How to Choose a Payment Gateway

What Is a Payment Gateway?

A payment gateway represents a specialized technology that nicely facilitates all online transactions by putting extra focus on security while transmitting payment intel between clients, merchants, and other businesses. In plain words, a payment gateway serves as a bridge that conducts and facilitates transactions between all the above-mentioned users. The process works by the user initiating payment online, the payment date goes through detailed data encryption as well as authorization, and then the banks check the verification. Cutting-edge payment gateways use 3d secure security measures and encryption to upscale the entire process. For those who don’t know what is 3d secure procedure, you can read more here.

Types of Payment Gateways

Payment gateways have been categorized into various sectors or types based on their usage, integration, processing procedures, and functionality. The main types of payment gateways include:

Hosted Payment Gateways

Hosted payment gateways redirect customers to an external or specialized payment provider’s page to conduct the transaction. The greatest advantage is super easy integration and high security, for instance, as a hosted payment gateway, Vellis offers top-of-the-line payment processing solutions available on the market, so this payment gateway is the best if you are searching for direct server-to-server integration.

Self-Hosted Payment Gateways

Self-hosted payment gateway entails that all translations and processes are conducted on the payment gateway provider platform such as Vellis. Hence, payment details that are collected on the merchant’s site but processed externally are called self-hosted. The benefits include better control and safety over the checkout experience, seamless user integration, and adequate flow of funds. The only downside might be that it requires additional compliance with PCI DSS regulations.

API-Based Payment Gateways

API-Based payment gates have direct integration with a merchant’s website or app which is ideal for unique customization, and seamless user experience. However, some users are not prone to these gateways to have higher technical requirements and security compliance.

Local vs. International Payment Gateways

The biggest differences in local vs international payment gateways include that some transactions are processed for domestic and others for cross-border payments. Local payment gateways prefer to work with local and regional banking systems whereas international payment gateways remain open-minded for multi-currency support such as cryptocurrencies.

Key Factors to Consider When Choosing a Payment Gateway

Going for an adequate payment gateway is a crucial step for safe and smooth payment transactions. Hence, here are the key factors that ought to be taken into consideration.

Security and Compliance

The focus must be placed on PCI DSS compliance for a plethora of reasons. Various encryption and fraud detection tools such as 3D Secure,  CVV verification and others should be applied. If the payment gateway possesses encryption, tokenization, and even fraud detection features it’s eligible and safe. Don’t forget to check if the gateway is PCI-DSS compliant to protect customer data and possess 3d secure authentication such as Vellis.

Supported Payment Methods

Reaching out to a global audience should not represent an issue. Supporting credit and debit cards, digital wallets, ACH payments, BNPL (Buy Now, Pay Later), and possessing mobile payment compatibility is of utmost importance. Digital wallets, cryptocurrencies, UPI, and other international payments ensure a further international reach.

Integration and Ease of Use

When the payment gateway is compatible with eCommerce platforms such as Shopify, WooCommerce, and Magento, more clients would be drawn to this way of payment, thus the integration would be versatile. It’s advisable to select a gateway with easy API integration and documentation for the website or app because it offers developer support for custom solutions.

Transaction Fees and Costs

Fees and costs are inevitable, however, it is easier to break down setup fees, fees per transaction, monthly fees, and transaction charges and then make a comparison. Some gateways charge a fixed fee with a small percentage per transaction. Pricing models such as flat-rate and interchange-plus may impact costs by imposing various chargeback fees and currency conversion charges, but that depends from model to model.

Settlement Times and Fund Availability

Most payment gateways have standard processing times and opt to deliver instant payout options. Some getaways will undoubtedly have instant settlements but perhaps for an extra fee, however, depending on the fund’s availability, other payment processors due to additional security measures and similar might have the funds transferred to the merchant’s account daily, weekly, or monthly.

Customer Support and Reliability

Most payment getaways offer eligible 24/7 customer support. Such perks are extremely vital on a global scale because of uptime guarantees and response times.

Best Payment Gateways for Different Business Needs

Best for Small Businesses

The most ideal payment getaways for various business needs ought to possess low fees and an easy setup. Some of the most used ones that fall into that category are PayPal, Square, myPOS, and similar.

Best for High-Volume Businesses

For large-volume businesses, getaways that offer lower transaction fees, adequate scalability, and sprucing features tend to be the best. Those include, for instance, Adyen or Stripe.

Best for International Businesses

Those who are running an international business might benefit from solutions that offer multi-currency and global support. Some of the ideal payment processing gateways include PayPal, Wise, Vellis, Worldpay, and others.

Best for High-Risk Businesses

Some industries that are labeled as high-risk such as gambling, adult entertainment, travel, and similar might not be accepted by common payment processors such as PayPal because they have high chargeback risk. Here the gateways that would be ideal are also Vellis, PayKings, PayOp, and like-minded.

Common Mistakes to Avoid When Choosing a Payment Gateway

Choosing the wrong payment gateway may lead to undesired costs, higher security risks, and an ineligible customer experience. Hence, when choosing a payment gateway don’t overlook hidden fees, always ensure that they possess fraud protection, never ignore customer experience in the checkout process, and never go for a provider with scalability options.

FAQs

What is the difference between a payment processor and a payment gateway?

Payment processors handle all fund transfers, transaction approvals and settlements, while gateways authorize transactions and act as a bridge.

Can I switch payment gateways after integrating one?

Yes, any business can migrate to a new provider if needed.

What payment gateways work best for startups?

Those getaways that are affordable, offer necessary features and easy-to-integrate options are ideal for startups.

How do I ensure my payment gateway is secure?

Payments gateways that possess SSL encryption, PCI DSS compliance, and fraud prevention tools will guarantee utmost security.

What are the fastest payment gateways for fund settlement?

Providers that offer instant or same-day settlements are PayPal, Square, Stripe, Wise, etc.

References

Payment Card Industry Security Standards Council. (2023). PCI DSS compliance guidelines for payment gateways. Retrieved from: pcisecuritystandards.org/document_library