Payment Gateways To Keep Your E-commerce Transactions Safe

by GK May 08, 2019
Payment Gateway

Payment Gateways have been around for a while now. As an e-tail entrepreneur, eCommerce payment gateways are the ones fetching money in and out of your company. As a result, they also become prime targets for hackers and scammers.

In 2018, Thales Data Security reported that 75% of retailers in the US have suffered cybersecurity issues with their eCommerce sites.

One thing that is certain that eCommerce is more susceptible to hacking than any other sector and so are the eCommerce payment solutions. To keep an eCommerce store safe and conduct protected online transactions, one needs a highly secure payment gateway for the business. 

This article gives a clear comprehension of the payment gateways and reveals numerous decisive influences that you should ruminate while choosing different payment gateway services for your eCommerce store.

How important are eCommerce payment gateways?

They are the one managing the cash flow in and out of your business. They are responsible for not just managing the online payments but also offering the best user experience to the eCommerce customers.

Did you know that few of the top factors for heightened shopping cart abandonment rate are directly associated with the UX users get from the payment gateways?
  • 28% of customers abandon a shopping cart for a complicated checkout process
  • 19% of customers do not trust the site with their credit/debit card information
  • 8% of customers cannot find their preferred payment option on the site
  • 4% of credit cards get declined due to technical errors

That’s a huge loss of sales!

Now you must be wondering how to get a perfect eCommerce payment gateway integration so as to avoid these losses and also keep the transactions safe from any kind of breach?

Well, that’s a nice question, but the answer is a little complicated. It’s not that you can simply make a Google search for best eCommerce payment solutions and integrate the ones on the top in the list. Not every payment gateway is suitable for everyone. Not even the ones in the top of the list.  

Let’s understand from the very basic.

What is a Payment Gateway?

A payment gateway is a business solution that facilitates payments through cards on online stores and also the brick and mortar stores. The setup of a payment gateway may include a software or even hardware.

Payment Gateways facilitate the cash flow in three steps:

  • Step 1: Encrypt the data transfer or communication between the merchant and the payee.
  • Step 2: Request approval from the card issuing bank or finance company.
  • Step 3: Proceed to the next step once the issuing bank/company approves the transaction.

Examples of Payment Gateways:

  • PayPal
  • Braintree
  • Stripe
  • Square

Are Payment Gateways and Payment Processors same?

Many a time, we use the terms payment gateways and payment processors interchangeably. Though they work a little same but are entirely two different entities.

Simply, a payment processor is responsible for analyzing and transmitting the encrypted data.  The encrypted data may include an array of information like card number, holder’s name, expiry date, CVV, 3D secure pin, and others. In short, the transmission of any data required by the bank to authorize the transaction. For example, the POS machines used by brick and mortar retailers are payment processors. They generally read the card information and send to the associated parties.

While payment gateways are ones transmitting payments between the customer’s bank and the merchant’s bank. They are mainly the POS used for online transactions or card-less transactions to organize eCommerce payments. Several payment processors also offer their own payment gateways. For example PayPal.

Examples of Payment Processors:

  • Card Networks: MasterCard, Visa, American Express, etc.
  • Card issuers: Banks and finance companies that issue cards.
  • Independent processors: First Data, Vantiv etc.

Note: If you are integrating an eCommerce payment gateway solution, it might use its own payment processor (ex. First Data, PayPal, Square) or use any third-party processors (ex. Braintree with PayPal). They may also include both software and hardware components.

Types of Payment Gateways

As an eCommerce store owner, you can integrate three types of Payment Gateways on your site or mobile apps:

1.      Total off-site Payment

Such payment gateways redirect the user to a third party site where he/she has to fill up the payment information and request for the authorization from the issuing bank. For example, PayPal takes users to its own page once they click on the Pay Now button on the eCommerce site.

