Choosing the right payment gateway to boost your online sales

Selecting the right payment gateway for your online shop is much more crucial than you might think.
Yet e-tailers rarely put the choice of payment method at the top of their list of priorities when it comes to developing their business. And yet, given the impact it has on the consumer's shopping experience, it can influence the way they evaluate your site... and therefore encourage them (or not) to complete the transaction!
What is a payment gateway? How does it work and what are the benefits? How do you choose a payment gateway for dropshipping and e-commerce?
We tell you all about it.
What is a payment gateway?
Payment gateway: definition
A payment gateway is defined as a service that establishes a link, via a payment processor, between :
- the customer's bank details entered on your website,
- the acquiring bank (the bank that hosts your merchant account).
The payment gateway is therefore responsible for :
- validating the information entered by the Internet user, while protecting against the risk of fraud,
- transmitting the payment data securely using an encryption system,
- send information about the transaction (approval or refusal of payment) back to the merchant site.
☝️ A payment gateway is therefore essential as soon as you authorise online payments on your e-commerce site.
The different types of payment gateway
There are two main types of payment gateway:
- Self-hosted payment gateways: in this case, the banking information is entered directly on a page of the merchant's site, then transmitted to the payment gateway.
- Hosted payment gateways: in this case, the customer is redirected to a page external to the site when entering their bank details. Once they have entered their details, they are redirected to the merchant site.
Payment gateway VS payment processor and merchant account
But the payment gateway is part of an overall process involving other technologies that are necessary for it to function properly.
To help you understand better, let's focus on the payment processor and the merchant account, terminologies that you will frequently come across when considering your future payment gateway.
The payment processor
A payment processor is a company that manages the transaction by acting as an intermediary between :
- the issuing bank (the customer's bank),
- the acquiring bank.
More specifically, it retrieves the information relating to the transaction via the payment gateway, processes it and finally deposits the funds in the merchant's account.
At the same time, the payment processor informs the gateway of the success or failure of the transaction.
The merchant account
The merchant account is the account that receives card payments from the payment processor, before transferring them to the seller's bank.
☝ Note: some payment gateways also provide merchant account services.
How does a payment gateway work?
Paying for a basket via the payment gateway involves a number of steps:
- The customer enters their bank details on the site's payment page, when checking out their shopping basket.
Traditionally, they are asked to enter :- their name
- credit card number
- the card's expiry date
- the secure code (CVV number).
Depending on the services chosen, this payment page is integrated directly into the website or hosted externally by the payment gateway.
- The gateway encrypts the information entered and transmits it to the payment processor. At the same time, it ensures that there is no risk of fraud, using integrated TLS (Transport Layer Security) protocols.
- The acquiring bank forwards the payment data to the credit card network (Visa, Mastercard, American Express, etc.). They carry out additional anti-fraud checks before sending the information to the issuing bank.
- The issuing bank approves or rejects the transaction, and notifies the acquiring bank accordingly.
- The acquiring bank informs the payment gateway (which subsequently notifies the merchant) whether the transaction has been refused or approved.
- if approved: the customer receives a payment confirmation,
- if refused: the seller may ask the customer to try to pay using a new payment method.
- If the transaction is accepted, the merchant eventually receives the money in their merchant account. Transfer times vary from one payment gateway to another.
☝️ Good to know : despite all these steps, the operation only takes a few minutes, to ensure the best possible customer experience.
What are the advantages of a payment gateway?
Enhanced security
Unlike physical payments, online payments do not require proof of the identity of the person using the bank card. What's more, it does not require you to enter a 4-digit secret code.
This is why the payment gateway protects the transaction from the risk of fraud, by encrypting sensitive information in transit between the online shop, the issuing bank and the acquiring bank. It protects the customer against theft of their personal data.
But it also protects the seller by :
- reducing the risk of fraud,
- ensuring that the customer has sufficient funds, does not exceed their credit limit, does not operate via a blocked account, etc.
Increase in the number of sales
Payment methods are multiplying. Today, many users no longer pay solely by credit or debit card. Many now use services such as PayPal, or electronic wallets such as Apple Pay or Google Pay.
Most payment gateways support these technologies. With them, you can opt for a convenient payment method that meets the needs of all types of customer and, by extension, optimises your sales.
Ease of use
A payment gateway really opens up new possibilities when it comes to settling online transactions:
- it simplifies operations (much more than if you were to use a bank transfer or, worse still, a cheque), and everything is grouped together in the same channel,
- while guaranteeing that the seller receives payment from customers more quickly.
What's more, payment gateways are developing their own technology, and some integrate with third-party tools such as CRM or compatibility software.
All in all, they promise to save time and make things simpler for customers and professionals alike.
How do you choose your payment gateway?
There are various criteria to take into account when choosing your payment gateway. Let's take a look at them.
Compatibility with your e-commerce platform
Before choosing your payment gateway, you should find out whether it is compatible with your merchant site. For example, if you use a platform such as Shopify or Prestashop, check the list of accepted providers in their extension catalogue.
Which payment gateway for Shopify?
There is a wide range of payment gateways available for Shopify (2Checkout, Amazon Pay, Paypal, Stripe, etc.). See the full list here.
Which payment gateway for Woocommerce?
