Payment gateways: how do I choose the best one for my online store?
Making the right choice of platforms and payment gateways on your website and virtual online store is key to your business on the Internet.
There are many elements to a successful online store creation and design, from eCommerce platforms to good web design. But there is an ingredient that you cannot ignore: the payment gateway.
The payment gateway is what allows you to receive money transfers. The other elements of your web page guide the user to the purchase, and if that last step does not work well, your entire business is in trouble.
In this article, you will find everything you need to know about payment gateways like:
- What are payment gateways
- What are the different payment gateways
- How much do payment gateways charge
So that you can choose the most suitable one for your online store, be it Paypal or Stripe or other alternatives that exist.
Payment gateways, what are they, and how do they work?
What are payment gateways?
A payment gateway acts as an intermediary between your bank and the bank of your client’s card. They are what allow your business to receive payments online. For that reason, payment gateways are a requirement for any small business with its catalog of products or services.
Payment gateways exist because it is forbidden to send banking information directly from a website (for example, your online business) to a payment processor (in this case, the bank of your merchant account). Payment gateways communicate your customer’s credit card information to the payment processor and notify them if the transaction has been approved.
A payment gateway acts as an intermediary between your bank and the bank of your client’s card.
How do Payment Gateways Work?
To understand how payment gateways work, let’s start with the client-side. Your online store user adds the products they want to buy to the shopping cart. The next thing you need to do is enter your debit or credit card information, including the card number, expiration date, card name, and security code.
As I explained before, banks do not allow this information to be sent directly from your website to the acquiring bank; that is, the bank of your merchant account. The payment gateways come: customers enter their data in the gateway you have integrated into your website. The payment gateway will encrypt the data securely to the acquiring bank.
Upon receipt of this information, the acquiring bank sends it securely to the payment card service (such as Mastercard or Visa), which has the role of performing another security check.
The payment card service then sends the information to the issuing bank (i.e., the customer’s bank). It makes security and fraud checks, and, finally, it authorizes the transaction if it is valid.
The notification of approval or rejection of the transaction is sent back to the card service and to the acquiring bank, which then sends that information to the payment gateway. Depending on the case, the payment gateway will display a transaction confirmation page or ask the customer to try a different payment method.
The process has many steps, but it happens instantly, and a good payment gateway should show the result of the transaction in just a few seconds.
How do you choose payment gateways?
There are several elements that you must take into account when choosing a payment gateway when making the briefing for the online store.
Although their role seems very specific, they do not all function the same way or have the same capabilities.
Payment gateways are a critical ingredient in the sales flow of any online store. A well-chosen payment gateway can increase your conversion rate and attract more repeat customers.
But choosing the right payment gateway is only the first step. You need to integrate it into your website and customize it to your needs to get the most out of it. It implies that it is easy to use, works without errors, and looks good with the rest of your web design.