Choosing the right payment gateway to boost your online sales

Selecting the right payment gateway for your online store is far more crucial than you might imagine.

Yet e-tailers rarely put the choice of payment method at the top of their list of priorities when it comes to developing their business. And yet, given its impact on the consumer's shopping experience, it can influence the way they evaluate your site... and therefore encourage them (or not) to complete the transaction!

What is a payment gateway? How does it work, and what advantages does it offer? How do you choose a payment gateway for dropshipping and e-commerce?

We tell you all about it.

See all software Payment Gateway

What is a payment gateway?

Payment gateway: definition

A payment gateway is defined as a service that establishes the link, via a payment processor, between :

• the customer's banking data entered on your website,
• the acquiring bank (the bank hosting your merchant account).

The payment gateway is therefore responsible for :

• validating the information provided by the customer, while protecting against the risk of fraud,
• transmitting payment data securely via an encryption system,
• send transaction information (payment approval or refusal) back to the merchant site.

☝️ A payment gateway is therefore essential if you want to allow online payments on your e-commerce site.

The different types of payment gateway

There are two main types of payment gateway:

• Self-hosted payment gateways: here, banking information is entered directly on a merchant site page, then transmitted to the payment gateway.
  
  
• Hosted payment gateways: in this case, customers are redirected to an external page when they enter their bank details. Once they have done so, they are redirected to the merchant site.

Payment gateway VS payment processor and merchant account

But the payment gateway is part of a global process involving other technologies, necessary for its smooth operation.

To help you better understand, we'll focus on the payment processor and the merchant account, terminologies you'll come across frequently when considering your future payment gateway.

The payment processor

A payment processor is a company that manages the transaction by acting as an intermediary between :

• the issuing bank (the customer's bank),
• the acquiring bank.

More concretely, it retrieves the transaction information via the payment gateway, processes it, and finally deposits the funds into the merchant's account.

At the same time, the payment processor informs the gateway of the success or failure of the transaction.

The merchant account

The merchant account is the account that receives card payments from the payment processor, before transferring them to the seller's bank.

☝ Please note: some payment gateways also provide merchant account services.

How does a payment gateway work?

Checkout via a payment gateway involves a number of steps:

• The customer enters his bank details on the site's payment page, when checking out his shopping cart.
  Traditionally, customers are asked to enter :
  • name
  • credit card number,
  • expiration date,
  • the secure code (CVV number).

Depending on the services selected, this payment page is integrated directly into the website, or hosted externally by the payment gateway.

• The gateway encrypts the information entered and transmits it to the payment processor. At the same time, it ensures that there is no risk of fraud, using integrated TLS (Transport Layer Security) protocols.
  
  
• The acquiring bank forwards the payment data to the credit card network (Visa, Mastercard, American Express, etc.). These then carry out additional anti-fraud checks, before in turn sending the information to the issuing bank.
  
  
• The issuing bank approves or rejects the transaction, and notifies the acquiring bank accordingly.
  
  
• The acquiring bank informs the payment gateway (which subsequently notifies the merchant) whether the transaction has been refused or approved.
  • if approved: the customer receives a payment confirmation,
  • in the event of refusal: the seller may ask the customer to try a new payment method.
• If the transaction is accepted, the merchant eventually receives the money in his merchant account. Transfer times vary from one payment gateway to another.

☝️ Good to know : despite all these steps, the operation only takes a few minutes, to ensure the best possible customer experience.

What are the advantages of a payment gateway?

Enhanced security

Unlike physical payment, online payment does not require proof of the identity of the person using the bank card. What's more, no 4-digit secret code is required.

This is why the payment gateway protects the transaction from the risk of fraud, by encrypting sensitive information in transit between the online store, the issuing bank and the acquiring bank. It protects the customer against theft of personal data.

But it also protects the seller by :

• reducing the risk of fraud,
• ensuring that the customer has sufficient funds, does not exceed his credit limit, does not operate via a blocked account, etc.

More sales

Payment methods are multiplying. Today, many users no longer pay solely by credit or debit card. Many now use services such as PayPal, or e-wallets like Apple Pay or Google Pay.

Most payment gateways support these technologies. With them, you opt for a convenient payment method that meets the expectations of all types of customers, and by extension ensures you optimize your sales.

Ease of use

A payment gateway opens up a whole new world of possibilities when it comes to settling online transactions:

• it simplifies operations (much more so than if you were to use a bank transfer or, worse still, a cheque), and everything is grouped together within a single channel,
• while guaranteeing that the seller receives payment from customers more quickly.

As an added bonus, payment gateways are developing their technology, and some integrate with third-party tools such as CRM or compatibility software.

All in all, they promise to save time and make things simpler for customers and professionals alike.

How to choose your payment gateway?

There are a number of criteria to take into account when choosing your payment gateway. Let's take a look at them.

Compatibility with your e-commerce platform

Before choosing your payment gateway, it's a good idea to find out whether it's compatible with your e-commerce site. For example, if you use a platform such as Shopify or Prestashop, check the list of accepted providers in their extension catalog.

Which payment gateway for Shopify?

The repertoire of payment gateways available for Shopify is extensive (2Checkout, Amazon Pay, Paypal, Stripe, etc.). See the full list here.

Which payment gateway for Woocommerce?

