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How to choose a payment gateway in 2021?

The data shows that people trust online services more than it used to be and are making more and more online transactions.
The total volume of payments made by one of the largest online transaction services PayPal for the 3rd quarter of 2020 reached $ 250 billion.

Do not forget that the Internet, as well as real-life, is full of scammers who are trying to get the payment data of users.
Today we will talk about what e-commerce is impossible without, about payment gateways. In this article, we will define the term payment gateway, talk about the criteria for choosing the optimal payment gateway for business, and how the right choice can help to secure user funds.

The definition of a payment gateway

A payment gateway is a software and hardware complex that accepts and processes payments by credit cards, cash, and alternative payment methods.
It serves as an intermediary between the bank and merchants and their clients, ensuring secure data transfer over the network.
The service also helps protect businesses from fraud.

How does the payment gateway work?

The traditional life cycle of a transaction can be divided into several stages:

1. Customer orders a product on a merchant’s website. Then, enters a payment page and enters payment data;
2. The payment gateway captures the payment data, encrypts, and sends it to the payment processor through a secured channel;
3. Payment processor transmits data to the acquiring bank and requests payment authorization;
4. Acquiring bank authorises the transaction and sends the payment request to the credit card network;
5. Credit card network (Visa, MAstercard) forwards the information to the issuing bank for approval;
6. Issuing bank checks whether the cardholder has enough funds for purchase and sends the response;
7. Money is debited from the cardholder’s account and the transaction is completed.

The merchant does not immediately receive funds to the bank account. In fact, he only gets permission to transfer funds. At the end of the working day, the merchant transfers all data on the transactions to the bank, which transfers the funds.
A payment gateway is often referred to as a payment processor. A payment processor is a company that is responsible for processing payments and uses a payment gateway as software.
Let’s look at the criteria for choosing a company that will become your processing partner.

Payment gateway selection criteria

• Industry. The processing company may decline your application if the business is in a high-risk category. These industries include:
  • Startups;
  • Tobacco products;
  • Goods and services for adults;
  • Streaming platforms;
  • Any business with recurring payments;
  • Large transactions;
  • Gambling;
  • Software;
  • Tourism;
  • Financial services;
  • Consulting firms, etc.

These industries have an increased level of chargebacks, so getting a merchant account will be more expensive;

• Integration. Depending on the type of integration, users can perform operations directly on the merchant’s site or they will be redirected to the payment gateway site.
  • In the case of API integration, the entire transaction process takes place on the merchant’s website. Also, the resource owner can customize the payment page for the needs of the site. At the same time, the site owner is responsible for the security of transactions;
  • In the case of a hosted payment page, the user is redirected to the payment gateway site and completes the payment process. In this case, the payment processor is in charge of any issues related to the security of payments.
• Payment methods. Any business can be divided into local and global. Depending on the payment preferences of a particular region, it is necessary to choose a payment gateway that will provide the ability to make payments not only by traditional methods (bank cards, cash) but also by alternative methods;
• Fees. Any online transaction is charged a fee. This is usually a percentage of the transaction, plus a fixed amount. The processing commission consists of several elements, two of which are mandatory: Interbank transfer commission. The bank that issued the payment card charges a fixed commission for each transaction made with this card; Evaluation Commission. Also, payment systems (Visa, Mastercard) charge a certain fee. The rest is a payment processing fee, which payment processors charge for the provision of services. If the business falls into the high-risk category, the merchant is obliged to pay a commission for each chargeback (~ $ 20);
• Availability of technical support. If a company values ​​its customers, it must have a team of specialists ready to solve any client problem. Communication with managers is provided through tickets within the platform, by email, or by phone.

The bottom line

The main goal of any processing platform is to provide customers with the ability to accept and withdraw payments quickly and smoothly.
In the few seconds, it takes to process a transaction, the payment gateway must perform a large spectrum of complex processes. Therefore, the choice of a payment gateway should be approached responsibly.
Thanks to the criteria mentioned above, any merchant can find a suitable solution. If you are interested in getting a payment partner but do not want to search, integrate and customize, we will be happy to assist you.
Paymentop provides services for the installation of a turnkey payment gateway.
Write us right now and get a ready-made platform for accepting payments.