The eCommerce market is maturing at a phenomenal pace with consumers becoming more comfortable with online purchases. Considering from where it had started, eCommerce has travelled quite the distance and is seeing consumers willing to purchase big-ticket items from eCommerce websites. Today, high-value transactions on eCommerce sites are hardly uncommon as consumers are willing to purchase everything, right from art, books, high-end smartphones to apparel to everything from eCommerce websites. This phenomenal growth is reflected in the numbers that show the continuous improvement in the growth of eCommerce globally. This year, consumers across the globe are expected to spend over $1.672 trillion on eCommerce websites.
Clearly eCommerce is no longer viewed as a high-risk business by banks and credit card processors. This makes it much easier for merchants to account for credit card acceptance today than it was when eCommerce had started and can be considered as a significant contributor in the success off eCommerce. That being said, an eCommerce website has to take into consideration a number of factors to be successful and one of the factors that contribute to such a website’s success is the payment gateway. Having the right payment gateway ensures that your customers can pay for your products easily without compromising on security.
To begin with, we need to understand how payment gateways function. A payment gateway securely processes payment requests from customers after verifying that the information provided is correct. Once the information is verified, the payment method funds the order so that the online store can confirm and process the order.
In this blog, we outline some best practices when you want to integrate payment gateways into your eCommerce website.
There are two types of payment gateway – hosted and integrated. Hosted payment gateways redirect the customer to the payment processor’s platform. The security and compliance requirements have to be addressed by the provider.
An integrated payment gateway connects directly to the eCommerce website via the API provided by the gateway. Integrated payment gateways provide a smooth and seamless payment experience to the customer since he/she do not have to leave the website at any given point in time. With such gateways, storing cardholder data is simpler. However, this also means that the eTailer has to be responsible for addressing all security and compliance requirements.
Integrated payment gateways also need the eTailer to procure a Merchant Account. A merchant account is a secure bank account that allows the eTailer to receive credit card payments directly.
While integrated payment gateways might take a little time to set up, the integrated API’s ensure that the customers have a seamless experience. Hosted gateways are great for new stores since they are easy to set up. However, directing a customer to a different website might make the payment experience choppy and can impact the conversion rates if the gateway is not well known and trusted.
Another thing to consider is if the payment gateway is supported by your eCommerce platform. There are separate plug-ins or extensions for integrating payment gateways to the platforms. When choosing the gateway, eTailers need to ensure that it already has a plugin that can be applied to their technology platform and that the gateway integrates effortlessly with their shopping cart. If it is not so, there is an additional time investment in identifying off-the-shelf plug-ins and extensions from the platform to integrate with the payment gateway.
Payment Service Providers or PSP’s use a Software as a Service (SaaS) model and form a single gateway for an eCommerce website to accept multiple modes of payments electronically. The PSP connects to multiple banks, card, and payment networks and typically manage the connections between the external network and the banks. Since the PSP is the virtual cashier for the eCommerce website, it is critical to select a PSP who has a reputable name, is trusted and does not have outage problems and can offer the package that suits the eTailer’s requirements such as hosting secure pages on the PSP server or even providing IMA’s.
There are a large number of online payment methods that are acceptable across the globe. Along with the established names such as Visa and Master Card, there might be some new or niche payment options that might be very popular in a particular geography. eTailers need to identify which payment method their target audience prefers and ensure that those payment methods are supported.
Along with this, the payment gateway functionality should also extend billing support for subscriptions and memberships so that the changes to payment dates, amounts and subscription types can be enabled without cancelling or restarting a subscription. Additionally, the payment gateway should be able to provide the functionality the eTailer needs such as providing options for taking recurring payments from customers when needed or taking payments from sellers who are listed on the eCommerce website etc.
When selecting a payment gateway it is vital to evaluate the gateway fees that have to be borne. Finding a gateway that has reasonable fees is essential as sometimes the payment gateways charge a fee per transaction, or monthly usage or both. This aspect needs to be carefully evaluated since these small numbers can add up to a lot in the long run. For example, a per-transaction fee of 1% might seem marginal but can amount to a lot in the case of luxury retail.
Taking account of the security of a payment gateway is of foremost importance for any eCommerce website. The payment gateway provider should be Level 1 compliant with the Payment Card Industry Data Security Standard (PCI DSS) and also offer built-in security such as tokenization. They should have proper encryption on all payment pages, have solid authentication procedures, use API’s to securely post data from the website etc.
Along with all of the above, eTailers should also ensure that they have readily available and accessible support, if they face any issue. The eTailer has to identify the kind of support that will be offered (email, call center, etc), the responsiveness of the support offered and the cost involved for the same.
When integrating a payment gateway, it always makes sense to see how the gateway will appear on the eCommerce website and the kind of experience it will offer to the customers. Using too many steps to get from the cart to the confirmation screen can often lead to abandoned carts. At the same time, the transaction security cannot be compromised. Requesting a demo to identify how the gateway will function on the online store, the screens the customers will view and the nature of the information that will be requested for can help eCommerce website eliminate purchase barriers and get the sales going.