Introduction
Imagine this: you have a major sales event on the horizon and expect a surge of customers to flood your website. However, your reliable payment gateway unexpectedly malfunctions, causing numerous payment failures on your important day. This not only disrupts the customer experience but also leads to lost sales, and consequently, lost revenue. With 62% (Finance Magnates, 2020) of customers choosing not to return to a website after a failed transaction, having a backup for times when your primary gateway is experiencing downtime is crucial. That’s where the need for multiple payment gateways and a reliable router to distribute payment traffic between them comes in.
What is a payment gateway?
Essentially, a payment gateway acts as a bridge between a merchant’s website or point of sale (POS) system and the financial institutions involved in the transaction, ensuring the secure transmission of payment information. Payment gateways handle the entire transaction process from the payment authorization to the settlement of funds from the customer’s account to the merchant’s account. Payment gateways are essential for any business that wants to accept online or electronic payments, ensuring transactions are secure, efficient, and reliable.
What are the key functions of a payment gateway?
The key functions of a payment gateway include:
Payment authorization: A payment gateway requests the card’s issuing bank to verify the card information. Once confirmed, it communicates this authorization to the acquiring bank.
Data security: It encrypts card information to protect against fraudulent activity, ensuring secure transmission of payment data.
Verification of funds: The payment gateway checks if the customer has sufficient funds in their account to complete the transaction.
Settlement: It ensures that the transaction funds are safely transferred from the customer’s account to the merchant’s account.
While payment gateways facilitate the transaction process and encryption of data, it is important to note that the actual transfer of funds from a customer’s account to a merchant’s account is handled by payment processors.
Why do businesses need multiple payment gateways?
Businesses may need multiple payment gateways for a variety of reasons:
Cost-efficiency: While integrating with multiple payment gateways may seem counterintuitive from a cost-optimization perspective, it is less expensive in the long run. By using multiple payment gateways, businesses can route transactions through the gateway with the least processing fee or transaction charges.
Backup for downtimes: Another advantage of having multiple payment gateways is that transactions are routed to the next prioritized payment gateway in case of downtime or outage of the primary payment gateway, ensuring that payment flow is not disrupted despite a particular payment gateway facing downtime.
Scalability: As your business grows, it may become difficult for a single payment gateway to handle all the incoming payment traffic, which may lead to frequent downtimes. Using multiple payment gateways ensures that the traffic is divided between them so that a single payment gateway does not have to bear the burden of a multitude of transactions at all times.
Payment method variety: Some new-age payment gateways also function as payment aggregators, providing a variety of payment method options to your customers. Integrating with multiple payment gateways ensures that your customers have access to their preferred payment method, ensuring customer satisfaction.
How to integrate multiple payment gateways on your website or app?
Most payment gateways have a fairly simple process of getting started. The only prerequisite is that you have a merchant account on their site. Let’s delve deeper into how you can get started with multiple payment gateways on your website or application:
- Choose the payment gateways: Select the payment gateways you want to integrate based on transaction costs, geographical location, customer preferences, supported payment methods, customer support, etc.
- Set up a merchant account on each gateway: Create your merchant account on the website using your credentials.
- Select a payment processor: A payment processor is a third-party service that facilitates the actual transfer of funds from a customer’s account to a merchant account. You may use different processors for different payment gateways or the same processor for multiple payment gateways.
- Obtain API keys: After you log in using your merchant account, you’ll get the Application Programming Interface (API) credentials such as API keys or secret keys that are needed to maintain communication between your website or mobile application and the payment gateway’s servers.
- Install SDKs or Libraries: If the payment gateway of your choice requires manual integration through coding, you’ll need to install the Software Development Kit (SDK) in your programming language to get started.
- Integrate the payment gateway API into your website or application: Most payment gateways provide plug and play options or single-switch enablement processes for integrating into a mobile application or website. However, some may require you to access back-end code and manually insert the PG integrations.