Advantage:

  • Payment security is managed by Payment Gateway
  • Card information is secured by the Payment gateway

Disadvantage:

  • No control over the payment process
  • Payment UX depends entirely on the gateway provider

2.      Combined Payment

As the name suggests, the user completes a few of the steps on the e-commerce site and then directed on the payment gateway page to complete the transaction. For example, the Stripe payment gateway lets you fill up the card information in the checkout page and redirects to the Stripe page for the authentication process.

Advantage:

  • Payment security is managed by the Gateway itself
  • You can control and customize the form’ UX for filling up the card details

Disadvantage:

  • You cannot control the UX after the form filling step for card information
  • Adds up one extra step in the entire checkout process
  • You are entirely responsible for the safety of the card information.

3.      Total On-site Payment

It’s clear now. Such Payment gateways allow you to handle the payments and data transfer through your own server. Your site is entirely responsible for both data encryption, posting, and payment authentication.  These are mainly used by large eCommerce sites, which have their own infrastructure for safe online transactions.

Advantages:

  • Absolute control over the payment process and UX

Disadvantage:

  • With absolute control comes absolute risk on your servers.

Top Payment Gateways comparison (Fees & Charges)

The following table is an e-commerce payment gateway comparison based on the fee and additional costs per transaction taken from the merchants. Please note these are the standard plans and charges. These companies also provide custom plans with more control and benefits. You can contact them or visit their official sites to know the custom plans and charges.

 

Payment Gateway Processing fee/transaction Additional charges/transaction

1.        

PayPal 2.9% $0.30

2.        

Square

2.75% (Swiped) 3.5% (manually entered)

$0.15 (only for manually entered)

3.        

Stripe

2.9%

$0.30

4.        

Apple Pay

3%

NA

5.        

Amazon Pay

2.9% (domestic ) Up to 3.9% (International)  

$0.30

6.        

Authorize.Net 2.9%

$.30

7.         First Data 1% to 2% or $25 to $35

$.25 to $.35

8.         Braintree 2.9%

$0.30

Considerations for best eCommerce payment Gateway integrations

We have already discussed most of the aspects that define a good merchant payment gateway. However, there are various other aspects that make a Payment gateway suitable for certain kinds of eCommerce businesses.

·        Not all support all kinds of payments

Every payment gateway does not support all kinds of cards. Also, many payment gateways support payments within a certain geographical area only.

·        Not all support international payments

There are various payment solutions that do not support international transactions but they are really good when it comes to domestic payments.

·        Not all are safe for every kind of business

Some payment gateways do not support specific business niches. You have to be very careful about this. For example, there are separate payment gateways for adult rated websites. In addition to this, a payment gateway must essentially be certified by the PCI-DSS standards. Discard a solution that is not PCI-DSS compliant.

·        Offer multiple payment gateways

There are various reasons for offering multiple payment options on your site. One of the biggest reasons is the sense of choice they give to customers. As we know not all payment gateways are same you would need different payment options for different situations.  For example, a domestic payment gateway, international payments, and payments from different issuing banks and companies.

·        Look for the best user experience driver

As we discussed in the section for the types of payment gateways, different types of payment gateway integrations offer diverse user experience. You should inspect the same and integrate payment solutions as per your requirements on the user experience perspective. For example, choose PayPal if you seek off-site payment gateway and do not want to manage your own server. Choose stripe if you can do with an additional step added in the checkout process.

Consider their charges and payment fees

Of course, this is one of the top considerations. Inspect your budget and select a solution that fits in it. I suggest starting with a single but efficient solution even if it is a bit costly. You don’t want to lose your early customers from the checkout page.

E-Commerce Payment Gateway integration is a crucial step in starting your own online store. In addition to transaction safety, a payment gateway is also responsible to offer the best UX.  A majority of cart abandonments occur when payments gateways fail to offer the desired UX. Some make sure your selected payment gateway services are not just safe but also let users enjoy hassle-free shopping experience. With a better knowledge of price, safety, features, and compatibility, you would definitely make the right selection.

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