Table of contents:
- Blog Summary
- How does a payment gateway work?
- Advantages of using a payment gateway for your business
- 7 factors to consider when choosing a payment gateway service
Are you a new ecommerce business owner looking to grow your business by incorporating payment gateway services? Look no further, for we have the perfect guide to help you through the process of choosing the right solution provider for your business.
If you own an ecommerce business, choosing a payment gateway is one of the most crucial decisions you will need to make for your business.
A payment gateway acts as a channel to transfer money from your bank account to the platform where you need to transfer your money. It enables you to perform an online transaction using a wide range of payment methods, including UPI, credit/debit cards, net banking, and other popular online wallets.
For ecommerce businesses these days, online payment options are becoming more important than ever. So to keep up with the trend, your business should be able to offer its customers with a seamless online payment mechanism that will enable them to purchase with ease and convenience. And payment gateways help you do exactly that.
However, to enjoy the best benefits of using a payment gateway, you need to choose the right service provider for your business. This blog will walk you through the process of selecting a payment gateway for your ecommerce business.
How does a payment gateway work?
Payment gateways automate, speed up, and safeguard the payment processing procedure. Payment gateways follow Payment Card Industry (PCI) guidelines and use a variety of security measures to prevent fraud.
This is how an ecommerce payment gateway works:
- The payment process begins when a customer enters the payment information needed for the transaction. The payment gateway then verifies all the information like card details, etc.
- After receiving the necessary information, the payment gateway sends it to the payment processor, which is then sent to the merchant’s acquiring bank.
- Once the payment gateway receives the approval for the transaction, the bank then checks the customer’s account for sufficient funds.
- After confirming for sufficient funds, the payment gateway sends a yes or no message to the merchant.
- After verifying the availability of funds, the bank then settles funds with the payment gateway. Finally, the payment gateway settles funds with the merchant account to complete the transaction.
Once this process is done, the customer then gets a confirmation message for their purchase from their bank account and the merchant.
Advantages of using a payment gateway for your business
No matter what kind of business you run or which industry you are working in, using a payment gateway will boost the performance and growth of your business. One of the biggest advantages of a payment gateway is that it allows for simultaneous use by millions of users, allowing you to sell goods and services whenever you want.
Here are some advantages of using a payment gateway for your ecommerce business:
- Secure transactions: Payment gateways protect sensitive data using industry-standard encryption, safeguarding both merchants and customers from fraudulent transactions and cyber attacks.
- Improved customer experience: Implementing a payment gateway in your business can improve customer satisfaction as customers have the freedom to choose their preferred payment mode. The swiftness and security of the payment gateway also add to the credibility of your business.
- Reduced payment failures: When you conduct business transactions through a payment gateway, you also have the benefit of reduced payment failures. This is because payment gateways check the customer’s availability of funds right when they enter their account information.
- Saves a lot of time: Payment gateways are the fastest way to accept online payments. Compared to manual processing, this method is substantially faster. Swift and timely payments are an important aspect of a successful ecommerce business.
- Accepts global payments: Payment gateways provide you with the flexibility to accept payments in multiple currencies through a variety of payment methods, allowing you to expand your customer base internationally without restrictions.
7 factors to consider when choosing a payment gateway service
It’s important to choose the right payment gateway for your ecommerce business, as dealing with payments is a crucial part of running a successful business. A secure, effective, and quick payment gateway boosts customer loyalty and keeps money flowing to your end.
You can consider these 8 factors while choosing a payment gateway for your ecommerce business:
- Payment security
When you are running an ecommerce business, you might have to ask your customers for confidential financial information like their card number or CVV. As a business owner, it is your responsibility to make sure that this data is safe. Having a secure payment system will also assure your customers and help them trust your business better.
When you choose a payment gateway provider, check whether:
- the payment gateway is PCI-DSS compliant, as it is a must for accepting credit card payments. Most payment gateways in India are PCI-DSS compliant.
- they have fraud detection tools and screening technology to ensure the safety of all transactions
- they have elevated levels of encryption like SSL encryption to avoid a wide range of breaks, and
- they have the feature of a digital signature for an extra layer of security.
One of the most important factors to consider when selecting a payment gateway is pricing. Most payment gateways charge the business based on the kind of transactions they conduct, the amount, and the location of the business.
Make sure you choose a payment gateway provider that fits your budget and offers the best value for your money. Nowadays, most payment gateways do not ask for setup or maintenance fees. Instead, they may levy additional charges like:
- Monthly subscription fees
- Annual maintenance fees
- Payment gateway purchasing fee
- Other hidden charges
While pricing is an important factor to consider, make sure you don’t make the decision solely based on this. Low rates may also be an indication of poor payment infrastructure and facilities.
- Customer support
To run a successful business, you must offer customers seamless payment services 24/7. This means that you should be able to fix all your payment-related issues before it translates into poor customer service. When responding to payment issues of your customers, your payment gateway service provider must be available and approachable at all times, with a minimum turnaround time.
Since some payment gateway providers don’t offer technical support at all, it’s your responsibility to adhere to manual instructions to fix any issue. To avoid such instances, make sure you choose a service provider who can offer live support round the clock.
- Multiple payment options
When it comes to sales acquisition, having a variety of payment choices is a powerful tool to increase client interactions. While most businesses offer debit/credit card payments to their customers, there are a lot more options available these days. Your payment gateway should offer multiple payment options ranging from credit cards and net banking to UPI payments and digital wallets.
By using the right payment gateway, you can offer your customers the freedom to choose their preferred mode of payment when dealing with your business. The more payment options you offer, the higher the chances of a customer completing their transaction with your business.
- Quick and easy integration
Integrating a payment gateway service into your business has always been a time-consuming and complicated process. But with the right service provider, it doesn’t have to be. Make sure you choose a payment gateway provider with a simple and quick onboarding and integration process that does not keep you waiting for a month or two.
Depending on the complexity of your business, it can take you only a day or two to sign up as a merchant with some of the best payment gateways. It’s up to you to choose the right provider. It’s better if your service provider also offers you reliable support for the integration process.
- Fast processing speed
Customer experience and satisfaction are two important factors that determine the success of any business. Especially in e-commerce businesses, you have to ensure seamless transactions for all customers and make sure that no one faces a long downtime or other payment processing issues.
Due to this, you should consider the processing speed of payments when choosing a payment gateway service. You need to check how quickly payments are being transferred to the business’s account from the customer’s bank account. This is one of the crucial factors in payment gateways that promise an end-to-end solution.
- Consolidation of payments
Just like how quick payment processing can ensure customer satisfaction, consolidating payments for your businesses is important to manage your finances better. As a business owner, you need to be able to review the consolidated summary of all the transactions to ensure a healthy cash flow. A credible payment gateway provider is aware of this requirement and offers a merchant dashboard with all the payment details for easier and quicker analysis of your finances.
Choosing a payment gateway with this feature will be highly beneficial for your business as it will help you monitor and manage your cash flow while also simplifying your accounting and bookkeeping tasks.
Integrating payment gateways into your business is an important step in expanding and developing your ecommerce business to greater heights. While it makes the whole process of receiving payments easier and safer, it also offers a lot of other advantages that can benefit both your business and your customers.
Selecting the right payment gateway service provider can impact your ecommerce business in a number of ways. Once you are ready to accept online payments, you can narrow down service providers based on the checklist discussed above.
Accepting payments through 100+ options, NTT DATA Payments offers end-to-end payment services that are both safe and secure.