If your new business is going to involve a website for your customers to make purchases, you’re going to need a credit card payment processing facility.
With so many providers in this space, which is the best payment gateway to use? There are a number of factors to consider, some or all will be relevant to your business.
Which payment gateways are supported on your ecommerce platform?
First things first. If you have already made a decision on the platform hosting your eCommerce website, then you will almost certainly have some ‘out of the box’ options available. Whichever platform you’ve chosen, there will be a range of off-the-shelf plugins or extensions to help you integrate w h major payment gateways.
Where possible, you should choose a payment gateway that already has a plugin for your platform as this will dramatically reduce the technical development to get your eCommerce website up and running. In addition, by using a gateway provider that already neatly integrates with your website, you will remove the concerns about new version integration in the future.
Do you want customers to enter their payment details directly on your site?
In technical terms, there are three ways to capture a customer’s credit card details in order for you to process payment:-.
a) Hosting a payment form on your site, with all customer card details posted to your server
From the customer’s perspective, the neatest solution is for them to key their card details into a form within your website. Regrettably, this is the least safe and secure method and will present you with an overhead of ensuring your website is PCI compliant. This can be both expensive and time consuming to maintain as annually you will be expected to complete a review to ensure you meet the credit card provider’s security requirements. Unless you’re expecting to have a very high turnover, this is unlikely to be cost effective.
b) iFrame or redirect
By far the most secure mechanism, and the one that removes any concerns from your perspective in terms of PCI compliance, is to place a checkout form in a secure iFrame (within a page on your site) or redirecting customers to a hosted payment page. The downside to this solution is that the payment form may not have a common look and feel in line with the rest of your website. Many customers, however, will find it reassuring knowing that their credit card details are being processed on a recognisable payment gateway rather than your site. This customer confidence could remove any concerns they may have purchasing on your website and ultimately result in increased orders.
c) Hosting a payment form on your website, but the card details are sent directly from a web browser to a secure payment gateway that is NOT on your server
This is a halfway house solution. With this, your customers key their card details into a form on a page served from your site, but code running on your website connects directly with the payment gateway supplier’s server. The customer’s card details never pass through your web server. The benefit of this solution is that the form capturing card details can be styled in line with the rest of your website. Your security responsibilities will be less than with a normal form such as outlined in point a) above, but much more involved that with an iFrame or redirect.
It is imperative that you are fully aware of the latest PCI requirements. Version 3.0 PCI data security standards became effective from 1st January 2015. This will provide you with full details on the different categories and what merchants using each of these checkout methods need to do to be PCI compliant.
Are you looking for a separate payment gateway provider from your merchant account provider or an all-in-one payment service provider?
There is a distinction between a Payment Gateway and a Merchant Account.
Above we have specifically been talking about different options in integrating a payment gateway onto your eCommerce website. The payment gateway is simply the technical platform used to process card payments online.
A Merchant Account is effectively an online bank account that will temporarily hold your money (you are the merchant) until it is moved into your actual bank account. When a customer successfully makes payment on your website, the money taken will be automatically placed into your merchant account. Typically the money will remain in your merchant account for a pre agreed number of days that was set with the merchant service provider when they approved your account. This is normally anywhere between 2 and 7 days. After this period, the money will then be automatically transferred into your actual business bank account.
Many of the payment gateway providers, such as SagePay or PayPoint, just offer the technical platform for the processing of the card payment. Where this is the case, you will need to organize the merchant account element yourself.
There are however, other payment providers such as PayPal and Stripe who will provide a ‘one stop solution’ by offering both services. In effect, you will be using their own merchant account, which will be configured to transfer the proceeds of any sales directly to your regular business bank account, again at an agreed delay between payment taken and transfer.
These combined solutions offer a number of benefits over separate service providers. They are often quicker and easier to get payment processing up and running. In addition, they often result in lower setup and monthly fees. The big negative however is that, in general, the per-transaction fees charged tend to be higher, If, therefore, you ultimately expect to process a high volume of transactions via your website, you would probably be better advised to have your own merchant account. Merchants expecting reasonably low transaction volumes may instead decide to go for a combined solution to start with, with a view to changing at a later stage.
Are you intending to offer PayPal as a mechanism for your customers to make payment?
Why limit yourself to one payment gateway? Many of the eCommerce platforms allow you to offer alternative payment options to your customers. PayPal is an excellent alternative option to offer to customers. Many of your customers will already have PayPal accounts and many of them prefer to pay by PayPal rather than enter credit card details into yet another website. Even if you don’t use PayPal as your main payment gateway, consider offering PayPal as an alternative way for customers to pay. It can also be a good backup in case of any problems with your primary payment gateway or merchant account.
Fees – how much does all this cost?
There’s no escaping it – you’ll need to put some effort in to compare what’s on offer. All providers of payment gateways and merchant accounts charge different fees that can include monthly fees, fixed fees per transaction, variable fees based on a percentage of transaction amounts, and extra fees for things like chargebacks, payments from international cards, and more. There are a number of comparison websites available to assist with this research, for example PaymentBrain. Don’t forget that you will need to consider whether you’re website platform easily integrates with your preferred gateway service provider.
Does the service provider have an excellent reputation?
For all eCommerce websites, reliable payment handling is key, so you’ll want to work with a company who has good credibility in the market. Check online reviews from existing customers to ensure that there is no history of regular system downtimes, delays in transferring funds etc. Issues like this will kill your own reputation with your customers and possibly impact the likelihood of them returning to make a subsequent purchase. If you haven’t heard of a particular service provider, then the chances are that neither will your customers so be a little extra cautious before signing up!
Functionality – does the payment gateway do what you need?
Think ahead – do you require to do more than just take one-off payments online? If you are providing ongoing services, then you should consider whether the payment gateway you are considering supports taking recurring payments against card details supplied at the time of the initial purchase. The mantra should be – make it easy for your clients to pay you!
What cards are your customers likely to use?
Not everyone will want to pay with a VISA or MasterCard issued debit/credit card. A number of specialist cards may be relevant depending on where in the world you expect to derive business from. Consider this when assessing the various payment gateway providers and what cards their system supports. The last thing you want is to lose business because your gateway doesn’t support a card that your customer is trying to pay with!
Is your new business likely to be considered ‘high-risk’?
There is no guarantee that all payment gateway / merchant service providers will be prepared to offer you their services. Some businesses will be considered to be ‘high-risk’. As a rule, this is normally based on the sector you operate within and where in the world your customers are located.
Listed below are some examples of high-risk sectors which might make it more difficult to get payment gateway / merchant services:
- adult content
- gambling websites
- debt collection
- electronic cigarettes
- diet programmes / weight loss products
If this is the case, you may have to apply to work with specialist service providers but, almost certainly, the setup and transactional costs will be significantly higher.