In an era where online payments have become the norm, ensuring the security of customer data and financial information is crucial. Payment gateways act like a bridge between transactions and technology.
A payment gateway bridges your online store and customers’ payment methods, safeguarding sensitive information during the transaction process.
Choosing the appropriate payment gateway for your business is crucial as it guarantees strong security, protects sensitive information, provides various payment options, and enables smooth global transactions. This guide outlines key considerations on how to choose a payment gateway that aligns with your specific business requirements.
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How to Choose a Payment Gateway to Accomplish Security and Efficiency?
Here are a few key pointers to remember when choosing a payment gateway:
- Secure payment processing: Payment gateways confirm customers’ payment details, protecting sensitive financial information from unauthorised access and fraud.
- Transaction verification: They ensure the availability of sufficient funds to complete transactions, minimising the risk of failed payments and enhancing transaction efficiency.
- Transaction authorisation: Payment gateways authorise transactions, swiftly transferring the payment amount to your account while maintaining data integrity and accuracy.
Related Read: What is a Payment gateway and How it works?
What do you need to start accepting payments?
To initiate the process of accepting payments for your business, there are several key components that you must have in place. When choosing a payment gateway, these essential elements must be considered:
A merchant account is a special bank account that lets businesses take different kinds of payments, mostly credit and debit cards. It works as a middleman where customer money is held briefly before going to your business bank account.
Business bank account
A dedicated business account acts as the ultimate repository for funds gathered from customer transactions, ensuring systematic organisation and effective management. It stands as an essential platform for securely centralising the proceeds originating from your merchant account activities.
A payment gateway is a secure online platform that facilitates the transfer of transaction data between your website or application and the payment processor. It encrypts sensitive information to ensure the safety of customer data during online transactions.
The payment processor is responsible for authorising and executing the payment transactions. It works closely with the payment gateway to ensure seamless and secure fund transfers.
Types of Merchant Accounts:
Retail merchant account
Retail merchant accounts are tailored for businesses with brick-and-mortar stores, facilitating in-person cashless transactions with their customers. Owners of such accounts utilise a payment terminal, commonly known as a point-of-sale (POS) system, to efficiently process card payments through a physical network.
E-commerce merchant accounts
An e-commerce or online merchant account is custom-made for businesses running web stores, seamlessly enabling cashless transactions via websites or mobile apps. These finely-tuned accounts ensure the utmost security during transaction handling, seamlessly processing them in real time. This empowerment allows e-commerce enterprises to gracefully embrace credit, debit, and ACH payments from customers exploring their products on smartphones, tablets, or computers.
Mobile merchant account
Mobile merchant accounts offer the ease of on-site card transactions, effortlessly processing payments via portable POS systems or mobile devices. Unlike conventional wired card terminals, these solutions embrace wireless technology, ensuring agility and freedom of movement. Especially beneficial for businesses with ever-changing venues, this merchant account type provides a secure and uncomplicated means of collecting card payments at any location for the day.
14 Factors to Consider While Choosing a Payment Gateway
When selecting a payment gateway for your business, consider the following factors:
Cost or pricing is a significant consideration when choosing a payment gateway. Evaluate the types of fees, including setup fees, monthly fees, and transaction fees. Some gateways offer a zero setup cost option, like Razorpay, which can be advantageous for startups and small businesses. Make your choice based on your transaction volume and the value of transactions to ensure it aligns with your budget.
Ease of integration:
Consider how easily the payment gateway can be integrated with your website, mobile apps, or other platforms. Look for gateways that provide well-documented APIs, SDKs, and plugins for popular Complete Merchant Solutions (CMS). This ensures a smooth integration process and reduces development time.
Security is paramount in payment processing. Ensure that the payment gateway complies with industry-standard security features and protocols, such as PCI DSS (Payment Card Industry Data Security Standard). Data security should be a top priority to protect both your business and your customers’ sensitive information. Razorpay takes security as an utmost priority with compliances to all security measures and protocols.
Easy checkout on mobile and other devices:
Given the increasing prevalence of mobile transactions, the payment gateway must offer a seamless checkout experience on mobile devices. Mobile optimisation enhances user satisfaction and conversion rates. Interestingly, since its establishment in 2016, it took four years for the monthly UPI transaction value to exceed Rs 3 lakh crore (by September 2020); remarkably, within just one more year, this value more than doubled to reach Rs 7 lakh crore.
Hosted vs. non-hosted payment gateway:
Decide whether you want a hosted or non-hosted payment gateway. Hosted gateways redirect customers to the payment provider’s site for processing, while non-hosted gateways allow customers to complete transactions on your website. The choice depends on your preferences, branding, and security requirements.
