E-commerce, SaaS, eLearning, and booking platforms all have one common goal: to provide customers with a secure and user-friendly payment process.
Fintech companies have made it possible for even startups and SMBs to accept online payments, even if they don't have a physical presence.
In fact, according to the Federal Reserve, only 60% of businesses in the USA accept cash payments, with more and more companies transitioning to electronic payments. The US payment processing market is expected to grow 5% to 7% for the next five years, with an annual value of over $2 trillion in 2023. However, 7% of buyers abandon shopping carts due to inadequate payment options.
As a digital nomad or a business owner, the chance of you not using a payment gateway is close to none. Everything from freelance work to online shopping requires a secure and convenient payment method.
So, let's explore everything about payment gateways and how to integrate them into your website.
What is a Payment Gateway?
A payment gateway is a technology that authorizes and processes credit card and direct payment processing for e-businesses, online retailers, and merchants. It acts as a bridge between the customer's bank and the merchant, ensuring the secure transmission of transaction data.
The data is encrypted and transmitted to the merchant's web server, then decrypted and forwarded to the cardholder's bank, where it is authorized or declined. A confirmation is then sent back to the merchant, and the customer receives a transaction notification.
Security protocols and encryptions are in place to protect the sensitive data of the customer. A payment gateway facilitates other functionalities like currency conversion, recurring payments, and fraud detection.
Types of Payment Gateways
Payment gateways can be broadly classified into two types: hosted and Integrated. Let's examine each type, its benefits, and examples.
Hosted gateways
Hosted payment gateways are external payment pages that redirect customers to a third-party website to complete the transaction. The customer leaves the merchant's site and is directed to a secure page hosted by the payment gateway, where they enter their payment information.
This gateway type is easy to set up and requires no technical expertise. Hosted gateways also provide a higher level of security as the sensitive data is not stored on the merchant's website.
Paypal, Braintree, and 2Checkout are examples of popular hosted gateways. When customers use a hosted gateway, they are redirected to a PayPal page where they can choose their payment method and complete the transaction.
Integrated gateways
Integrated gateways, on the other hand, allow customers to complete the transaction without leaving the merchant's website. The payment form is integrated into the merchant's website's checkout page, providing the customer with a seamless payment experience.
This gateway type requires more technical expertise and may require PCI DSS compliance. However, integrated gateways offer the merchant better customization options and branding opportunities.
With integrated gateways, the customer stays on the merchant's website while completing the payment process. The merchant has more control over the customer's experience and can tailor it to their brand.
How Does Payment Processing Work?
The payment processing flow involves multiple steps to ensure a smooth and secure transaction for the customer and the merchant. Here's a brief overview of how payment processing works:
- Customer initiates the payment by entering their payment information on the merchant's website.
- The data is encrypted and transmitted to the merchant's server, then decrypted and forwarded to the customer's bank for authorization.
- The payment method that customers choose, such as a credit or debit card, determines which payment network the transaction goes through.
- Point of sale (POS) terminals send the encrypted transaction data to payment gateways, which securely transmit it to the appropriate payment processor.
- The payment processor then sends the transaction data to the card network (e.g., Visa or Mastercard).
- The card network forwards the information to the customer's issuing bank for authorization.
- The issuing bank approves or declines the transaction based on available funds, account status, and other factors.
- If approved, the transaction is sent back through the same channels to the merchant's POS system.
- The acquiring bank receives the funds from the issuing bank and adds a payment to the merchant's bank account.
- The merchant can then reconcile the transaction and receive payment for the goods or services.
What is PCI DSS compliance?
PCI DSS (Payment Card Industry Data Security Standard) is a set of security standards developed by the Payment Card Industry Security Standards Council (PCI SSC). Its 12 requirements are designed to protect cardholder data and prevent fraud in payment transactions.
- A regularly updated firewall must protect cardholder data to protect against potential breaches.
- Vendor-supplied defaults should not be used for system passwords and other security measures to prevent unauthorized access.
- Stored cardholder data must be protected through encryption to prevent theft or fraud.
- Cardholder data should only be transmitted through secure, encrypted channels over public networks.
- Updating anti-virus software or programs to protect against malicious attacks.
- Secure systems and applications must be developed and maintained to protect cardholder data.
