Which payment gateway should you use for your ecommerce store? With dozens of online payment processing options to choose from, it can be a complicated decision.
|Dharma Merchant Services|
Now, here are ten factors to consider:
1. Is the payment gateway supported on your ecommerce platform?
Which ecommerce platform are you going to be using? Something SaaS-based like Shopify or BigCommerce, perhaps? Or a self-hosted platform like WooCommerce or Magento? Whichever platform you’ve chosen, there will be a range of off-the-shelf plugins or extensions to help you integrate with major payment gateways.
Where possible, choose a payment gateway that already has a plugin for your platform.
2. Do you want customers to enter their payment details directly on your site?
From a technical point of view, there are three ways for you to take payment details from a customer.
a) Payment form on your site, details posted to your server
The smoothest checkout experience for customers is usually for them to enter their payment details into a normal form on your site. Unfortunately, this is the least secure way of doing things so you’ll need to take very serious security precautions to remain PCI compliant. Unless you’re turning over millions per year, this probably won’t be cost-effective.
b) iFrame or redirect
An alternative to take payment details directly through your site is to include putting the checkout form in a secure iFrame (within a page on your site) or redirecting customers to a hosted payment page. It’s harder to get the payment form to match the rest of your website with these approaches, but they’re also the most secure way of doing things.
c) Payment form on your site, details sent straight from browser to secure payment gateway (not via your server)
Lastly, a middle-ground solution is to use a solution such as the Stripe payment gateway’s Stripe.js. With Stripe.js, your customers type their card details into a form on a page served from your site, but the Stripe.js code communicates directly with the Stripe server. The customer’s card details never pass through your web server. Your security responsibilities will be less than with a normal form, but much more involved that with an iFrame or redirect.
Make sure you understand the version 3.0 PCI data security standards effective from 1st January 2015 which give more details about the different categories and what merchants using each of these checkout methods need to do to be PCI compliant.
3. Do you want a payment gateway and merchant account or an all-in-one payment service provider?
Some payment providers such as SagePay or PayPoint offer just a payment gateway (the bit of technology that sits between your website and the payment networks). They require you to have your own merchant account (the special bank account that the money passes into — different from your regular business bank account). Other payment providers such as PayPal and Stripe offer a combined payment gateway and merchant account (effectively you’re using their merchant account.)
Getting an account with one of the combined providers tends to be easier than getting a merchant account, and tends to involve fewer setup and monthly fees. The per-transaction fees tend to be higher, however. For these reasons, small merchants may want to start with a combined payment provider. Larger merchants can typically save money by having their own merchant account.
4. Do you want to offer PayPal?
You don’t necessarily need to limit yourself to one payment gateway. Lots of ecommerce platforms allow you to offer multiple payment options to your customers. The most popular ‘secondary’ option to offer is PayPal. Lots of consumers have PayPal accounts and many of them prefer to pay by PayPal rather than enter credit card details into yet another website. Even if you don’t use PayPal as your main payment gateway, consider offering PayPal as an alternative way for customers to pay. It can also be a good backup in case of any problems with your primary payment gateway or merchant account.
5. What are the fees?
Payment gateways and merchant accounts charge various different fees that can include monthly fees, fixed fees per transaction, variable fees based on a percentage of transaction amounts, and extra fees for things like chargebacks, payments from international cards, and more. You can use a comparison website such as PaymentBrain to get an overview of fees and ask to see a full schedule of charges before signing with a provider.
6. How long is the contract?
Historically, some payment providers have been known to lock merchants into lengthy contracts of two years or more. This can be a problem if you find you’re not happy with the provider for some reason after signing. Other providers are happy to have merchants using them on a monthly rolling contract. Make sure you understand which sort you’re signing up to.
7. Does the provider have a good reputation?
Payment processing is critical to your business, so you’ll want to work with a provider who has a good reputation in the industry. Some payment providers have had problems with outages. Others have a reputation in some circles for blocking merchants’ money without due cause. If you haven’t heard of a particular payment provider before, be a little extra careful before signing up with them.
8. Does the payment gateway do what you need?
Does you need to do more than just take one-off payments for goods or services that you are providing? Perhaps you’re looking to take recurring payments from your customers? Perhaps you want to act as a marketplace, taking payments on behalf of sellers who are listing on your site? Most payment gateways are quite limited in the functionality they provide, so make sure the payment gateway you’re considering has the features you need.
9. Does the payment gateway support the payment methods your target market uses?
There is a huge number of online payment methods in use around the world, from the well-known and well-established Visa and MasterCard to very niche payment methods used in just one or two countries. Each payment gateway supports some of these payment methods. Make sure you understand which payment methods people in your target market like to use and choose a payment gateway with support for those methods. If your website doesn’t accept your customer’s preferred payment method, you will lose sales.
10. Are you in a ‘high-risk’ business?
Some businesses are considered by payment providers to be ‘high-risk’. This is generally because of the sector they operate in.
Some high-risk sectors include:
- adult content
- debt collection
- electronic cigarettes
- diet programmes
- credit repair
If your business is in one of these sectors, you may find many payment providers don’t want to work with you. In such cases you’ll need to work with a provider that specialises in so-called ‘high-risk’ payment processing.
5 Popular Payment Gateways to Consider
If you’ve considered these 10 points, you’re now well on your way to choosing a suitable payment gateway.
To save you some time, here are five popular payment gateways that all do well based on the criteria above.
|Dharma Merchant Services|
What other factors are you considering in choosing a payment gateway? Let us know!