A smooth and secure payment process is essential for a business procedure and its success. That’s why payment gateways have been created as intermediaries that make online transactions easy and secure the transmission of payment information between customers, merchants, and financial institutions. They play an important role in preventing hassle in online payments and protecting customer data.
Are you interested in learning more about how payment gateway works in eCommerce? Keep reading and learn how to select the best payment gateway for your eCommerce needs.
Overview of Payment Gateway Functionality
A payment gateway is a go-between technological platform supporting electronic financial transactions. It allows businesses to securely process and manage different payment methods, including credit cards, debit cards, and digital wallets. It is a platform on which customers, businesses, and financial institutions can work smoothly, with a fee for each processed transaction.
How payment gateway works in eCommerce? When a customer makes a purchase on an eCommerce website, they proceed to the checkout page through a payment gateway that encrypts the customer’s payment details for security. The payment gateway then securely forwards the data to a bank or a financial institution for verification. Once the transaction is approved, the money is transferred from the customer’s bank account to the merchant’s designated account, and the process is complete.
A payment gateway performs several key functions to ensure secure, efficient and accurate payments:
- Encryption: It encrypts the customer’s payment details when submitted during online checkout to protect them from unauthorized access during transmission.
- Payment Processor Connection: It connects the business’s customer checkout to the payment processing provider.
- Authorization: It forwards the encrypted transaction to the business’s bank, which sends it to the customer’s bank/payment processor to verify details like account balance and payment method validity before approving or declining. The gateway receives and relays this response.
- Data and Reporting: Gateways provide businesses with data like transaction history and refund management to analyze and improve payment operations.
- Fraud Prevention: The security measures can be fraud detection algorithms, address verification, and card verification that could detect potential fraud in transactions.
Factors to Consider When Choosing a Payment Gateway
With many available choices for eCommerce payment gateways, it is important for your business to consider the key factors that impact your payment process, ensuring ease of use for customers while still ensuring security. Below are some considerations when you select a payment gateway for your business:
- Transaction fees: Payment gateways offer different fee structures, including transaction fees and monthly charges. You should assess their total costs and choose the option that aligns with your business’s budget and sales volume to maximize your profit.
- Security features: The chosen payment gateway should have robust security measures, including data encryption, fraud detection, and PCI-DSS compliance. It must protect customer’s sensitive information for security, then help build trust and maintain credibility as a result.
- Accepted payment methods: It is best if your payment gateway solution can manage different payment methods to cater to diverse customer preferences. Some common methods are credit cards, debit cards, and digital wallets.
- eCommerce payment gateway integration: When a payment gateway can integrate well with your shopping cart system, its setup process will be much simpler. Moreover, it will be more likely to provide a smooth user experience for your customer and your own business as well.
- Customer support: Issues and technical difficulties are undeniable, so your payment gateway provider should provide responsive and reliable customer support. Then, your potential problems can be resolved quickly and business disruptions can be minimized.
Best Payment Gateway for eCommerce Website
Let’s take a look at the most outstanding payment gateway options at the moment for eCommerce websites like yours. Then, you might find out the best payment processor for eCommerce business.
PayPal
PayPal is one of the most recognized payment gateways globally. Most of their users are businesses that cater to a global customer base, and their customers prefer using PayPal wallets.
Its advantage in the industry is the convenience of processing online payments. Meanwhile, the payment gateway still provides robust protection programs against fraudulent transactions.
With what PayPal offers, its fees are relatively more expensive than other options, especially on a larger scale.
Stripe
Stripe is well-suited for eCommerce merchants offering subscription-based services, considered a highly sought-after payment gateway. What sets Stripe apart from other options is its platform-agnostic nature. This nature allows it to not limit itself to a specific eCommerce platform, but integrate with various websites and mobile apps.
Moreover, Stripe provides advanced customization options and flexibility for businesses to tailor their payment experiences to their customers. It accepts both credit card payments and mobile payments seamlessly. Some additional features that Stripe offers include invoicing, subscription management, and international servicing.
Compared to other payment gateway options, Stripe requires a higher level of technical knowledge to configure and utilize its functionalities.
Authorize.Net
In the eCommerce payment gateway comparison, Authorize.net is especially created for retailers with a Visa merchant account. The payment gateway is owned and operated by Visa, so it can seamlessly integrate with a Visa merchant account and smoothly sync the data between the two platforms. Thanks to this compatibility, Authorize.net stands out as a convenient option for retailers in different eCommerce platforms who seek a reliable payment gateway.
Square
Square is well known for its exceptional POS system, but it also provides a comprehensive payment gateways for online retailers who operate both online and offline. The solution from Square is all-in-one, with a complimentary POS system.
Square helps businesses efficiently manage their inventory across various sales channels in real-time. Additionally, the payment gateway allows access to crucial sales data and integrates with accounting software. This feature makes the tax reporting process much easier, right from the user-friendly dashboard.
In Conclusion
How payment gateway works in eCommerce? Working as a technological intermediary, payment gateways ensure a secure transmission of payment information between customers, retailers, and banks. Then, choosing the right payment gateway is essential for eCommerce businesses to thrive. Consider the factors mentioned in the above article and help you find the solution that aligns with your business models and growth plans, providing a smooth checkout experience for your customers while keeping sensitive information secure.
Do you still have further concerns about this topics? Don’t hesitate to contact Tech-One team with our dedicated members who are willing to support you or visit our learning hub to find out answers for all of your questions of eCommerce!