Finding a safe and convenient payment solution is a significant burden for eCommerce firms, and it’s easy to understand why. Payment gateways like Tailored Pay are necessary for eCommerce firms for one reason: clients prefer to pay using credit and debit cards. According to research, an astounding 80% of internet buyers prefer to pay with credit or debit cards. Therefore, how can eCommerce firms ensure that their payment systems meet their customers’ expectations?
Which payment gateways are available?
Redirect: The consumer is transferred to a separate provider’s page to begin the payment procedure. When using PayPal, for example, the consumer gets taken to PayPal’s checkout page. While this is easier and more secure for merchants that benefit from large platforms like PayPal, it also leaves the business with little to no control over the process and increases the number of steps necessary for the client to complete the transaction.
Onsite checkout, Offsite payment: A prominent example of this payment gateway type is Tailored Pay, which integrates frontend checkout with backend payment processing on your website. While this method is not as flawless as the redirection described above, organizations do have some influence over the complete client experience. However, you must conduct your due diligence on the features of the payment gateway solutions you choose.
Onsite Payments: This form of payment gateway is popular with large-scale eCommerce enterprises who wish to manage payments via their servers. Businesses maintain complete control over the client experience but at the expense of increasing accountability for sensitive trade-offs between customer experience and effectiveness.
Payment Gateways and How They Work
When a consumer places an order, a procedure is initiated. This procedure begins immediately after the consumer inputs their credit card information into the browser to finalize their transaction.
Here is what will happen next:
- Encryption: The payment information input on the web browser is encoded (translated to a new format) for this transaction’s exclusive usage.
- Data transfer: During this phase, the encrypted data transaction will be transmitted securely by the payment gateway.
- Request: The payment processor submits an approval request to the customer’s financial institution, which determines whether the transaction should be accepted or declined depending on available funds.
- Fulfillment: Once the transaction has been authorized, the firm is authorized to complete the order.
This entire procedure is often done in 2-3 seconds, although the payment gateway does much more. Additionally, the payment gateway is responsible for functions such as tax calculation when applicable and order monitoring to detect fraud.
Understanding How Merchant Account Works
In contrast to a standard company bank account, a merchant account is a customized account through which firms can accept credit card payments from customers. After monies have been cleared, they are temporarily stored in these specialist accounts before being transferred to the business’s bank accounts. Merchant accounts simplify the process of receiving payments from different payment sources while also facilitating the handling of refunds and chargebacks for eCommerce enterprises. While merchant accounts and payment gateways are synonymous, some payment systems provide just standalone payment gateways, while others, such as Tailored Pay, offer both. Merchant accounts in conjunction with payment gateways simplify the process of accepting payments online for eCommerce firms.
Payment gateways: Untold Truths
Because not all payment gateways are made equal, it is critical to understand the advantages and disadvantages of each choice before settling on the best payment gateway for your business.
The following are some of the most significant constraints you could anticipate:
- Variation in approved card types: Although most payment gateway services claim their universality, the reality is that they cannot take payments from certain processing sites and card issuers. This may be region- or issuer-specific. Numerous gateway providers emphasize payment acceptability throughout Europe and North America but do not specify which types of payments are not accepted.
- International shoppers are excluded: If you wish to sell your products/services worldwide, your selected gateway should offer a global solution. Merchants wishing to cater to a largely foreign audience should verify the payment gateways’ worldwide acceptability. Some American clients, might not be familiar with Alipay which is China’s most popular payment platform. Additionally, even if accepted, cross-border transactions may be more expensive — since certain payment gateways may levy extra costs for foreign transactions.
- Security reservations: Research indicates that a sizable proportion of buyers express security concerns while making online transactions. While security is a critical component of any effective payment gateway, the following are some inescapable weaknesses to consider:
- Malware. Hackers can employ malware to penetrate a user’s account and conduct fraudulent transactions using secure payment channels.
- Breach of Data. While TLS encryption permits payment gateways to handle sensitive data (such as credit card numbers), the data remains vulnerable to a security breach as long as it is kept on a server.
- Risk to mobile security. The inability to manage who has access to clients’ mobile devices remains a security problem.
Considerations When Selecting a Payment Gateway
When selecting a payment gateway, it is critical to understand what features to anticipate – and whether or not these features align with your company’s demands. The following are some critical aspects to consider:
- Security: Because the Payment Card Industry Data Security Standards (PCIDSS) is the golden standard for digital transaction security, it is critical to pick a PCI-compliant payment gateway. By using a PCI-compliant payment gateway, you ensure the security of your customers’ payment information and limit your chance of facing severe penalties or sanctions.
- Integration with other apps: Your payment gateway must interface with other web-based applications as well as your existing accounting software. To minimize service interruptions, it is critical to select a payment gateway that is compatible with your existing apps and a hit on your bottom line.
- Cost: Before you commit, it is critical to understand the charge structure of your selected payment gateway. The majority of payment gateways have a total operational cost that is comprised of setup fees, transaction fees, and monthly administration fees. Additionally, fraudulent purchases on your website would incur extra costs.
- Payment options: If you’ve determined how your customers like to pay, you’ll want to select a method of payment that corresponds to their payment habits. Select a payment gateway that supports different payment methods to minimize future issues.