According to the latest research, e-commerce’s share of sales continues to steadily grow. This year, online sales represented around 15% growth in comparison to last year’s figures. Currently, online sales are forecasted to continue to grow up to 17% by 2022. Below, we reveal some secrets about something at the very heart of e-commerce. Payment gateways: how to choose the best one, and how to add a payment gateway to a website.
What is an Online Payment Gateway and How Does It Work?
A payment gateway is merely the software intended to deliver transactional data to the acquiring bank and retrieving responses from the issuing bank on whether a transaction was approved or declined. Essentially, payment gateways facilitate communication between banks.
How Does a Payment Gateway Work?
As for the working principles of a payment gateway – here’s what is going on right after a user clicks the “Order” button:
- 1. The customer’s browser encrypts the data and sends it to the merchant’s server, which transfers it to the payment gateway.
- 2. The payment gateway forwards details to the merchant’s bank payment processor, which sends data to the card association, and the latter then transmits the transaction to the card-issuing bank.
- 3. The card-issuing bank receives the authorization request and sends the processor a response code that denotes if it is approved or denied.
- 4. The processor forwards the response code to the payment gateway, which forwards it to the website. Next, it goes to the cardholder and merchant.
- 5. The merchant then fulfills the order and submits all previously approved authorizations in a so-called “batch” to the acquiring bank at the end of the day, for settlement via its processor.
- 6. The acquiring bank makes the batch settlement request of the credit issuer, which makes a settlement payment to the acquiring bank. The acquiring bank subsequently deposits the total of the approved funds to the merchant’s nominated account. Typically, the entire process from A to Z takes 3 days.
Every merchant falls under the PCI DSS, a government regulation standard containing a series of security requirements that every merchant must follow to be in compliance. However, the majority of e-commerce websites don’t store credit card data. Rather, they use third-party payment service providers like PayPal or Stripe to handle card information more securely. The merchants still need to be PCI DSS compliant, but the requirements aren’t as numerous compared to merchants who store credit card data.
Requirements for an E-commerce Payment Gateway
After you’ve learned a few of the basics of payment gateways, namely the role of the payment gateway and how it works, you’re ready to proceed with learning the nuances of how to choose a reliable one.
To maximize efficiency for your business, the payment gateway should meet some really basic requirements, such as usability and safety. In addition to these things, other means of enhancing your e-commerce website with payment gateway include making sure the gateway is:
- Economic. We’re certainly not saying to just blindly pick the cheapest one, but make sure it’s competitive.
- Secure. Payment gateways should have PCI DSS certification in the event you are going to accept credit cards.
- Responsible. If your system is scheduled to experience any downtime for updates, etc., make sure to notify your users in advance via different channels, such as your website and social media accounts, so your customers are not caught off guard.
- Flexible. Choose a gateway that will be able to adapt quickly to your current business requirements and needs minimum time and effort to do so.
- Global. Choose a payment gateway that is able to support you worldwide, or at least, in the majority of your locations. You should also have a broad portfolio of payment methods and providers.
- Easy to use. Gateways should have an intuitive administration panel, as well as reporting and business intelligence tools. As a bonus, it’s also good to have technical and business key performance indicators (KPI) dashboards, and a monitoring and alerting system.
- Scalable. Your chosen payment gateway must be able to fulfill your needs while your business grows.
Features That the Best Payment Gateway Should Have
Before you start to integrate a payment gateway in a website, it’s first necessary to decide which features you want to incorporate with the gateway. We’ve prepared a list of the features that are in the most demand:
- Multi-language option. Go global by allowing your customers to interact hassle-free in the language they are most familiar with.
- Fraud management system. Monitor incoming payments and prevent fraudulent transactions and transfers to keep your business safe.
- Multi-channel processing. Accept payments seamlessly via various channels: online, on mobile devices, mail-order, or over the phone with a call center.
- Multi-currency processing. Enable customers to make online payments in the currency they feel most comfortable with.
- Multi-payment method. Accept credit cards, internet banking, cash payments and even PayPal transactions on a single integration.
- Built-in analytics. Get reports and analyze your sales performance to obtain meaningful insights on how to enhance your business.
The 6 Most Popular Gateways for Your Website
Before you review the payment gateways themselves, let’s take a short look at some stats about which payment gateways are the most widely used.
