The internet has been widely accepted as the number one source of merchandise by customers. As a merchant, therefore, you have no choice but to find a reliable way to get your products online. To a merchant, online retailing increases sales by exposing the business to a new customer base, while to the client, shopping online eliminates the hassle of physically visiting a store.
However, the success of eCommerce has been marred by overwhelming cases of card-not-present fraud. Consequently, it is up to the merchant to employ payment processing practices that give the much-needed protection from malicious buyers. While not full-proof, a payment gateway is the best chance an online seller has to process credit card payments securely.
Types of Payment Gateways
Payment gateways provide a link between websites and card services to allow customers to make direct payments and complete transactions instantly. Although the services a gateway will offer your business vary with your merchant account provider of choice, it will likely fall under the following two categories:
- Hosted Payment.
If when making payment a buyer is redirected to the gateway page where they can complete the process, then yours is a hosted payment gateway. PayPal is an example of a hosted gateway provider. The best part about this gateway is that it doesn’t require you to accept or store any personal card details on your website. Instead, the gateway’s site handles the security risk.
- Shared Payment
A shared payment gateway enables the customer to finalize the purchase while still on a merchant’s site. Rather than redirecting to another website for payment, clicking the “buy” link or button reveals a post form, which the buyer fills with all the required details. A good example of a provider that offers this type of gateway is eMerchantBroker.
This type of gateway lays the entire security risk on the merchant but makes the transaction process a lot faster. Moreover, customers do not always like to be redirected to other pages while shopping.
Picking what is right for you
Choosing between hosted and shared types should be based on your business. New or small-time sellers prefer hosted gateways, but an established merchant is likely to benefit more from a shared gateway.
Besides type, other things to consider when choosing a payment gateway include:
- Transaction fees
Gateway providers will charge a small amount for the use of their website or app to process your payment; either as a fixed fee per transaction, a set percentage of each purchase or a mix of both.
- Recurring billing
A good gateway should extend to the merchant the ability to process monthly subscription payments from the customer automatically.
- Fraud prevention
In addition to payment processing, a gateway can come bundled with fraud mitigating solutions and chargeback detection services which prevent losses from suspicious purchases.
Signing up for the right payment gateway requires sufficient understanding of your business niche and the operations of available payment service providers.