The average percentage of online shoppers who abandon their carts is 69.57%. A competent payment gateway can lower that figure, thereby increasing your conversion rates.
We will discuss what payment gateways are, how they operate, it's different types and how they differ from payment processors. We will also discuss the top payment gateways available in the world.
What A Payment Gateway Is ?
An online portal known as a payment gateway links a bank account to the appropriate payment processor. It transfers transaction data physically through a payment terminal or electronically through web payment services and APIs.This payment service authorizes several online payment methods, including UPI (Unified Payments Interface), credit cards, internet banking, and other kinds of digital wallets.
If you've made the decision to launch a business, consider your payment gateway options. It guarantees safe transactions and safeguards private information. Customers can securely save their sensitive data on the Payment Card Industry Data Security Standard (PCI-DSS) gateway, including credit card information.
Additionally, many payment gateways include fraud prevention measures like CVV (Card Verification Value) and AVS (Address Verification Service),as well as payer authentication, to lower the possibility of data loss and theft.
Some payment gateways also enable cross-border online transactions, making it simpler for budding entrepreneurs to expand their eCommerce globally.
How Payment Gateway Works ?
There are four important participants in every electronic transaction. The issuing bank (which issued the consumer's card) and the acquiring bank are additional parties to consider along with the customer and the merchant (who collects the funds from the issuing bank).
Digital transactions typically take minutes, despite the fact that there are several procedures.
When a customer is ready to check out, the website will guide them to a payment gateway where they should enter their bank or credit card information.
Encryption is the next process. The unique data used between the buyer and the seller will subsequently be encoded by the payment gateway.
The gateway will also carry out fraud checks using TLS and other built-in security protocols (Transport Layer Security).
The issuing bank will check to see whether there is adequate funds in the account or not just after establishing a secure connection.
The seller's account will be approached by the payment processor. In case it is approved, the acquirer receives money before settling it into the sellers account. Finally, the customer will be notified that the transaction was successful.
Sometimes , seller will request that the buyer do an alternative payment method incase , merchant account rejects the transaction. Network failures, the merchant's transaction cap, and problems with the bank are a few of the variables that affect acceptance.
Difference Between a Payment Gateway and a Payment Processor
A payment processor is different from a payment gateway. Although a payment gateway and a payment processor work together to complete a transaction, they are fully distinct from one another and cannot be used interchangeably.
An intermediary who relays transaction details to the merchant, issuing bank, and acquiring bank is known as a payment processor. Its responsibility is to uphold the security of payment processing, including fund settlement and user authentication.
A payment processor typically also provides credit card readers or other payment-accepting hardware. You will need a service provider and a merchant account for this.
A payment processor's point of sale interface for in-person transactions is a terminal.
In contrast, a payment gateway blatantly serves as a facilitator between the buyer and the vendor.
A payment gateway supports transactions where a card is not required, whereas a payment processor is for card-present transactions. It serves as a point of sale for your online store.
The virtual authentication procedure is more sensitive because there is no actual presence of the customer or payment card. Payment gateways must check clients' digital credentials against harmful threats in order to ensure the security of payments.
Different Payment Gateway Types
Knowing the advantages and disadvantages of each type will aid you in making the best decision because a reputable payment gateway is essential.
Redirections are the easiest checkout process, and they work best for new and small businesses because they are safe and straightforward to set up. To configure them, sellers do not need to register a merchant account.
To complete the transaction, this payment gateway will direct your customers to a different payment page. You can advertise your brand on the checkout page by putting your logo there.
You can rely on third-party redirect gateways to handle the strenuous tasks, such as security protocols and privacy obligations. However, since you'll have less control over the procedure, this could also be a drawback.
The method's potential to interfere with users' purchasing experiences is yet another drawback. To finalise the online payment, the customer must exit the eCommerce site.
Off-Site Payment and On-Site Checkout
The customer experience is streamlined because the checkout is completed directly on the website, without any redirection.
However, this gateway will send users off-site in order to complete a transaction. Hence, sellers are responsible for ensuring their own security.
To protect customer information, your website must achieve PCI compliance, which calls for additional resources and technological know-how.
On-Site Payment and Checkout
For large eCommerce enterprises that anticipate producing a significant volume of sales, this method of payment is appropriate. The seller's system will be used for everything, including checkout and payment processing.
Your customer will be momentarily directed off-site for the transaction by a third-party gateway. They won't understand this, though, as the hosted payment page mimics your eCommerce website identically.
To encourage individuals to purchase more things, you can make special offers or use the add-ons during this procedure.
The system will immediately redirect consumers back to your website after the transaction has been completed. Customers can browse the product pages indefinitely in this way, increasing your chances of increasing conversions.
This payment mechanism has a somewhat complex infrastructure even though it offers a quick, safe, and trustworthy transaction. To set it up, you will require extensive technical skills or to hire a developer.
Being paid on-site means you have a lot of obligations because you are in responsible of everything. You'll need a PCI compliance certificate and an SSL certificate in addition to the payment gateway itself.
Best Payment Gateways Available
One of the most well-known payment gateways that supports both transactions and money transfers is PayPal, which you may be familiar with. It provides PayPal Payments Standard and PayPal Express Checkout as its two payment options.
While PayPal Express Checkout sends clients to their PayPal account to complete their transactions, the PayPal Payments Standard allows retailers to accept credit cards online.Because clients don't have to enter their payment information each time they make a purchase, the latter speeds the payment procedure.
- Rapid Setup : It takes no longer than 15 minutes to add a PayPal button to your website, leaving you time to focus on increasing your sales.
- Helpful Features : These include of integrations for shopping carts, fraud prevention, and round-the-clock phone help, all of which work with the majority of eCommerce platforms.
- Cross Border Payments : One of the most popular payment processors in the world is PayPal.
- Interrupted Shopping Experience . Customers must visit another website to finish their payments because PayPal utilises redirection. Only accounts for businesses are eligible for the auto-return option.
Stripe, a trustworthy payment gateway that is also on the list, is a flexible payment platform that is used by prestigious businesses like Pinterest, Lyft, and Slack.
- Buy On Click : Customers can buy things using Stripe by preserving their debit or credit card details for one-click checkouts.
- Analytics availability :You can get thorough reports from Stripe's Sigma that will help you understand how to enhance your business operations.
- International Transaction : More than 135 currencies and all the main payment card companies are supported by Stripe.
- Awaiting Payouts : Payments to retailers' accounts must be received within 7–14 days.