Payment gateways are great for business, they allow merchants and customers to pay for goods and services using digital mediums. Without a payment gateway, a business could technically only take cash payments. Moreover, the faster and seamless transaction experience gives customers a satisfying buying experience as they can quickly buy things and move on with their lives without having to wait in long queues for their chance to come, or wait to collect change.
In this article, we will look at the online payment gateway and their types to help you choose the aptest one for your business requirements.
What is Payment Gateway?
A payment gateway is an online system that helps communicate transaction-related data between various parties, i.e., the merchant, customer, bank, and card networks to verify the data and make digital transactions possible. All of this communication is end-to-end encrypted leaving no scope for any unauthorized person from getting access to the information being shared.
How Does a Payment Gateway Work?
A payment gateway works in conjunction with a payment processor, while the former is responsible for communicating transaction data, the latter is responsible for the processing of that transaction. Here’s a simple breakdown of the process:
- A customer selects a product or service and hits the ‘Buy Now’ button
- They land up on the payment gateway’s secure payment page where transaction-related data such as banking or card information is collected
- This information is shared with the payment processor which relays it to the bank to verify the details and check for sufficient funds
- If everything is in order the transaction is processed and this information is relayed back to the payment processor
- The payment processor redirects this information to the payment gateway
- The payment gateway shares this information with the merchant and the customer
- The customer account gets debited and the merchant account is credited with the requested amount
Even though it is a complex process, all of this happens at lightning-fast speeds without the customer ever realizing what goes behind the scenes. Now that we have a basic understanding of payment gateways and the way it works, let’s look at the Top payment gateway integrations you can choose for your business.
Hosted Payment Gateway
A hosted payment gateway is good for small business owners who may not want to get into expenses such as set up fees, annual payment charges, etc. this option is a better option in this case. Whenever a user checks out they are redirected to the payment gateway hosting provider’s secure payment page where all of the transaction information gets collected and processed. The only downside is that the merchant has no control over the user experience since all of the payments take place outside the merchant’s website.
Self-Hosted Payment Gateway
In a self-hosted payment gateway, all of the information related to the transaction data such as card details, and banking details are collected and processed right on the merchant’s website. This gives greater control to the merchant when it comes to the user experience. However, the merchant is responsible for acquiring all necessary certifications such as PCI-DSS, etc., and for maintaining the payment gateway infrastructure.
API Hosted Payment Gateway
API-hosted payment gateways function similarly to a self-hosted payment gateway; however, the processing in this type of gateway takes place via HTTPS queries and APIs. This is a perfect solution for all kinds of business owners.
Now Coming Back to the question ‘how to choose the best payment gateway for your business?” Here are the points to keep in mind.
- See that the payment gateway accepts all known kinds of digital payments
- Accepts multiple currency types
- Adheres to all security standards such as PCI-DSS, 3D secure, etc.
- Offers a cost-effective and cost-efficient plan that suits your business case
- Works seamlessly across all banking and card networks
- Comes with an acceptable settlement period, ideally between 7-10 days
A payment gateway is no longer an option in a world where digital modes of payments have become more of the norm than the exception. Therefore, if you are a business owner and looking to increase customer experience like pay with QR code, engagement, and sales; a payment gateway is what you need to give a brand-new start to your business!