Every successful online business wants to build a smooth, seamless, and comprehensive customer experience, and choosing an online payment gateway is a key first step towards achieving that. Modern businesses need payment solutions that offer a complete journey to their customers, guiding them from ‘just browsing’ to checkout with a minimum of mess and fuss. The gateway, the part of your website that handles the actual payments processing and customer payment information, is far more than a fancy bit of tech. It needs to handle incredibly sensitive data well, it needs to enable your clients to pay how they want to, rather than how you want them to, and it needs to look good doing it. Luckily, there are a few rules of thumb for understanding the needs of your business and picking a payment gateway to suit them.
In this article:
What are online payment gateways and how do they work?
Simply put, it’s the part of your website the customer puts their card data into, but an online retailer looking to accept payments with maximum security needs a deeper understanding, so let’s go over the actual payment process.
Now, this could be an article (or an entire book) by itself, but put simply:
- Your customer enters their payment information into your checkout page
- That data is encrypted and sent along to the payment processor of your acquiring bank
- Your acquiring bank pings a payment request over to the issuing bank via your card association (Visa, Mastercard, etc.)
- The issuing bank returns (hopefully) an approval, which wings its way all the way back down this chain to the checkout page (or POS terminal, or whichever mechanism the customer first put their details into).
So, what a payment gateway actually is, happens to be right there in the name: the first step on a payment journey. It’s the spot where the customer puts their data, and it’s the first tool in the merchant’s arsenal for keeping that data safe and secure as it zips around the web.
In fact, many payment gateways will, at every stage, try to minimise the merchant’s PCI DSS (an information security standard) obligations by keeping as many tasks and processes as possible away from the merchant’s website and on the provider’s PCI compliant systems. So it’s not only essential, it’s convenient: the ultimate ‘so you don’t have to’ tech, freeing your business from having to concern itself with the understanding and application of a disparate array of security standards to your checkout experience.
What are the main differences between payment gateway providers?
Although all payment gateway providers perform roughly the same task, there’s no universal, single type of online payment gateway. These services are offered in an endless number of forms, fashions, and functions, and figuring out which one suits you best is essential to making a smart choice.
There are differences in implementation: some gateways are presented on merchant websites as a distinct ‘iFrame’, embedded in the merchant’s checkout page, or else they redirect the user from the merchant’s site entirely to a page owned by the gateway provider. There are still others that offer an API allowing merchants to integrate the gateway more seamlessly with the layout and design of their own site. There are also providers that offer payment processing and ones that don’t. If you’re running a small to mid-sized business, it’s probably not in your interest to open your own merchant account and process payments yourself, so you’ll want to limit yourself to gateways that come backed up by a processor. Bigger businesses, meanwhile, might opt to save themselves some transaction fees by processing payments themselves via their own merchant account.
There’s also the human element to consider. It’s no good having the most whizz-bang tech in the biz if you can’t get anyone on the phone to help you use it. Some providers make it a point of pride to boast just as much about their team as their tech, and for good reason. Your payments tech is needed to, well, take payments, and you need to take payments to survive as a business (stop me if I’m getting too technical)! That makes your gateway one of the most crucial gears in the vast machine of your company, which means you want the most talented techies there are to keep it running smoothly and to guide you through implementing and using it as efficiently as possible. You’re going to want a provider that offers assistance in more forms than a chatbot or a wiki, in short.
As you can see, choosing an online payment gateway is a more complex process than it might initially sound; certainly, more complex than giving “best payment gateway” a quick Google search and picking the top result. Payment gateway providers offer specific products to meet specific needs, and whether they suit you or not has to be found out through exhaustive research.
Wait, so if there are different kinds of providers, are there different kinds of gateways?
Why yes there are, hypothetical interlocutor! And we could be here all day enumerating the precise differences between builds, implementations, and use cases, but for now, let’s just go over a few of the most common types of payment gateway on the market:
Self-hosted gateways: these gateways live entirely on your website. Your customer stays on your page as they input their card data, which is then whisked away to a payment URL to go through the step-by-step payment process we covered earlier. They’re pretty convenient: your customer stays where they are, and you have control over the whole thing (because it’s on your website).
Hosted gateways: the opposite! These gateways live elsewhere. When your customer hits the checkout page, they’re transported to the site of your provider to input their data before being brought back to your site. Think PayPal if you want an example, and think being able to offload stuff like security concerns and maintenance to a crack team of experts if you want to know why some people opt for it over self-hosting.
API hosted gateways: kind of a combination. Your customer stays on your site because your site has been integrated, via an API, into the payment mechanisms of your gateway. They’re able to enter their details into a page that matches the layout and experience of the rest of your website, and they can even do it from their phone, with API hosting offering significant capabilities when it comes to multi-device journeys.
How do I integrate an online payment gateway into my site?
So, you’ve pored over the documentation, contacted a hundred different customer support departments, and finally chosen the payment gateway that will work best for your site. Well, not so fast, because you need to consider how easily your chosen gateway will integrate into your site. The first thing to consider is your location: where are your customers coming from and how do they want to pay? It’s no good crafting a checkout experience perfectly optimised for Visa and Mastercard if your business is going to be conducted primarily in China, for example. Likewise, you don’t just need a payment processing service that can handle the predominant payment methods in your region, you need a gateway that can accept payments from whatever the popular local alternatives are (think e-wallets and national card schemes). After all, you’ve no need for a payment solution that answers payment problems you don’t have.
What’s more, you’re going to want to find a payment solution that integrates neatly with your existing e-commerce platform. Whether your online store is on BigCommerce, Shopify, Solidus, WooCommerce, or any of an endless number of other platforms, it’s simply not worth it to go through the pain of forcibly integrating an otherwise incompatible gateway with your platform. If you find one that seemingly offers everything you could ever want, but doesn’t integrate with your platform, you can almost assuredly find a similar-but-separate option that does. You need a service that saves your business time and resources, not wastes them!
So, which online payment gateway should I pick?
Sorry to say, but there’s no route to the ‘best’ payment gateway for your business that doesn’t involve some research legwork! What’s more, an online payment gateway is essential because online payments are essential. So many customers are used to doing so much of their shopping through a screen that only having a brick and mortar store has become downright archaic. The task of selecting it, navigating through the technical jargon, the data security certificates, and fretting about ease of integration, can seem a daunting one at first. But, really, when you ask how to choose an online payment gateway, you’re really asking “what are the needs of my business?”. As soon as you know what those needs are, you know what you’re looking for in a gateway.
Do you run a huge multinational looking to keep down transaction fees? Then you know you probably want to open your own merchant account and handle payment processing yourself. Do you run a small business in the UK? Then you know you need a gateway that can handle Visa and Mastercard payments, mobile payments like Apple Pay, and perhaps some of the more popular e-wallets. Once you know what you need, you know what you’re looking for.