Similarly, Woocommerce supports a wide range of payment gateways.

There are some free ones, listed in the site's "Basic Payment Options" documentation.

There are also many other payment gateways available for a fee, including the more traditional ones (Stripe, Amazon Pay, Square, PayFast, Woocommerce Payments, etc.).

Service level

As we've seen, a payment gateway can include additional functionalities to those expected as standard. Some providers offer both payment gateway and payment processor (and therefore merchant account) services. Others, on the other hand, only offer gateway services.

It all depends on your needs. All-in-one solutions are easier to deploy (no need to obtain a merchant account), but monthly transaction fees are often higher. This is why larger sites tend to operate via their own merchant account, to achieve substantial savings on sales volume.

Security guarantees

Security is an essential component of the payment gateway. So make sure your chosen supplier meets the latest standards, particularly PCI (Payment Card Industry Security Standard), and enjoys a good reputation in this field.

This will reassure consumers, and encourage them to provide their banking information.

Functional coverage

With so many payment gateways on the market, it goes without saying that not all of them offer the same range of functions.

So, when choosing the right tool, you need to ask yourself what you need in advance. For example, do you need to manage recurring payments? If you operate on a subscription basis, certainly.

Customer experience

The ease with which consumers can complete a transaction on your merchant site can influence their decision to buy. If the process proves too complicated, there's a good chance they'll be tempted to go elsewhere.

That's why you need a service that :

• guarantees smooth operations, and does not multiply the number of steps involved,
• accepts all bank cards,
• is responsive, i.e. perfectly adapted to mobile use.

In short, your customer's payment must be quick and easy!

☝️ Ensuring a good customer experience also means taking into account payments from customers all over the world, if you choose to deliver internationally.

Payment gateway costs

Payment gateway rates vary from one provider to another.

Even if you're willing to pay the right price for a solution that's sufficiently secure and user-friendly, it's important to identify the right level of service to avoid paying for unnecessary features.

At the same time, study the pricing policies of the various providers to identify any associated costs (transaction fees, chargeback fees, fees for accepting different payment methods, etc.).

See all software Payment Gateway

Examples of payment gateways

Here are a few examples of tried-and-tested payment gateways.

Authorize.net

Authorize.net is a platform offering a range of different products. You can use :

• the solution including payment processor (with additional costs),
• or the payment gateway alone.

What's more, the tool supports all types of payment. In fact, while it allows online transactions via computer or cell phone, it also accepts payments by electronic check or even by telephone, thanks to a virtual terminal.

In addition, the provider offers a range of interesting features to facilitate your business, such as support for recurring payments and electronic invoicing.

Finally, Authorize.net guarantees a high level of security, and remains a solution that's easy to use and integrate with your other platforms.

MoneyTigo

Money Tigo is a French payment gateway offered by the IPS INTERNATIONAL group.

Perfectly secure and compatible with most CMS (Woocommerce, Prestashop, Magento, etc.), it accepts different types of payment:

• simple payment,
• twice, three times, four times,
• recurring payment,
• oneclick payment, etc.

What's more, MoneyTigo is much more than a simple payment gateway, as it simplifies your accounting management (monthly statement, performance summary, reconciliation, etc.).

Another strong point of the solution is its advantageous pricing system. With MoneyTigo, there's no monthly subscription fee; a percentage is deducted from your sales, so you only pay when you sell.

Last but not least, the tool is easy to learn, and its user-friendly interface promises easy management of your business.

PayPal

There's no need to introduce PayPal, which for years has been the leader in all-in-one online payment services.

One of the main advantages of this provider is its solid reputation, which gives Internet users peace of mind if they opt for its services. Thanks to its reputation and experience, PayPal is also compatible with virtually every e-commerce platform or CMS on the market (WordPress, Prestashop, Magento, Shopify, etc.).

What's more, the company has worked to make the tool as easy as possible to use and integrate into your online store, even via mobile.

Last but not least, there are a number of different formulas available (PayPal Express Checkout, PayPal Pro, etc.). You can choose yours according to the degree of personalization you want, and whether you want the user to remain on your website at the moment of payment.

On the other hand, note that the high fees associated with PayPal are often singled out for criticism (2.9% + $0.30 for a web transaction, for example). What's more, some companies have encountered problems with blocked accounts, as they are considered risky by the provider.

Stripe

After PayPal, Stripe is probably the most famous payment gateway.

The platform remains simple to use, even if it may require some technical skills if you're planning advanced use. In fact, it has the advantage of being highly flexible and customizable (e.g. basket personalization). In this way, the transaction process becomes smoother and smoother, without the surfer even noticing that he or she is passing through a third-party service. What's more, this payment speed is also achieved by integrating the service into your website, without reloading the payment page.

At the same time, Stripe offers a number of advanced functions, notably for managing subscriptions and recurring payments.

Last but not least, Stripe's powerful reporting tools give you a clearer picture of your sales.

You now have a clearer understanding of the role and benefits of payment gateways. However, given the abundance of payment gateways on the market, we recommend that you study the various proposals carefully before selecting the one best suited to your online business... and to your customers' needs! Let's not forget: they must remain your top priority.

A good payment gateway not only makes it easier to manage your transactions, but also ensures the best possible customer experience, and a soaring conversion rate!