What Is a Payment Gateway?
What is a payment gateway?
Sometimes when you sell products and services on the internet, people pay you for them. To do this, they need to use a payment gateway, which is an electronic system that allows customers to make payments for products or services they've purchased. Payment gateways are also known as checkout systems or digital wallets; these names all refer to essentially the same item. There are many different payment gateways out there, but we'll cover some of the most common questions here in order to help you figure out which one is right for your business.
What is a payment gateway?
Payment gateways make it possible for eCommerce websites and applications to process payments from their customers quickly, securely and seamlessly. A payment gateway is a service that authorizes credit card payments, processes them securely and transfers funds to a merchant's bank account. A payment gateway acts as a liaison between merchants and the credit card networks. The merchant communicates with the payment gateway using an API (application programming interface) through their website or online store. This communication process can happen in real time, making it possible for customers to complete their purchases without leaving your site or app.
The payment gateway is responsible for processing credit cards from both buyers and sellers; it sends information about each transaction to the appropriate issuing bank after receiving authorization from the card networks (Visa, Mastercard, American Express or Discover Network). Once authorized by one of these companies' networks, your merchant account will receive money from each transaction automatically within 24-48 hours!
What are the benefits of using a payment gateway?
Using a payment gateway can be beneficial for your business in the following ways:
- It's secure. A payment gateway encrypts information to ensure that customers' credit card numbers and other personal data are transmitted securely over the Internet, protecting them against fraud.
- It's easy to use. A payment gateway has all of the features you need to process payments quickly and easily, such as recurring billing options, integrated shopping carts and automatic coupon codes.
- It's convenient for your customers. Customers enjoy paying with their preferred method because it makes their shopping experience easier—no need for cash or checks!
Payment gateway features to consider.
Now that you know what a payment gateway is, it's time to learn how to select one. There are many different factors to consider; here are some of the most important ones:
- Security: How secure is the gateway? Are they PCI compliant? Does their security meet your company’s standards? It’s important to make sure your data is secure, therefore, it’s equally important that you choose a secure gateway. A secure gateway is PCI compliant and uses best practices when it comes to encryption, firewalls and network access. Don’t trust your customer's data with a less secure provider—make sure yours is PCI-compliant.
- Support: What kind of support do they offer, and how easy is it to contact them? Will there be someone available 24/7 or only during business hours? Do they have a live chat feature to assist during times of emergency? Support is the most important part of any brand, because people have questions and concerns. If you don’t provide responsive customer support to your customers, they will go elsewhere. Having a payment gateway that's easy to get in touch with can help you resolve your own customer concerns faster. Your payment gateway should be available 24/7 and have live chat feature to ensure that when you need them most, there’s someone around who can help.
- Reporting: What reports will you get from the gateway, and how detailed are these reports? If necessary, can these be customized so that you can see exactly what information is important for your business needs? Many gateways offer reporting features that enable you to see the data from your transactions, such as transaction details, amount of the payment, etc. You can also see if your payments were successful or not. A good payment gateway should be able to generate reports in many formats and should allow you to use these reports according to your business needs
- International Payments: Can you send international payments via this gateway and if so, to where? By making sure that the payment gateway you’re using can accept international cards and other forms of payments can reassure your customers around the world that they can easily make a purchase with your business.
For a more in-depth explanation on what you should consider when choosing a payment gateway, check out our blog "What to Consider When Choosing a Payment Gateway!"
What types of payment gateways are there?
- Hosted Payment Gateway: This is the most common type of payment gateway, where a third party hosts your website on their server and handles all communication with your users (e.g., collecting credit card information).
- Self-hosted Payment Gateway: With this option, you host all of your payment gateways' code on your own servers and handle all transactions yourself—you're responsible for hosting and maintaining the software, but it's still considered secure because everything is happening behind closed doors in your own processing environment (and not over the public web).
- API-hosted Payment Gateway: With an API-hosted payment gateway bundled into another service that you use, such as an eCommerce platform or accounting software package, there's no need to install any additional software onto your site—payment functionality will be automatically available through APIs within other programs that already exist on that server environment where it was installed (ecommerce platforms usually include some sort of "checkout" tool from which customers can enter their payment details).
How can I choose the best payment gateway for my business?
Choosing the right payment gateway for your business can be a complicated decision. There are many things to consider, and it's important to choose one that is compatible with your business needs and offers the best value. Let's break it down into three main areas: ease of use, reliability and customer support.
Ease of Use: The first thing to consider when choosing a payment gateway is ease of use. How easy is it for your customers to make payments? Will they be able to do so without any additional steps or technical knowledge? If you're selling online, this is especially important because customers who shop online are there for the convenience of not being in store. They expect to move effortlessly throughout your checkout process without having to second guess their decision. If they start to get frustrated with your site's navigation or feel like they have to jump through hoops just to check out, they'll leave and find what they're looking for elsewhere.
Reliability: You want to make sure that your payment gateway can be trusted. Look for one with a good reputation, but don't rely solely on this because even reputable companies have been known to make mistakes in the past. The best way to find out if a company is reliable is by reading reviews from other customers who have used their services in the past.
Customer Support: A good payment gateway should have excellent customer support. In fact, this is one of the first things you should check when comparing different providers. If you're having any issues with your account or need help setting it up for the first time, you want to know that there's someone out there who can assist you as soon as possible. You might want to even try calling into the customer support line and ask some basic questions. Does the rep seem to understand what you're asking or does it seem like they are a little scattered? Any pre-vetting you can do beforehand can help you out in the long run.
What is the difference between a merchant account and a payment gateway?
A payment gateway is a service that handles the actual payment processing. Once you've set up your account with a gateway, you'll be able to accept credit card payments directly through your website or mobile app. A merchant account, on the other hand, is an account that holds funds from your customers before they are deposited into your bank account each month.
In order to use a payment gateway and accept credit card payments through it, you will also need some kind of merchant account as well—a good rule of thumb is that if you're setting up an online store or business site where customers can purchase goods and services using their credit cards or debit cards (and yes: Apple Pay counts), then yes indeed—you need both!
How do you get a merchant account in order to start using a payment gateway?
The first step in getting a merchant account is to visit Redde Payments and click on “Get Started Now.” This will take you through the very simple process of adding your company information and providing us with some basic information about your business. Once that's done, we'll be able to get you set up with a payment gateway of your choice since we integrate with all of the most popular ecommerce platforms like WooCommerce, Shopify, BigCommerce, WordPress and more.
Once we've set up your merchant account, you'll be able to start accepting payments from customers all over the world. It's important to note that this process only takes a few minutes—we work hard to make sure that our clients get the best service possible.
Congratulations! You've reached the end of this article, and you now know what a payment gateway is and why you should have one. There are plenty of options for those looking to accept online payments, whether you're a big business or an individual, so don't be afraid to research this topic more fully and find the right solution for you. It may take a bit of time to get going, but once you do, your life will be easier! Check out our other articles for more insightful payment knowledge. If you are interested in getting started with a payment gateway, click here!