In the same way, Woocommerce allows many payment gateways.
There are some free ones, listed in the "Basic payment options" documentation on the site.
There are also many other paid payment gateways, including the more traditional ones (Stripe, Amazon Pay, Square, PayFast, Woocommerce Payments, etc.).
Level of service
As we have seen, a payment gateway can include additional functions to those expected as standard. Some suppliers offer both payment gateway and payment processor (and therefore merchant account) services. Others, on the other hand, only offer gateway services.
It all depends on your needs. All-in-one solutions are easier to deploy (no need to obtain a merchant account), but the monthly transaction fees are often higher. This is why the largest sites tend to operate via their own merchant account, in order to make substantial savings on sales volume.
Security guarantees
Security is one of the essential components of the payment gateway. So make sure that the supplier you choose complies with the latest standards, particularly PCI (Payment Card Industry Security Standard), and has a good reputation in this area.
This will reassure consumers and encourage them to provide their bank details.
Functional coverage
Given the range of payment gateways on the market, it goes without saying that not all of them offer the same range of functions.
So, when choosing the right tool, you need to consider your requirements in advance. For example, do you need to manage recurring payments? If you operate on a subscription basis, certainly.
Customer experience
The ease with which consumers can carry out a transaction on your merchant site can influence their decision to buy. If the process is too complicated, there's a good chance they'll be tempted to go elsewhere.
That's why you need to opt for a service that :
- guarantees smooth transactions and does not multiply the steps involved,
- accepts all bankcards
- is responsive, i.e. perfectly suited to mobile use.
In short, your customer's payment should be quick and easy!
☝️ Ensuring a good customer experience also means accepting payments from customers all over the world if you choose to deliver internationally.
Payment gateway costs
Payment gateway prices vary from one provider to another.
Even if you have to accept paying the right price for a solution that is sufficiently secure and user-friendly, you should identify the right level of service to avoid paying for unnecessary functions.
At the same time, study the pricing policies of the various service providers to identify all the associated costs (transaction fees, chargeback fees, costs associated with accepting different payment methods, etc.).
Examples of payment gateways
Here are a few examples of payment gateways that have proved their worth.
Authorize.net
Authorize.net is a platform offering a range of services. You can therefore use :
- either the solution including the payment processor (with additional costs),
- or the payment gateway alone.
The tool also supports all types of payment. In fact, while it allows online transactions via computer or mobile phone, it also accepts payments by electronic cheque or by telephone via a virtual terminal.
The provider also offers a range of interesting features to facilitate your business, such as recurring payments and electronic invoicing.
Finally, Authorize.net guarantees a high level of security, and remains a solution that is easy to use and integrate with your other platforms.
MoneyTigo
Money Tigo is a French payment gateway offered by the IPS INTERNATIONAL group.
Perfectly secure and compatible with most CMS (Woocommerce, Prestashop, Magento, etc.), it accepts various types of payment:
- simple payment
- payment in two instalments, in three instalments, in four instalments,
- recurring payment,
- one-click payment, etc.
What's more, MoneyTigo is much more than just a payment gateway, since it simplifies your accounting management (monthly statement, performance summary, reconciliation, etc.).
Another strong point of the solution is its advantageous pricing system. With MoneyTigo, there's no monthly subscription fee; a percentage is deducted from your sales, so you only pay when you sell.
Finally, the tool is easy to learn and use, and its user-friendly interface makes it easy to manage your business.
PayPal
PayPal needs no introduction: for years it has been the leader in all-in-one online payment services.
One of the main advantages of this supplier is its solid reputation, a guarantee for Internet users if you opt for its services. Thanks to its reputation and experience, PayPal is also compatible with virtually every e-commerce platform or CMS on the market (WordPress, Prestashop, Magento, Shopify, etc.).
What's more, the company has developed the tool to make it as easy as possible to use and integrate into your online shop, even via mobile.
Finally, there are a number of different packages available (PayPal Express Checkout, PayPal Pro, etc.). You choose yours according to the degree of personalisation you want, and whether you want users to remain on your website when they pay.
On the other hand, note that the high fees associated with PayPal are often singled out for criticism (2.9% + $0.30 for a web transaction, for example). What's more, some companies have encountered problems with accounts being blocked because they are considered risky by the provider.
Stripe
After PayPal, Stripe is probably the most famous payment gateway.
The platform is easy to use, although it may require some technical skills if you are planning to use it in an advanced way. It has the advantage of being highly flexible and customisable (for example, by customising the shopping basket). In this way, the transaction process becomes smoother and smoother, without the Internet user noticing that they are passing through a third-party service. What's more, this speed of payment is also achieved by integrating the service into your website, without reloading the payment page.
At the same time, Stripe offers a number of advanced functions, particularly for managing subscriptions and recurring payments.
Finally, the solution is particularly powerful when it comes to reporting tools, so you can get better visibility of your sales.
You now have a clearer understanding of the role and benefits of payment gateways. But with so much on offer on the market, we recommend that you study the different proposals in detail before selecting the one that's best suited to your online business... and also to your customers' needs! And let's not forget: they must remain your top priority.
A good payment gateway will not only make it easier to manage your transactions, but above all will provide the best possible customer experience, guaranteeing a skyrocketing conversion rate!
Article translated from French