What is a Payment Gateway?
A payment gateway is a software application or service that processes credit cards and other types of payments for ecommerce stores and businesses in much the same way that a POS device does for a brick and mortar store. It must be able to encrypt payment information to ensure that credit cards and other payment instruments are protected and that the transaction between the merchant and the customer is successful.
While the concept may be simple, some of the operations are not. For instance, the payment processing software has to be able to send transaction information to the appropriate source for approval and then relay the response back to the store. This is how the store knows whether the transaction is approved or denied.
Why You Need a Payment Gateway:
If you have an existing website or hope to have a website in the future that accepts online payments, you will need to have a payment gateway. One reason for this is that all online credit card transactions are presently handled by payment gateways. There are no acceptable alternatives. Therefore, you must have one in order for your customers’ orders to be approved and for you to receive your money. You will also need one if you plan to use a mobile phone to accept payments.
How to choose the right gateway for your ecommerce website or app:
1. Hosted Payment Gateways
There are two types of payment gateways: hosted payment gateways and integrated payment gateways. Hosted payment gateways redirect a customer to the platform of a host network where the customer inputs his or her information. PayPal and 2Checkout are examples of hosted payment gateways. One pro of a hosted payment gateway is that the host is responsible for security issues. Also, a hosted payment gateway is very easy to set up. However, a con is that these gateways are not preferred in some countries. Another con is that some of these gateways tend to be slow, which can negatively affect conversion rates.
2. Integrated Payment Gateways
Integrated payment gateways use an application-programming interface (API) to connect your store or business to gateway services. In addition, referred to as non-hosted payment gateways, providers make direct payments through your online store. Pros include a pleasant payment process for your customers because they are not redirected outside your store. Such gateways are also mobile friendly. Cons include the fact that your website is responsible for a good portion of the security. If your website sustains a breach, you may be subject to an audit. Also, your store architecture may require some tweaking in order to support some the gateway provider’s features.
How to integrate a custom payment gateway into a website or app:
The exact steps for payment gateway integration will depend on the gateway chosen. However, there are several common steps. For instance, if you choose to go with a hosted payment gateway, you will need to connect your website to the gateway and get an SSL certificate. You will also need to obtain the gateway’s credentials, including the merchant’s ID, MWS access key and secret key. You should be able to do a great deal of customization to make the payment process look the way you want it to.
If you use an integrated payment gateway, the first thing you will need to do is make sure that your security measures are adequate. However, you should be able to accomplish this by using some of the extensive APIs and modules that are readily available. Otherwise, you may have to depend on custom payment gateway development to integrate the payment gateway into your website. You will also want to make sure that your payment gateway will accept a variety of payment options and those mobile phone users are accommodated.