Gateway to Success: Why Is a Payment Gateway the Best Solution for E-commerce?

A payment gateway is a tool that no e-commerce company can do without. Let's see why and which benefits it will bring.

Make Way for the Gateway

A payment gateway is a technological solution that enables fast and secure payment processing of card-not-present (CNP) transactions. It is a link between the seller, the buyer, and the bank, similar to a POS terminal at an offline store.

Thanks to the gateway, it’s all done quickly and securely. So, in a way, it’s a digital “twin” of a physical point-of-sale, which is a payment terminal at a physical shop's counter.

Here is an overview of how the payment gateway works:

1. The buyer goes through the checkout process and enters the required payment data through the interface.
2. The system forwards the transaction details to the payment gateway and through it to the bank that issued the card, with which the client pays for the products or services.
3. The bank forwards a request to the payment system (Mastercard, VISA, etc.), which assesses the client's balance and compares it with the transaction terms.
4. The issuing bank sends an authorization code that allows the payment system to complete the transaction.
5. Then the code travels to the payment gateway and from there to the merchant.

If the payment processing is successful throughout the mentioned steps, the funds are securely debited from the client's account. Therefore, even though this software does not receive payment, it is one of the essential software solutions for an ecommerce business. Read ahead to find out how to get all the benefits a payment gateway has to offer!

With this nifty tool, people are making payment online. But there are some other perks you get from employing it too, which we’ll discuss later.

Gateway Types

Now, let’s see which gateway solutions you can choose from as a business owner. There are 4 gateway types that allow you to receive payment.

1. Hosted gateways

   When your client wants to pay, the system redirects them to the third-party Payment Service Provider. On the new webpage, the customer will need to enter their card credentials.

   Pros:

   • Quick and easy to install.
   • User-friendly.

   Cons:

   • Customers may lose their trust as a redirection to a new webpage may appear to them as a "scam move".
   • Redirection to the third-party services may lead to the dropdown of the conversion rate.
   • You can't really control the payment process.

2. Direct API gateway

   API stands for Application Programming Interface. This know-how allows clients to enter their card details and complete the checkout on your website.

   Pros:

   • More customization options.
   • Multiple ways to receive payment: via desktop or mobile application.

   Cons:

   • Responsibility, including PCI DSS compliance and all of its costs, rests in your hands.

3. Self-hosted gateways

   Thanks to this type, card payments take place within one page on your website. Once the client enters their credentials, they are coded in a special format and delivered to the payment gateway. 

   But a major pitfall of this method is that if it fails technically all of a sudden, you'll have to deal with the poorly organized tech-support solutions.

   Pros:

   • Improved user experience.
   • Quicker checkout process.
   • Some customization options.

   Cons:

   • Poor support options for technical solution.

4. Bank gateways

   Finally, you can “borrow” a payment gateway from a local bank. This option includes redirection to the bank’s page where your customer will finalize the purchase. 

   Pros:

   • Easy installation and highly secure payments.

   Cons:

   • Somewhat clumsy user experience.
   • Limited customization: you can’t enable recurring billing, brand payment page etc.

These are fundamental payment gateway types. So, which one should you choose? And which factors are there to consider?

Hunting for the Best Solution

So, which payment getaway to accept payments is the best for your venue? Here’s what to pay attention to:

• Security compliance. There are various security standards, most notably PCI DSS. It stands for Payment Card Industry Data Security Standard and serves to protect card payments that you receive or make from fraud, cyberattacks, and so on.
• Ease-of-use. Remember: you’re just one click away from losing a customer. Therefore, the checkout process must be simple and quick. Cross-platform and multicurrency support are also a must.  
• Customization. Among all else, this implies visual integrity of your brand. You don’t want your checkout page to stand out drastically when compared to the rest of your online venue.
• Setup. Painless and quick setup is preferable as it'll allow you to take payments online immediately.
• Cost-efficiency. Actually, there are ways to reduce your costs by cutting labor and spending money on making your company security-compliant. It is possible thanks to the out-of-box solutions.
• Verification. The payment gateways should also be able to verify your client to exclude fraud. Especially the false chargebacks — a literal plague of e-commerce.
• Support. Another important nuance is that your gateway payment is supported 24/7 by the tech team behind it.

These are the features to look for in a solid option. But what will you gain from employing it?

Benefits of It All

Services provided by the payment gateway are critical. And here’s why:

• Security. It allows preventing fraud, money/sensitive data theft.
• Reputation. Once you can provide your customers with security, your reputation will be spotless and their loyalty to your brand will grow. They’ll want to return to do business with you later.
• Convenience. Thanks to the intuitive interface and minimum clicking or tapping, customers can pay for the “stuff of their dreams” literally in a snap of their fingers.
• Efficiency. Various protocols — from PCI DDS to Know Your Client — will minimize the risk of fraud, which potentially leads to losses. Malicious chargebacks, that we’ve mentioned, result in extra losses such as issuer fees and other fines.

But how do you add it to your website?

Gateway = Plug & Play

If you choose the DIY options, you’ll have to scavenge for the pieces of code from GitHub, fiddle with them yourself and hope that they will turn into the gateway buttons through the brain-bending abracadabra of JavaScript. And not to mention that you'd have to somehow support that hardly reliable infrastructure too.

Or you can go the easy way and get the “all-in-one” package. That is ready to work from the start. Here are the pros of a ready-made gateway:

• Pivotal security. This gateway is protected with the TLS Certificate, which encrypts traffic and PCI DSS that secures card payments.
• Tokenization. It turns the bank card number into a mambo-jumbo of random digits that hackers can’t use. Also, it simplifies the payment process: the client won't have to enter their credit card credentials over and over as this system "remembers" this data after the initial authorization and stores it for later. Plus you can enable a subscription mode for the recurring billing.
• Customer care. You will get high-quality support at any time of day and night.
• Lower costs. All the necessary features are already here. You don’t need to pay for them separately, and it allows you to cut the expenses.
• Client’s Satisfaction. This payment gateway needs no redirecting pages. Therefore, processing is quick. Purchases can be made in just two clicks/taps — your customers will appreciate this simplicity.

As a result, you won’t need to build your own payment system from scratch. A ready-made solution is there for you. And it waits to become an engine of your success.