- Access to cardholder data should be restricted to only those employees who need it for their job functions.
- Each employee with computer access should be assigned a unique identification number to track any potential security breaches.
- Physical access to cardholder data must also be restricted to prevent unauthorized access.
- All access to network resources and cardholder data must be tracked and monitored for suspicious activity.
- Regular security system testing and monitoring should be conducted to identify and address any potential vulnerabilities.
- There should be a policy in place that addresses information security for all personnel involved in payment processing.
Before implementing PCI DSS compliance, it's essential to define the scope of what is required for your specific business. This can help reduce compliance costs, operational costs, and the risk associated with handling payment card data.
What are the Most Popular Payment Gateways?
While many payment gateways are available in the market, certain ones have gained popularity due to their ease of use, features, and reliability. Let's take a look at some of the most popular payment gateways used by merchants:
PayPal
PayPal is one of the oldest and most widely recognized payment gateways. It allows customers to pay using their PayPal account or credit/debit cards without sharing sensitive information with the merchant. PayPal also offers fraud protection and dispute resolution services for customers and merchants.
Authorize.net
Authorize.net is a US-based payment gateway that supports electronic check processing, credit card payments, and mobile payments through internet-connected devices. The platform offers fraud detection tools and recurring billing options, making it popular among subscription-based businesses.
Stripe
Stripe is a global payment gateway that supports over 135 currencies and has a simple integration process. A set of programmable APIs and different payment forms make it a popular choice for businesses of all sizes. Businesses with global customers often prefer Stripe for its international capabilities.
Square
Square is a popular payment gateway for small businesses. It offers a seamless and affordable way to accept credit card payments. Its mobile app allows companies to take payments on the go, making it a convenient option for small vendors and service providers.
Adyen
Adyen is a global payment platform that supports over 180 currencies and 200 payment methods. Like-for-like settlement and consolidated reporting make it a top choice for international businesses.
Clover
Clover is an all-in-one platform with a payment gateway service, point-of-sale system, and business management tools. It offers various payment options, including contactless payments and mobile wallets, making it a popular choice for businesses in the retail and hospitality industries.
Google Pay
Google Pay is a fast and secure payment gateway that allows customers to make payments using their Google account or saved credit/debit cards. It has gained popularity among mobile users due to its integration with Android devices and apps like Uber.
Amazon Pay
Amazon Pay allows customers to use their Amazon account to make payments on partner websites. Its robust security measures and seamless integration with Amazon's extensive customer base have become a popular choice for e-commerce businesses.
Helcim
Helcim is a Canadian-based payment system provider that offers transparent pricing and advanced security features such as tokenization and 3D security. It also provides businesses with a virtual terminal for accepting phone payments or mail orders.
Braintree
Braintree, a PayPal-owned payment gateway, offers simple and scalable solutions for businesses of all sizes. The developer tools and customizable user interface make it a popular choice for engineers and designers looking for seamless integration.
Stax
Stax is a cloud-based payment gateway that offers transparent pricing and flexible payment options, including ACH payments. It also provides businesses with detailed analytics and reporting for better insights into customer behavior.
2Checkout
2Checkout is a global payment gateway that supports over 87 currencies and offers multiple payment options, including credit cards, PayPal, and local payment methods. Its fraud protection services and recurring billing options are popular among subscription-based businesses.
Checkout.com
Checkout.com is a fast-growing payment gateway that supports over 150 currencies and offers advanced fraud detection tools. Reduced foreign exchange costs and cross-border payments make it a preferred choice for businesses with international customers.
Payza
Payza is a payment gateway that offers multiple payment options, including credit/debit cards, bank transfers, and cryptocurrency. Its global reach and low transaction fees make it a popular choice for businesses with an international customer base.
Payline Data
Payline Data is a payment gateway known for its low fees and quick fund transfer. It offers various payment options, including NFC payments, and has a reputation for excellent customer service.
Ayden
Ayden is a payment gateway that supports over 250 payment methods and offers consolidated reporting for businesses with multiple locations. The security and fraud prevention tools and global reach make it a top choice for large international businesses.