Since you’ve gotten some guidelines above on how to choose a payment gateway, we can take a look at the top payment gateways 2020 in use by e-commerce stores worldwide.
Let’s start reviewing them in detail!
The list of the most popular payment gateways can only be opened by PayPal. This well-known payment system currently serves around 350k websites and 184 million customer accounts. Equally advantageous for both small businesses and market leaders, PayPal doesn’t require any setup or monthly fees. Currently, PayPal is considered as the most reputable and the most international payment gateway, available on over 200 markets and accepting 26 leading currencies. In its commitment to security, PayPal adheres to all leading encryption standards, keeping payment credentials guarded.
- Customized checkout. Designed as an enterprise-grade solution, PayPal Payments Pro lets users create a custom checkout process which means you can integrate all the layout and colors that match your company’s theme and brand.
- Fully integrated payment system. PayPal gateway integration works smoothly with all major e-commerce platforms, CRMs, and sales management tools.
- Fast access. Once a payment is sent, it takes merely minutes to make it available to you. The system offers you the option to keep the money on your PayPal account or transfer it to your bank account.
Coinbase is considered to be the most user-friendly payment gateway for cryptocurrency, with the added bonus of an exceptionally convenient mobile interface. To date, it supports over 40 cryptocurrencies and they’re not going to stop there! For you, this means no limitations on yourself or your customers in terms of what cryptocurrency to choose for payments.
- Lots of available plugins. You can find plenty of third-party integrations to make the payment processing process more convenient for you and your customers.
- Permanent enhancement. Be secure in the knowledge that opting for this payment gateway gives you everything in one single solution because Coinbase permanently implements the best practices of cryptocurrency processing.
- Operates within a limited number of countries. To date, the company doesn’t serve customers from every corner of the world. In order to learn whether you can use Coinbase, we recommend that you check this list.
Another popular option to consider if you want to make a website with a payment gateway is Stripe. Created by industry experts, Stripe is an extremely developer-centric payment software. This means you’ll be able to build production-ready integrations using any modern tools – from React components to real-time webhooks. If you opt for the Stripe payment platform, you also choose less long-term maintenance and more concentration on customer and product experience. Stripe processes charges and displays prices in the customer’s preferred currency, which improves sales and helps customers avoid conversion costs.
- Multiple payment options. Go global by processing payments for all major credit and debit cards in every country. Digital wallets such as Alipay, Amex Express Checkout, and Apple Pay are available for customers who want a reliable way to pay without sharing their card information.
- Easily accessible reports. Get all charge, fee, transfer, and refund information in real-time through Stripe’s API and dashboard.
Despite only being on the market for 16 years, 2Checkout is available in 196 countries, serves over 50k merchants, works with 87 different currencies and offers 15 languages to choose from. Customers enjoy this fully-featured payment solution for its robustness and low-cost fee structure. Another advantage is that you don’t have to pay any monthly or setup fees!
- PCI DSS compliant. 2Checkout has PCI certification Level 1 – the highest certification possible, which guarantees total protection for both merchants and customers from fraud.
- Worldwide accessibility. 2Checkout provides you with an opportunity to customize the platform according to the customer’s language and currency. As the business owner, you’re also free to offer localized payment options.
- Supports major payment methods. 2Checkout is well-known for its support of MasterCard, Visa, Discover, American Express, JCB, PayPal, and other major payment methods and services.
Another great option to take into account while considering how to create a website with payment gateway is Authorize.net. Currently, Authorize.net is one of the most sought-after payment gateways, as proven by the more than 400k merchants that use it worldwide. This platform is extremely well documented and has a range of tutorials and other training materials to give users confidence while managing it. You’ll also appreciate the 24/7 free support provided by professionals who will assist you in solving any possible issue you may have.
- Check payments support. In opting for Authorize.net, you choose an exclusive and fully integrated electronic payment method that accepts and processes payments from bank accounts directly through the user’s website or the Authorize.Net Virtual Terminal.
- Virtual point of sale (VPOS). You can leverage Authorize.net as a so-called virtual point of sale. In the event that you already have a POS, it won’t be a challenge to integrate it.
- Virtual terminal for manual transactions. This feature allows business owners who take orders via phone or email to submit transactions manually.
