You may have heard of some of the big-name online payment gateway providers such as PayPal, Apple Pay, and Amazon Pay, but which is the best option for your eCommerce business? Read on to discover more about the world of online transactions so you can choose the best payment gateway for your needs.
- What is a payment gateway?
- Payment gateway vs payment processor
- Types of payment gateways
- Payment gateway providers
- International payment gateways
- Need help choosing a payment gateway?
Is your online business ready to start selling? With almost 90% of customers using credit or debit cards to make online purchases1 you need an effective, secure, and simple-to-manage payments solution. Introducing the payment gateway – the best software solution to help protect your business from fraud and to give your customers confidence in your site.
Recent research suggests that over 88% of online shopping orders are abandoned2. A simple and convenient checkout and payment process that results in a positive user experience could make a significant difference to your bottom line.
What is a payment gateway?
An online payment gateway makes it easy for you to accept credit and debit card payments. It’s essentially software that connects your eCommerce website with your customer’s choice of payment. Think of it as your online cash till.
To ensure the process is secure and user-friendly, most eCommerce payment gateways use the following process:
- Encryption: all data between the seller and buyer is encrypted to help protect the confidentiality of the private information being shared
- Authorisation request: the transaction only goes ahead once the customer’s choice of payment (e.g. credit card company) approves the request
- Fulfillment: Once authorised, the payment gateway lets the eCommerce site proceed with the payment so the order can be completed
Payment gateway vs payment processor
You may have come across the terms ‘payment gateway’ and ‘payment processor’. Sometimes used interchangeably, there is in fact a significant difference between the two.
- Payment gateway is the whole secure process of analysing, transmitting, and authorising payment information between the buyer and seller
- Payment processor refers to the transaction part of the process between the payment card and the acquiring bank (e.g. the online equivalent of tap and pay)
Types of payment gateways
As the name suggests, redirect payment gateways give customers the option of completing their purchase by being redirected to a secure payment page such as the PayPal payment gateway.
This is a simpler – and popular – option for many small to medium-sized businesses. Although it adds another step to the buying process, the payment gateway doesn’t have to be integrated into their website, and the buyer benefits from the security and ease-of-use of the redirect payment gateway.
In this option, the buyer will begin the front-end checkout process on your website before proceeding to a back end online payment system to complete payment. To ensure the connection between your site and the payment gateway is secure, we recommend using SSL (Secure Sockets Layer).
This is an easy and quick option for handling payments although it does take the payment process out of your hands, which is why you should only connect with a trusted payment gateway, such as Stripe.
This online payment option is the preferred choice for larger businesses. As the seller’s servers process all the checkout and payment steps, it gives you more control over – and responsibility for – each transaction. In other words, the entire user experience of making a purchase is in your hands.
Now we know what payment gateways are, let’s have a look at some of the most popular options on the market.
Online payment gateway providers
In 2019, PayPal processed 12.4 billion transactions from its 305 million users.3 So it’s no surprise that it’s one of the most trusted redirect payment gateways. According to their website, merchants experience 88.7% online conversion on average with PayPal.4
By offering its payment gateways in a variety of APIs, it’s possible to customise the look and feel of Stripe’s on-site checkout so it integrates with the design and branding of your eCommerce site.
Able to cope with a large volume of transactions, the payment gateway can be integrated into shopping carts, analytics tools, marketplaces, and more. Plus, to help businesses accept any payment method in the world with a single integration, the Stripe payment gateway is actively adding new payment methods.
The number of consumers using Apple Pay is on the rise. In 2020, iPhone users that activated Apple Pay grew by more than 65 million people5 and in 2019 the payment gateway processed 10 billion transactions.6
As Apple Pay is mobile-based, this electronic ‘wallet’ solution allows transactions to take place using Touch ID and Face ID. With 1.65 billion active iPhones globally7, the potential customer base for Apple Pay is massive.
Ease is the name of the game when it comes to Amazon Pay. The online payment gateway allows customers to pay by entering their email address and Amazon password without leaving your site. There’s no need to enter credit card information as it simply uses the payment details saved to your Amazon account.
Although relatively new to the online payment gateway business, Amazon is a brand people trust. 89% of buyers agree that they are more likely to buy products from Amazon than other online retailers.8
Owned by PayPal, who acquired it in 2013 for $800 million (in cash), Braintree operates independently of the online payment behemoth.
With some programming know-how, Braintree is highly customisable and, according to its website, is the only payments platform that delivers ‘PayPal, Venmo (in the US), credit and debit cards, and popular digital wallets like Apple Pay and Google Pay in a single, seamless integration.’
Braintree is the online payment gateway of choice for many custom software solutions.
Easy to set up and smooth and efficient to use, this is a good option for multivendor marketplace websites. With a focus on working to reduce fraud, ShieldPay uses escrow (where a third party receives and disburses the money for the buyer and seller) to safeguard funds until both parties are happy to proceed.
Depending on your needs, ShieldPay can act as a redirect payment gateway, partial redirect, or fully integrate with your current payment process.
International payment gateways
If you envisage the need to process international transactions, you will need to integrate with an international payment gateway.
The good news is there are many options available, some better suited to particular regions than others. For that reason, once you know the countries you’re most likely to be authorising payments with, check your chosen online payment gateway covers those territories.
Need helping choosing a payment gateway?
Did you know that 16% of online shoppers abandon their basket if their preferred payment option isn’t available?9 So it’s important to know your customers’ shopping habits when selecting a payment gateway.
For more tips and advice on finding the perfect payment system for your business’s specific needs, get in touch.