosted services
  • 2.9% + $.30 per transaction
  • Funds take 3-4 days to transfer

 

Paypal Payments Pro

PayPal Payments Pro
  •  Monthly fee of $30
  • Integrated services
  • 2.9% + $.30 per transaction
  • Funds take 3-4 days to transfer

 

Stripe

Stripe
  •  No setup costs
  • Integrated platform
  • 2.9% + $.30 per transaction
  • Funds take 2 days to transfer

 

Authorize.net

Authorize.net
  •  $49 to set up, plus $25 monthly
  • Integrated payment platform
  • 2.9% + $.30 per transaction
  • Funds take 3-4 days to transfer

 

Amazon Payments

Amazon Pay
  •  No setup or monthly fees
  • Integrated payment platform
  • 2.9% + $.30 per transaction
  • Funds take 3-4 days to transfer

 

Understanding the purchase process

User experience means everything. Whether you’re using Chase Payments or Venmo, Authorize.net or Paypal, you’ll find that each has their own unique payment process. Just as you want to control all other aspects of your customer’s experience, you want to control and be certain of the user experience when it’s time for them to pay.

Most customer attest that they prefer to stay on site with the payment process rather than to head off to another site. However, trusted names in e-commerce can still offer a fantastic user experience as well.

When choosing a payment gateway, the key is to do your research and chose one that fits into the whole vision that you have for your site and for your business. Still unsure? An experienced web developer can help, not just with payment gateways, but with all of the major decisions you make for your website.

Pete Peranzo

Pete Peranzo

Pete is a results driven individual with over fifteen years in the IT and software industry. He is responsible for overseeing Imaginovation’s overall business strategy and direction. He offers a plethora of experience and knowledge, having worked in many domains and industries. Pete’s background in customer support is a driving factor in the company’s long term success and reputation. He has embedded customer service into the company's core culture, and feels that fast turnaround, great communication and high quality support are keys to long term business relationships. Pete graduated from UNC Pembroke with a Bachelor’s degree in Computer Science. View all posts by Pete Peranzo →

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