Payment gateways are important to your online business for a very obvious reason: you want to get paid! However, they do much more than that. Payment gateways help your online business by preventing fraud, securing sensitive data and providing your customers a seamless checkout process, to name a few advantages. Having a quality payment gateway is a necessity for running an e-shop, and the right one can help your business to succeed in many different ways.
What It Is
A payment gateway for merchant acquirers is a service that processes credit cards and other payment methods for your online business. Some of the most popular include PayPal and Square. They make the checkout process easier for all parties involved and instantly communicate to customers that your e-commerce site is trustworthy.
Many provide multi-currency support to make doing business internationally easier. There are also white label gateways, which allow your business to brand payment gateway services as your own. This means you become a provider of payment gateway services rather than just a user. Otherwise, they function very similarly to normal payment gateways.
How It Works
When a customer makes a purchase on your online store, they are redirected to your third-party payment gateway (or they simply remain on your site, if your payment gateway is integrated into your e-commerce store). There, they enter their payment information and click submit. This begins a multi-step process in which, electronically, several things are checked.
Their bank is communicated with to ensure they have enough funds for the purchase or that a credit card is not at its limit. Their user information, particularly their billing address, is verified to ensure the card is legitimate. Groups it communicates with in only a matter of seconds include the credit card company, the issuing bank and the acquiring bank. It then redirects customers back to the site, usually to confirm the order. At that point, it is up to your company to receive, fill and deliver the order.
Paying online is more convenient than having to mail in checks or appear in person. Most customers are already familiar with the major online payment gateway services and know how to use them. Customers are also more likely to want to use a third-party payment system, like PayPal, where their card information is already stored, rather than giving out that information to each company at which they shop. When customers are given more options with which to pay, they are also more likely to make a purchase because at least one of their payment methods can be used.
Payment gateways help prevent credit card fraud because they authorize the card before processing the payment. They help keep cash flowing into your accounts by requiring customers to pay at the point of sale to alleviate cash flow problems. They help keep important financial records your business needs to properly prepare for taxes and to assess the financial health of your organization.
Payment gateways also provide needed security. In an age when data breaches can happen and sour customers’ views of your company, you want to make sure their sensitive data remains safe. Look for PCI-compliant and SSL certificates to ensure that a payment gateway will provide the level of security needed for your business. Using a third-party payment gateway can also take some of the liability off of your business if a data breach occurs, because your business will not be responsible for storing and protecting customers’ payment information.
Payment gateways offer a number of advantages for your online business and help you make more sales. All merchants should shop around for a system that will meet both their needs and the needs of their customers. Pay special attention to things like monthly/annual fees, per-transaction fees and limits. Good support from the payment gateway provider is also a must. With a payment gateway in place, headache-free sales and easy payment processing will ensure customers remain pleased with their shopping experience.