4 Things to Keep in Mind Before Choosing a Payment Gateway

DZone 's Guide to

4 Things to Keep in Mind Before Choosing a Payment Gateway

Back in 2011, PayPal, one of the leading global payment provider revealed that they carry out $315.3 million in payments per day. Here are a few things vendors must bear in mind while choosing the payment gateway.

· Mobile Zone ·
Free Resource

With the world going online now there is no dearth of online payment gateways. People have readily accepted the online medium to carry out their shopping and banking activities. It has shown some significant growth in the online monetary transactions.

Back in 2011, PayPal, one of the leading global payment provider revealed that they carry out $315.3 million in payments per day. Talking about the holistic business transaction back in 2013, more than $1200 billion of eCommerce transactions.

The entire credit of this success goes to the reliable working methodology of a payment gateway along with the web and mobile app developers that comply with PCI Data Security Standards. It ensures that payment procedures are performing safely and speedily. Therefore, it is necessary to invest some analytical thoughts when it comes to choosing the integrated payment gateway.

Not only this but hiring the best app development companies can solve the problem by integrating payment gateways even with the mobile apps. The reason being, integrating correct payment gateway makes it easy for customers to pay for the products or services via the web or mobile app. Here are a few things vendors must bear in mind while choosing the payment gateway.

1. Security

The topmost priority while choosing the payment gateway should be the payment security. With the advent of online transactions, there is also a significant increase in numbers of credit card frauds and dummy transactions. The Payment Card Industry Data Security ensures that customers’ virtual money data is collected and stored securely, thereby reducing the security risks associated with the online trades.

It is always better not to assume that the payment gateway is a PCI compliant. Because complying with these standards are not only merchant’s responsibility as your business is also involved with the same. It is always advisable to ensure that your security requirements are possible to meet, and best is to inquire about the compliance surrounding them.

One of the most important aspect to consider is the method of capturing credit card data which involves choosing from the iframe, hosted, or API. Also, it is best to know about the information safe-keeping protocols followed by the selected methodologies.

2. Choosing the Type of Gateway: Classic V/S Modern

The basic difference between the Classic and Modern gateway is merchant account. Classic gateway requires the merchant account while Modern gateway does not need the same as the same is seamlessly in sync with the bank account. To ensure that payment gateway remains in harmony with the web and mobile app one need to hire top app developers who can understand your requirements precisely.

Classic Payment Gateway

Opt for the Classic Gateway if you are ready to tackle some hassles and run a bigger store. Classic gateway is best for the business which operates on the bigger scale with the high amount of daily transactions. However, there are plenty of hassles in deploying the Classic Gateway.

Apart from taking much time to set up, it also requires some amount of technical knowledge because the same needs to be integrated with API and requires a merchant account. One of the biggest advantages of the Classic Gateway is the lesser amount of per-transactions fee compared to the modern ones.A few popular examples of the Classic Gateway are Authorize.Net, WorldPay, and 2Checkout.

Modern Payment Gateway

One of the biggest advantages of Modern Payment Gateway is that you do not require a merchant account, and it is comparatively easy to set up. However, at the same time, the per-transaction rates are relatively more. One more disadvantage is that it redirects customers to the payment site which can hamper the conversion ratios. A few of the popular examples of modern gateway includes PayPal, Stripe, and SimplifyCommerce.

3. Transparency

The online payment industry has witnessed some significant change in the trading since past 5 years. Nevertheless, historically speaking, the industry is full of companies hiding the fees and locking you on long term basis.

Off late, there is one thing which everyone in this business is looking for - transparency. Transparency is now the primary concern for the businesses dealing with the virtual money and online transactions.

The best way to gauge the service provider is by it is clear and simple pricing plan. It is of utmost importance that the transparency is maintained throughout the business deal, allowing you to leave or opt out for a different provider at any point of time by letting you take the credit card data with you. There are few of the vendor who gives the services of data portability.

4. Selecting the Best-suited Hosting Methodology

Regarding hosting the payment gateways, there are two options. One is the off-site or a hosted method, and the other is integrated gateway.

Hosted Payment Gateways

People familiar with the PayPal must already be aware of the hosted payment gateway that redirects the customers to the payment processor’s platform where users give out all the payment information. One of the best rewards of the hosted payment gateway comes in the form of leveraging responsibility as the offsite provider is solely responsible for the PCI compliance and data security.

On the downside, in some countries these offsite payment processors are not trusted while on the other hand in some they are more preferred. So the best way is to gauge the user’s perception of how they perceive a hosted gateway. Moreover, also, diverting the users to another website is not a good idea, especially if they think that the particular gateway is not trusted.

Integrated Payment Gateway

Integrated Gateway connects the eCommerce site with the gateway’s pre-delivered API. The disadvantage of customer going off-site in hosted gateway turns the same into an advantage as they never go off-site for the payment purpose. In all, it gives a smooth and seamless experience to customers.

Even the integrated gateway has its limitation in the form of the ability required to integrate the chosen gateway. There are plenty of eCommerce platforms that can smoothly incorporate a wide range of gateways with the help of various APIs. However, there is one protocol over here, choosing the ones which do not support “out of the box” may require some custom programming for its efficient functioning.

Moreover, the pricing factor should also be considered while selecting the payment gateway. It is important to gauge the profit from sales as it can affect the businesses dealing in luxury goods. It is always better to hover upon the requirement and capacity multiple times before deciding the payment gateway for the business offering websites.

ecommerce applications, payment gateway, transaction management

Opinions expressed by DZone contributors are their own.

{{ parent.title || parent.header.title}}

{{ parent.tldr }}

{{ parent.urlSource.name }}