Worldpay
Worldpay is a payment gateway that supports multiple payment options, including credit cards, e-wallets, and alternative payments. You can customize the payment page to match your brand's look and feel. Its global presence and advanced fraud prevention tools make it a popular choice for businesses of all sizes.
How to Select the Right Payment Gateway?
Your business's success relies heavily on providing customers with a seamless and secure payment process. A secure and reliable payment gateway is the backbone of any online business. To help you make an informed decision, here are some factors to consider when selecting a payment gateway:
Ease of integration
Look for a payment gateway with simple and well-documented APIs, plugins, and customizable payment forms. This will make the integration process smoother and faster.
Supported currencies and payment methods
Consider your target market and ensure the payment gateway supports your customers' currencies and payment methods.
Transaction fees
Payment gateways charge a fee for each transaction, so compare fees across different options to find the most affordable one for your business.
Security measures
With increasing data breaches and cyber threats, selecting a payment gateway with robust security features such as encryption, tokenization, and fraud detection tools is crucial.
Customer support
Prompt customer support is essential in case of any issues or technical difficulties. Look for a payment gateway with 24/7 customer support to ensure smooth business operations.
Benefits of Professional Payment Gateway Integration
The success of your business depends on providing customers with a smooth and secure payment experience. Professional payment gateway integration can bring various benefits to your business, including:
Ensuring customer data protection and compliance with standards
Professional payment gateway integration protects your customers' sensitive information through secure encryption and tokenization and ensures compliance with industry standards and regulations, such as PCI DSS.
Smooth checkout process
A professional payment gateway integration can give customers a hassle-free checkout experience, increasing customer satisfaction and retention. Many customers abandon their purchases due to a complicated checkout process, and a seamless payment experience can significantly reduce cart abandonment rates.
Minimizing downtime and transaction failure
When a payment gateway is integrated professionally, it reduces the chances of downtime and transaction failures. This translates to fewer disruptions in your business operations and increased customer trust and satisfaction.
Handling increasing transaction volumes as the business grows
As your business grows, so will the volume of transactions. A professional payment gateway integration can handle increasing transaction loads smoothly without causing delays or issues. The gateway's scalability and reliability ensure that you can continue to provide a smooth payment experience to your customers, even as your business grows.
Steps to Integrate the Payment Gateway
Once you have selected the right payment gateway for your business, the next step is to integrate it into your website. Here are the key steps involved in this process:
Choosing the right payment gateway
First, carefully consider your options and choose a payment gateway that best suits your business needs. Some factors to consider include transaction fees, supported currencies and payment methods, security measures, and customer support.
Setting up a merchant account
You must have a merchant account to process payments through a payment gateway. This involves agreeing with a bank or payment processor to accept customer payments. Remember that there may be costs associated with setting up a merchant account, and you will also have to ensure compliance with industry standards and regulations.
Integration process
There are various ways to integrate a chosen payment gateway into your website, such as API integration, SDKs, and plugins. Your IT team or partner can assist you in selecting the best method for your business and implementing it.
Testing
You need to test the integration to ensure everything works correctly before going live. The sandbox environment provided by the payment gateway is crucial for this step as it allows you to test transactions without using actual customer data. Testing various scenarios, such as successful and failed transactions, refunds, and error handling, is vital.
The testing phase is also an excellent opportunity to make any necessary adjustments and fine-tune the integration process.
Going live
Once you have completed all the necessary testing and made any required changes, you can go live with your payment gateway integration.
Conduct final checkouts, such as security audits and compliance checks, to ensure everything is in order before accepting real payments. It would also be helpful to set up monitoring for transaction failures and performance issues to ensure smooth operations.
Choose a Reliable IT Partner to Integrate Payment Gateway to Your Website
Integrating a payment gateway can be complex and may require technical expertise. You may also need to change your website or systems to accommodate the integration. So, it is essential to have a reliable IT partner who can assist you throughout the process and ensure a smooth integration.
A trustworthy IT partner will have experience with payment gateway integrations and be able to provide valuable insights and recommendations. They can also help troubleshoot any issues, saving you time and resources.
iRonin.IT is a trusted partner for payment gateway integrations. Our team of experienced developers can help you integrate various payment gateways into your website.
Contact us today to learn more about our services and how we can assist you in providing a smooth and secure payment experience for your customers.