Still unsure about the type of payment gateway that fits your business needs? Explore in detail about types of payment gateway.
Reliable customer support is essential, especially in case of technical issues or inquiries. Ensure that the payment gateway provider offers responsive customer support via multiple channels, such as phone, email, and live chat. Read reviews and testimonials to gauge their level of support.
Types of cards/payment methods allowed:
When choosing a payment gateway, consider the types of cards or digital payment methods allowed. Ensure compatibility with credit and debit cards, digital wallets, and emerging payment options to cater to a wider customer base and enhance convenience.
If your business deals with international customers, multi-currency support is crucial. Ensure that the payment gateway can handle various currencies and provide real-time currency conversion. This feature is vital for accepting international payments and expanding your global reach.
Recurring billing capability in a payment system streamlines subscription management, ensuring operational efficiency and positive customer experiences, key for retaining repeat transactions.
Review the transaction limits imposed by the payment gateway. Ensure that these limits align with your business’s needs. Some gateways may have restrictions on the maximum transaction amount, so it’s essential to understand and consider these limits.
Think about how long it takes to set up and connect the payment gateway to your website or app. If the process is quick, you’ll be able to start taking payments right away, avoiding big delays that could slow things down for you. It’s important to factor in the time needed for this setup to make sure everything runs smoothly and efficiently.
The settlement period is how long it takes for money from successful transactions to go into your business bank account. Payment gateways have different settlement periods, like daily or weekly. Knowing this timeline well is important for handling your cash flow the right way.
Customisation and branding:
Evaluate the level of customisation and branding options offered by the payment gateway. Some gateways allow you to customise the payment page to match your website’s branding, providing a seamless and consistent user experience.
Reporting and analytics:
Opt for a payment gateway with robust reporting and analytics for insights into financial performance. Customisation fosters trust, brand recognition, and a consistent, customer-centric experience, strengthening your business.
Other considerations while choosing a payment gateway
Expanding your business globally requires a payment gateway that accommodates international transactions. Ensure that the payment gateway you choose supports transactions from the countries where your customers are located. This is especially crucial if you have a target audience spread across different regions.
Integration with other systems:
Some notable examples of e-commerce platforms and tools that a versatile payment gateway should be compatible with include Shopify, WooCommerce and tools like CRM systems. This synergy enhances operational efficiency, ensuring a streamlined business flow. A versatile payment gateway not only empowers customer payment options but also seamlessly meshes with prominent e-commerce platforms and essential tools, optimising your business operations.
Simplifying user experience is crucial in the online world. A payment gateway should facilitate intuitive and hassle-free transactions to provide a smooth experience to the customer. Also, ensure mobile compatibility, as seamless payments on phones and tablets cater to modern shopping trends.
Choosing the right payment gateway is a critical decision that can significantly impact your business’s success. By considering factors such as cost, security, integration, customer support, and other essential aspects, you can make an informed choice that aligns with your business needs and goals.
Whether you are a small startup or an established enterprise, a well-chosen payment gateway can streamline your payment processes, enhance customer satisfaction, and contribute to your business’s growth.
Can I have multiple payment gateways on my website?
Yes, it’s possible to integrate multiple payment gateways on your website. This allows you to offer diverse payment options to your customers, enhancing convenience and accommodating different preferences. However, managing multiple gateways requires careful setup and coordination to ensure a seamless experience and efficient transaction processing.
What is an example of a payment gateway?
Merchants can choose from different types of payment gateways, namely hosted, self-hosted, API-hosted and local bank integration payment gateway. Razorpay is an example of an API-hosted payment gateway that is widely used for online transactions in India.
What are the types of payment gateways?
There are four payment gateway types, each with distinct features. Hosted gateways redirect customers, ensuring security and compliance. Self-hosted offers control and speedy checkout, whereas, API-hosted provides customisation and integration ease. Local bank gateways redirect to bank sites but lack scalability.
Is payment gateway legal in India?
Yes, payment gateways are legal and widely used. They facilitate online transactions and are integral to e-commerce and digital payment systems. Payment gateways operate under the regulatory framework of the RBI and must adhere to compliance standards and data security protocols to ensure safe and secure transactions.
Do banks use payment gateway?
Banks collaborate with payment gateway providers to deliver secure and smooth online transactions, improving the overall banking experience by guaranteeing payment security and reliability for their clients.
How long does it take to integrate a payment gateway?
Payment gateway integration duration fluctuates based on factors like gateway choice, website platform, and complexity. Typically, it spans days to weeks. Collaboration with your team and the provider ensures a seamless, timely process.