Payment gateways are a secure online link between a merchant and an acquiring bank. They act like a PDQ in a shop by validating and relaying a customer’s card details securely, before collecting payment and giving it to your internet merchant account (IMA).
If your website has an online shopping cart taking card payments in real-time, you need a payment gateway service in addition to an IMA. This is because the shopping cart applications are not allowed to communicate (send and receive the transaction information) to payment processors directly (for security reasons).
Payment gateways protect credit card details by encrypting sensitive information, such as account numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor.
A payment gateway service company has gone through the extensive and lengthy process of getting approved to communicate with payment processors. A payment gateway company acts as the mediator for communicating the transaction information between the shopping cart application and payment processors.
Even if you are taking payments by post, phone or fax, you still need a payment gateway.
Your payment gateway conducts the flow of information between a payment portal (a website, mobile phone etc) and the front end processor or acquiring bank.
When customers order a product or service from a payment gateway enabled merchant, the gateway carries out a series of tasks to process the transaction.
The process works like this:
There are some fundamentals to bear in mind when considering a payment gateway. The most important is compatibility with your eCommerce platform, in other words, will it work with your shopping cart? Many of the shopping carts on the market automatically configure with the main payment gateways, but it would be wise to check with your web developer before signing up.
Other things to consider are the level of support for any problems you encounter, length of the contract for the service and any hidden costs (such as extra security or mail order and telephone payments) and the level of fraud protection the gateway provides. Most gateways will provide a dashboard to let you analyse sales figures and generate reports.
The other factor to consider when choosing your payment gateway is whether it is hosted or integrated.
When you set up a payment gateway, you can opt to have the payment page hosted by the payment service provider (PSP). By doing this you increase security as the PSP will have a high level of security in place. It will also save you time and hassle dealing with security updates or compliance issues.
The alternative is an integrated payment gateway or application program interface (API), which gives you much greater flexibility and control over your payment page. It also means that shoppers never leave your site, so does provide a better branding experience.
You are responsible for security compliance and will have the versatility to integrate your payment page with devices like mobile and tablets.
Which option is best for you will depend on the level of technical nous you have. Hosted is faster to obtain and simpler. API is more flexible but requires advanced IT skills.
When evaluating the different payment gateways on the market, you should consider the following:
Your gateway should carry out transactions quickly and reliably without charging over the odds. The process should be hassle-free. It’s a service after all, and one that you are paying for. Good payment gateways should dovetail with your business, security features and banking arrangements.
eCommerce and site integration
We’ve said it before, let’s say it again. Integration is everything with payment gateways. A good gateway will configure quickly with your shopping cart. Remember that your choice of hosted or integrated gateway will depend on the level of technical expertise you have. Always check with an IT specialist to make sure your chosen solution is compatible with the rest of your eCommerce platform.
Even if you’ve bought a straightforward gateway from a reputable source, it’s inevitable that you’ll run into problems at some point. Having readily accessible support therefore is a must.
Using your gateway
You’ve got to be able to use it, so make sure you can! Choose a product that is straightforward to understand and just as easy to use.
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