How to choose a payment gateway?

Sebastien | 19th February 2013 | Posted in Knowledge base, Payment gateway
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A Guide to The Payment Gateway

Choosing the right payment gateway is absolutely crucial for your business. As well as transferring money efficiently and safely for the products and services you sell, a good payment gateway inspires trust in your customers, increases your conversion rate and optimises your revenue.

What is a payment gateway?

A payment gateway allows customers to pay for purchases on your website with their credit or debit card. While you can think of it as the digital analogue of paying at a register in a physical store, payment gateways are not just used for e-businesses and online retailers, but bricks and mortar shops also.

A payment gateway links your merchant account to your website, which will take accepted payments and deposit them into your merchant account. They are also used to encrypt sensitive user information and to secure information that is transmitted between the customer, the merchant, and the payment processor.

Shopping carts

Your e-commerce 'shopping cart' can be integrated with your payment gateway. There are many different shopping cart applications to choose from, and the most important thing to consider is compatibility with the payment gateway. Whichever shopping cart you choose, make sure it is compatible with your payment gateway. Ideally, you want to know which payment gateway you are going to use before you choose a shopping cart; don't make the mistake of purchasing an expensive top-of-the-range cart until you know its compatibility. Some payment gateways are compatible with over 50 shopping cart applications.

Payment methods

Importantly, the more payment methods that your payment system accepts, the larger your conversion rate will be.

The payment processors you accept should reflect your target market. For example, if you serve a lot of French customers, you would need a payment gateway which accepts Carte Bleue, or a payment gateway that accepts Bancontact/MisterCash if you do business in Belgium.

If you have many alternative payment methods, make sure you advertise them clearly on your payment page, as this will have a positive influence on your conversion rate.

Hosted or integrated payment page

Before you select your payment gateway, you need to decide whether you want a payment page integrated into your website, or your payment service provider to host the payment page for you.

Integrated payment page

Pros: With an integrated payment page you have complete control over the page's look, and you can customize it to match the theme of your site, which helps with your branding and customer trust. It facilitates a seamless transition and a smooth checkout process.

Cons: Integrating your own payment page often requires an advanced understanding of programming – many people use the services of a web developer. You may also need to buy an SSL (Secure Socket Layer) certificate to encrypt information and secure the connection.

Hosted payment page

Pros: Requires little or no development knowledge and can save you money in development costs. Security and encryption is usually provided automatically.

Cons: Customers must leave your website to make the payment. Hosted payment pages with integration options are very limited in terms of page customization, and if the style of the page is very different to the style of your site, it may confuse customers and reduce their trust. If integration options are available, they usually come with additional fees.

Currencies

If you are going to do business with customers outside of the UK, you should consider a payment gateway that allows payments with local currencies. Customers are more likely to finalise a payment when they are able to pay in their own currency, not least because it eliminates bank fees and the consequences of exchange rates. If you offer subscription services, customers will also be more inclined to subscribe if they are able to pay in their local currency.

Contract termination

Before you sign up for a new gateway, check the contract small print. In particular, check the terms for contract termination (some providers demand a minimum contract term), cancellation fees (be careful of providers who impose high termination fees) and notice periods for cancellation. If you are signing for a rolling contract, make sure you know how to get out of it.

Customer support

Your payment gateway is absolutely vital to your e-commerce business, so make sure that your payment gateway provider offers excellent customer support. 24/7 customer support by telephone is important if you operate a global business.

Virtual terminals

Virtual terminals allow merchants to accept payments by phone, fax and post. This is essential if you're running a mail-order or telephone-order business (MO/TO). This service is most commonly included with your payment gateway at no extra cost, though in some cases you will be charged an additional monthly fee.

Other payment gateway features

Payment gateways come with many features, and two important features are fraud protection and recurring payments. A robust fraud detection solution should be included as standard, and you should always check to see if you are given anti-fraud tools. If you offer subscription services, make sure the gateway can handle recurring payments. 3-D secure is an additional security layer which is worth considering.

Pricing

Payment gateways are either based on a 'contract' model or a 'pay as you go' model. This means you may be charged a fee per transaction, or pay a fixed monthly rate with free transactions up to a certain limit. There can also be set-up fees and termination fees.

Unfortunately, payment service providers like to make fee structures as confusing as they are unique, to make it difficult for customers to compare offers and make an informed decision. Luckily LimpidMarket.com is here to help!

Payment gateway comparison

A payment gateway comparison service is a great way to understand the differences between different payment gateways. With them you can compare pricing, fees, features, and added extras, and learn more about which features are available and what pricing models are popular.

Published on 19 February 2013 by Sebastien for LimpidMarket