- Test the PG and monitor its activities: Now that you’re through with most of the steps, it’s time to go live. But before you embark on that journey, it’s important to test out if your multiple payment gateways are functioning seamlessly. If they are, you’re ready to accept payments through them!
Why do businesses need a payment router?
Businesses that have integrated more than one payment gateway will find it necessary to implement a payment router as it helps in navigating the payment infrastructure and guiding transactions to the best payment gateway possible. Payment routers like Optimizer provide a centralized dashboard that allows a business to manage multiple payment gateways from a simple, unified platform. Apart from that, payment routers generally come directly integrated with multiple PA/PGs which reduces a business’s burden to integrate them separately and individually.
What factors are important in selecting a payment router?
It’s essential to take the following factors into consideration while choosing a payment router for your business:
Ease of Integration
The payment router should seamlessly integrate with your existing systems, such as e-commerce platforms, ERPs, and CRM software. Look for robust APIs and comprehensive documentation to facilitate easy integration and customization. Some payment routers, such as Razorpay Optimizer have a fairly straightforward integration process with no requirement for coding.
Omnichannel Compatibility
Ensure the payment router supports various sales channels, including online, in-store, and mobile transactions. Moreover, also ascertain that your payment router supports channels such as Web, Android, iOS, and Webview, providing a unified payment experience across all platforms.
Supported Payment Gateways and Providers
Verify that the payment router is compatible with the payment gateways and providers your business uses or plans to use. This ensures flexibility and avoids disruptions in your payment processing. Also ensure that your router provides a variety of different payment methods.
Routing Capabilities
The router should offer dynamic routing based on real-time criteria such as transaction costs, success rates, and performance. It should also have robust fallback mechanisms to reroute failed transactions to alternate gateways.
Fraud Detection Mechanisms
Look for built-in fraud detection and prevention features that analyze transaction data to identify and block suspicious activities, ensuring secure transactions.
Security Compliance
Ensure that the payment router of your choice is compliant with all local and global security standards such as Reserve Bank of India (RBI) regulations, Payment Card Industry Data Security Standard (PCI DSS), ISO 27001 Certification, etc. in order to provide the most secure transactions in a law-abiding manner.
Unified Dashboard
A user-friendly, unified dashboard is essential for managing multiple payment gateways, monitoring transaction statuses, and accessing detailed reports and analytics in one place. This helps you get actionable insights into the processes that are working and the ones that are not.
Pricing Structure
Understand the pricing model, whether it’s per-transaction fees, subscription-based, or another structure. Ensure pricing is transparent with no hidden costs and consider features that help optimize transaction costs.
How can Razorpay help?
Razorpay Optimizer is India’s first AI/ML-powered infinity payments router that increases transaction success rates by up to 10% with its dynamic routing capabilities. With 100+ payment integrations and 99.99% uptime on transaction processing, Optimizer is the router that your business needs. If you already have a merchant account on Razorpay payment gateway, Optimizer integration becomes a plug and play process that you can get started with in just one click.
FAQs
- How does a payment router improve transaction success rates?
A payment router improves transaction success rates by dynamically routing transactions to the payment gateway with the highest probability of success at any given moment. It takes into account real-time factors such as payment gateway performance, downtime, transaction fees, etc., ensuring that payments are processed efficiently.
- What are the costs associated with integrating multiple payment gateways?
The costs of integrating multiple payment gateways can vary depending on several factors, including the gateways chosen, transaction volume, and the complexity of integration. While there may be initial setup costs and integration fees, using multiple gateways can ultimately lead to cost savings by allowing businesses to choose the most cost-effective option for each transaction. It’s important to evaluate each gateway’s fee structure and any additional costs involved in maintaining multiple integrations.
- What should I consider when selecting a payment router for my business?
When choosing a payment router for your business, consider factors such as ease of integration with your existing systems, compatibility with your current and potential payment gateways, routing capabilities, fraud detection mechanisms, security compliance, and the availability of a unified dashboard for monitoring transactions and generating actionable insight into payments.
