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How to choose the right payment gateway for your business

For an e-commerce store, getting the payment process right is vital. Not just for your business to function, but also for users to complete the transaction. Payment gateways have improved over the years to help users checkout with minimal friction and enable you access to the funds as quickly as possible. This post discusses this progression (how payment gateways used to be, how they are now, and what’s around the corner) as well as highlighting 5 key questions your business needs to ask in order to find the best payment gateway solution for your requirements.

How payment gateways used to operate in the early days of the web

When e-commerce was in its infancy, early payment gateway options were limited, and came with a hefty amount of set-up, both with paperwork to set up the service (especially for high street bank gateway offerings) and integrating with the website. More purpose-specific gateways (i.e. Worldpay or Paypal) also handled the basket logic, as many sites were selling products using simple HTML pages, with no e-commerce platform.

SSL certificates were expensive, and to self-host the checkout page would require costly and in some cases technically complex paperwork (i.e. PCI compliance etc.). HTML-only websites also meant often the basket, and almost always the checkout pages would be hosted elsewhere. Payment gateways allowed some styling of the pages hosted on their services but often checking out was quite a jarring experience, being passed from one site to another.

With all the paperwork, technical support, basket logic and checkout page customisation that was required, payment gateways back then were quite expensive. Generally, the contracts would work on a monthly fee + transaction fee + percentage fee.

The role payment gateways play in modern e-commerce platforms

Nowadays there are a plethora of payment gateway options, they are easy to sign up to and easy to integrate with most e-commerce platforms. Their offerings have become much more focused, generally handling behind-the-scenes tasks to capture funds with no basket integrations or front-facing interfaces, and SSL certificates are everywhere and free (with Holler Marketing at least!)

With all this competition, prices are cheaper than ever, and extra functionality aligned with the payment process is always being added to compete for your business. For instance, payment gateways will produce plugins and extensions that work with e-commerce platforms. These plugins seamlessly integrate payment buttons like Apply Pay and Android Pay and vaulting systems to enable your e-commerce store to save card credentials etc.

The above changes have moved payment gateway service fees to a pay-per-use model. The monthly fee model still exists, often with smaller transaction and percentage fees, but an e-commerce store would have to handle a lot of volume to make them worthwhile. The increase of smaller e-commerce sites without a large or consistent turnover has also made the pay-as-you-go model much more popular.

What’s next for payment gateways?

Payment gateway companies are always thinking about new ways they can increase the volume of sales through their platforms, this involves removing yet more barriers to payment as well as making payment options more prevalent. Over the next year or so you will notice more integrated payment options, known as social and live commerce, directly allowing purchases within social media posts and live-stream videos.

Another shift is the integration of finance products into payment gateways. Business-to-consumer products like ‘buy now pay later’ etc. are on the increase, first with the likes of Klarna, but most gateways now have some similar offering.

5 questions to determine the best payment gateway for your business

Firstly, assess what your requirements are. What is important to your customers and to you? Use the following questions below to figure out your priorities. Feel free to use the text areas to send us your answers, and we will get back to you with our suggestions.

    How important is quick payout?

    Most payment gateways have differing payout options and cycles. Stripe for instance lump transactions together and deposit in one go, this can sometimes make it difficult to match transactions to accountancy software etc. Some gateways expedite payouts to get the cash in your account same day or next day. If that is important to how your business operates, look into the payout terms, which might not be very clearly stated. Others offer quick payout, but it is an optional extra with additional fees.

    Who are your customers, and what would make it easier for them?

    If your customers are businesses, they will have different needs to consumers. I.e. finance options like ‘Pay in 3’ etc are rarely available to businesses. Business users might value saved card numbers over Apple/Android pay as the company credit card might not be saved onto the company computers. Business customers might also use mobile features a little less. Some payment gateways make it easy to create payment links which may be useful to you.

    What integrations do they offer with your e-commerce platform?

    Some payment gateways have fully support plugins/extensions which add a lot of value, free of charge. Others have no plug and play integration, or allow other companies to make them. How much does the plugin cost per year? How frequently has the plugin been updated? What extra functionality does it offer which could help your customers/you (i.e. saved cards or admin integrated refunds)? Don't know the answer to this question? Get in touch, we can help.

    What physical/offline payment products are you currently using?

    Do you have a physical store, or take payments over the phone? Do you have a EPOS system? Sometimes the ease of simply adding an additional service with the same company could win out, but be sure to think about if it is the best thing for your customers too.

    What is their support record like? Do they have in built fraud detection?

    If things don't go to plan, how easy will the company be to get hold of? Cheaper, more tech led operations have limited or zero telephone support when problems arise. Could that be a deal breaker for you? I.e. If handling high value items. Fraudulent payments are also a concern, one that ideally you want your payment gateway to block. Fraudulent payments will need to be flagged up, and processes need to be in place to ensure the money is handled correctly.

    How can we get back in touch?

    Holler Marketing can provide unbiased advice, free of charge

    Holler Marketing hold no affiliate account with any payment gateways. We have well over a decade of experience integrating with countless payment gateways. We believe the above questions should be asked and assessed and only then can the best decision for your company be made.

    Feel free to send your (even partial!) answers to the above 5 questions, and we will advise you on the payment gateway which best suits your requirements, free of charge, with no obligation.