6.2 Selecting Payment Gateways Selecting Payment Gateways
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There is a lot to consider when deciding which payment gateway is right for your business. The many different payment gateway services have different features and are designed to fit different ecommerce needs. It is recommended that you apply your own selection criteria that are unique to your business as you determine what you need from a payment gateway service and that you fully research several potential payment gateways before selecting one.
Here are several general criteria that you should consider when selecting a payment gateway:
Third Party Gateway vs Platform Native Gateway. If you decide to use a third party payment gateway, customers will be directed to an external payment gateway to submit all of the payment information away from your website so they can check out and complete the transaction. The customer will then be redirected back to your site after the transaction has been completed on the external payment gateway site. Payment gateways that are integral software to your ecommerce platform have customers submit payment information and process the transaction completely on your website.
Bundled Payment Gateway and Merchant Account. Many payment gateways offer a merchant account that is bundled with a payment gateway service. You use the payment gateway’s merchant account to hold the funds until they are permanently transferred to your business’s bank account. Many smaller businesses choose this option because it is often easier to set up and has lower monthly fees, but in some instances, additional per-transaction fees could be applied depending on the gateway you choose. It is important to note that if your business has its own merchant account and would like to add a payment gateway to its site, you should ensure that the payment gateway you select is compatible with your current merchant account.
Cost. Cost can be broken down into two separate components: monthly fees, which are recurring fees regardless of the order volume of your site, and per-transaction fees, which are based on the number of transactions that occur on your site and are either fixed or variable. Additionally, some payment gateways offer a volume discount if your business website conducts a high volume of sales through the payment gateway.
Reputation. This criterion is a vital, though often intangible, element to a payment gateway, because knowledgeable customers will make purchases from your site only if they recognize and trust the payment gateway you offer. Most major payment gateways are safe and reliable, but the customer’s perception of the reputation of the payment gateway is crucial to your site’s success.
Payment Methods Accepted. Payment method simply refers to which credit card companies the payment gateway accepts (Visa, MasterCard, etc.) and whether the payment gateway is able to directly accept bank account payments. Most major payment gateways accept all major credit card companies, but whether your desired payment gateway service will accept certain foreign credit card companies and currencies will vary. Some payment gateways have their own customer accounts (such as PayPal and Dwolla), in which customers have an account directly with the payment gateway to pay for products on your site. Businesses that are exporting or are planning to export should pay close attention to this criterion and should once more consider that credit card companies will always side with the cardholder in any overseas credit dispute situation.
Payment Gateway Supported by Your ecommerce Platform. Once you have made a choice on which ecommerce platform to use for your website, you must next ensure that the ecommerce platform will support your preferred payment gateway. Many of the major payment gateways are accepted by most major ecommerce platforms, but if you do not ensure that they are compatible, then you will soon discover that receiving payments into your business bank account from transactions on your website will be much more difficult. To check compatibility of a payment gateway with your ecommerce platform, simply visit your ecommerce platform’s vendor website, and check over the list of plugins and extensions for your preferred payment gateway.
A growing number of businesses are offering more than one payment gateway on their site. Most commonly, a site will have a non-hosted payment gateway option to directly enter payment information on the site in addition to a hosted gateway option (such as PayPal), which will direct customers off the site to enter payment information. Although offering two payment gateways is more expensive, it allows customers to select the option they are more comfortable with. Depending on your customer base, this offering could be a smart option for your business.