Designed to be convenient for both businesses and individuals, Skrill is another good option to implement a payment gateway. This service is a preferable option to the many pricier platforms and gateways available because it allows you to create an account for free and charges only 1% of the transaction’s value on the sender’s side. Skrill is also easy to link to any bank account worldwide and takes excellent care of the security of your payment information.
- Point of sale (POS). Skrill is a treasure for online stores because it allows users to pay for purchases online with a Skrill account, which is a key feature since many users simply abandon their carts due to the lack of an available immediate payment.
- Mobile accounts and ATM. You can rest assured your account will work properly on your mobile device, enabling you to process transactions and payments wherever you are.
- Decent customer support. To date, over 30 different currencies are supported by Skrill.
E-commerce Payment Gateway Integration Process
Depending on the e-commerce platform you use to run your online business, you can use a wide variety of off-the-shelf plugins and extensions offered by your platform. They will enable you to integrate your store with every payment gateway mentioned in this article.
Website integration with a payment gateway starts with registering a bank account, which will then be attached to the gateway. Make sure your registered bank account is authorized to accept funds, since regular bank accounts may not work for this. Right after the approval of your merchant account, it’s time to choose your gateway.
After you have selected your gateway, you’ll follow a specific setup procedure in order to add it to your store. Depending on the payment gateway you’ve chosen, it can be pretty simple via plugin or add-on, or it may require some custom development. Right after website integration with the payment gateway, we recommend that you turn to a QA engineer to ensure the gateway works properly. You should also check the PCI DSS compliance to be 100% sure the gateway is fully secure and doesn’t display credit card information.
Finally, after the payment gateway integration process is completed successfully, you are fully ready to use it, accept payments from customers, and mark their orders as ready to fulfill on your end.
Payment Gateways From Scratch?
After you’ve reviewed the most popular existing solutions for payments in the world of e-commerce, you may instead wonder about developing your own payment gateway for your e-commerce site. And, judiciously, you’d like to learn more details about the process.
Custom payment gateway development is a pretty complex, not to mention pricey, process. In general, if we look at full-stack payment gateway development, it takes from $100,000, and that just the price for development. This is just the price for development since there are so many facets to cover. And each of these aspects means an additional item of expenditure for you! Let’s look at some of the necessary steps:
- Registered as a payment gateway provider with the card network through an acquiring bank.
- Set up a merchant management system.
- Set up a merchant funding system.
And the most crucial one – obtain PCI certifications. On average, this step will cost you about $15,000.
So, as you can see, in addition to the complexity of the development itself, custom payment gateway development in general is not a piece of cake. With this in mind, we’d recommend you to consider the already existing solutions and build your own system on top of it.
Our Experience in Payment Gateway Integration
Although we recommend using an already-established payment gateway, sometimes already-established programs just don’t tick all the right boxes. In the event that you haven’t found a suitable payment solution, you can consider the option to develop your own, as Savvy.io, one of our recent customers, did. For Savvy.io, we developed a cryptocurrency wallet for supporting, receiving, keeping and exchanging cryptocurrency.
This client came to us with a query on developing a payment gateway extension based on Savvy API. He had the following requirements for the extension. It had to:
- Be capable of being integrated with the most popular e-commerce platforms (Magento, Magento 2, PrestaShop, OpenCart and WooCommerce).
- Provide customers with the opportunity to safely pay for online purchases with the Savvy wallet.
- Provide merchants with a reliable payment gateway able to accept and process payments following the best crypto-processing practices.
The first thing we did was a thorough analysis of every above-mentioned e-commerce platform. After learning all their features and peculiarities, we were able to create the best approach to develop modules for each. As a result, we developed a secure and reliable solution that successfully scales along with further Savvy API development. You can learn more details about the Savvy.io development process by reading the case study.
Your choice of payment gateway and how that gateway and its options are presented on your store will have a significant influence on the user experience of your customers. Choose well, and you’ll have more customers. Choose poorly, and you can easily guess the consequences.
We hope you now have a clear impression of the procedure of payment gateway integration for e-commerce step-by-step. However, if you still have questions about anything, or would like to discuss your project with an industry professional, don’t hesitate to drop us a line – we are here to help!