If you’re thinking about setting up an eCommerce store or are in the process of doing so, you’ll need to begin thinking about enabling payments. With so many different payment gateways to choose from, it can be difficult to come to a decision. We’ve put together some of the top ways you can narrow down your options.
HOW DO PAYMENT GATEWAYS WORK?
A payment gateway is an application that allows a shop to securely request payments from its customers. When a customer confirms their order, the payment gateway will then verify the customer’s billing information, verify the funds, approve requests with a confirmation number and send the money to you.
WHAT PAYMENT GATEWAY IS RIGHT FOR ME?
Only a few years ago, all gateways needed store owners to have a merchant account that allowed for credit card payments. Without this, there was no way of transmitting the money into the store owner’s bank account. However, there are now many new payment gateways that do not require the store owner to obtain a merchant account. These payment gateways can take funds directly from customer’s bank accounts, validate them and send them to the store owner.
NEW PAYMENT GATEWAYS
Newer payment gateways include PayPal and Stripe. The biggest advantage of using a more modern payment gateway is that you won’t need to change bank accounts or do anything to get the payment side up and running, meaning the process is usually quick and easy.
However, new payment gateways like PayPal and Stripe tend to charge larger fees per transaction when compared to older, more classic payment gateways. For small stores, the fees will not be a huge problem, but larger stores with a high number of transactions will notice the costs add up quickly.
OLD PAYMENT GATEWAYS
Older payment gateways include WorldPay and Authorize.Net. Whilst older payment gateways do require more work and time to set up, as well as a merchant account, they are better for larger businesses since the transaction fees are low. It’s worth considering whether the hassle will be worth it for the money you’ll save in the long run.
If you do decide to go for an older payment gateway, you’ll have to find a bank that offers merchant accounts and apply. Not all banks offer merchant accounts, and some have length approval times, so you may want to get this sorted in advance.
INTEGRATED VS. HOSTED
Payment gateways can be hosted off-site or integrated into your store, meaning customers will never have to leave your store to input their payment information. If you want an integrated payment gateway, you’ll need to ensure your website has this ability. Choosing an integrated payment gateway will also mean that you, as the shop owner, are responsible for securely storing any data and complying with all regulations, especially with the new GDPR regulations coming in next month.
PayPal is a common example of a payment gateway that is hosted elsewhere. Hosted payment gateways redirect the customer to the gateway’s own platform for them to input their information. Some countries favour hosted payment gateways, whereas other countries do not trust them. With well-known payment gateways like PayPal, there shouldn’t be any issues. The biggest advantage of a hosted payment gateway is that the provider is responsible for all compliance and data security, meaning there is one less thing for you to worry about!
NARROW DOWN YOUR OPTIONS
Think about what kind of payment gateway you would prefer and narrow your options down from here. Most payment gateways will have transaction fees, and some will also charge for monthly usage. Think about how much money you make online and what the percentage is per transaction fee. If you’re making lots of money online, transaction fees will add up quickly, even if they’re as little a 1%.
It’s important that you conduct the necessary research to help you choose the payment gateway that works for you and your eCommerce business.
If you’re struggling with what payment gateway to use, we would be more than happy to offer our advice and experience to help you. For more information, you can contact a member of The Creation Lab team by visiting our contact page or by giving us a call on 0800 6125 347.