If you are new to merchant services or operating an online shop, then it can be a little daunting working out the best way to get your customers to pay you for your goods or services. Sometimes the jargon and terminology in the financial and technology industries can be baffling and confusing.
According to Wikipedia a payment gateway is a type of merchant service provided by payment services provider that authorises credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar.
A payment gateway facilitates the transfer of information between a payment portal, such as a merchants’ website and the acquiring bank. The gateway encrypts the card data so that it can be transferred securely.
It is important to remember that payment gateways, just like point of sale (POS) terminals, are tools for handling payments, but in a virtual rather than physical form. A payment gateway is essential for an eCommerce business to accept credit and debit cards, as well as other payment methods.
Just like physical card terminals, payment gateways support a wide range of processing services including: authorisation only, authorisation and capture (Tokenisation – which is where your customers’ details can be stored for future use), refunds and virtual terminals (which enables merchants to enter payment details on an online payment terminal when taking an order over the phone or via mail order).
To get access to a payment gateway you will need to firstly apply for a merchant services account, this will allow you to take card payments from your customers. You can do this by contacting a payment services provider like NetPay Merchant Services.
Once you have your MID (Merchant ID) your service provider will work with you to provide the best solution for your business.
There are a couple of options when choosing a payment gateway, you can opt to have the payment page hosted by the payment service provider (PSP), this is typically called a hosted form. By doing this you will reduce the amount of security compliance you are responsible for as a PSP will have a higher level of security in place. It will also save you time and hassle dealing with security updates or compliance issues. When your customers check out they will be re-direct to a hosted payments page to take payment.
The alternative is an integrated payment gateway or application program interface (API), this option gives you greater flexibility and control over your payment page, your shoppers will never leave your site so will have a seamless shopping experience. However, you are responsible for security compliance, which can be quite technical and costly. Hosted is faster and simpler to implement and manage. API is more flexible but requires advanced IT skills.
It may sound like a lengthy process but the actual transaction process typically takes 2–3 seconds and the entire process from authorisation to settlement of funding (getting the money into your bank account) typically takes 3 days.
The most important thing to consider when looking for a payment gateway is compatibility with your eCommerce platform, will it work with your shopping cart? There are many shopping carts on the market, but it would be prudent to check with your web developer before signing up with one to ensure that the payment gateway is compatible.
Gateway features – Transactions should be carried out quickly and reliably without charging over the odds.