What exactly is a payment gateway? How does it work? How should you go about choosing one that’s best for your site? What options are out there?

Ninety-six percent of Americans shop online (with a staggering 224 million digital shoppers in the U.S. predicted by 2019), so like you, they’re familiar with the basic steps of the e-commerce shopping experience.

It is second-nature, like signing your name or tying your shoes: browse, pick a product, add to cart, hit the checkout.

But what happens between your customers entering their credit card numbers and you getting paid?

These gateways act as in-between services, processing inputted information provided during checkout and facilitating the authorization or fulfillment of payments made for e-businesses and online retailers. They’re used in brick-and-mortar establishments, too.

So why use a payment gateway?

Well, for starters, they take charge of purchasing’s tricky tasks: encrypting (i.e. securing) sensitive info — like credit card numbers — and helping you meet certain standards for data security online, ensuring safe transactions between you and your customer.

Plus, gateways save you time and work, removing the need for you to manually input info received on your end. They also offer flexibility in the types of payments customers can use. And flexibility is good — it increases the likelihood of sales by widening accessibility for customers with a variety of different payment types.

True fact: customers are likely to abandon their carts due to lack of payment options.

Selecting a Payment Gateway

Now to your big decision: choosing a payment gateway for your small biz. It’s a little scary: 46 percent of cart abandonments occur at the payment stage of checkout; if yours isn’t outfitted with a smart payment gateway, you could be looking at lost sales.

 

What to Consider When Choosing a Payment Gateway

With the right payment gateway, it’s a win, win, win.

But how do you know if you’ve found “the one?”

Well, when third-party tools are involved, you want to evaluate the individual features of each and make a choice based on the needs and capabilities of your site. Here are five important factors you should consider:

Security

 

It’s a no-brainer, but people are not going to just fork over sensitive financial information to sites that look shady. You want a payment gateway that’s reputable and provides safe checkout experiences for your customers.

And note: displaying security signage is powerful — more than 80 percent of consumers feel safer seeing logos of trustworthy payment options on a website.

Above all, only use a payment gateway that handles your customers’ delicate data with care. If you do, they’re more likely to stick around.

Cost

Like with almost any service, there are fees associated using third-party tools like payment gateways. For transactions processed on behalf of your business, you’ll have to pay fees — so pay attention to your gateway’s costs and do your research before integrating it into your site so you’re not slammed with surprise fees.

These fees charged can include transaction, statement, chargeback, merchant account fees, and likely more — such as fees to customers for using a certain payment method. And not surprisingly, customers do NOT like hidden costs so read the fine print.

Accepted Payment Methods

The reality is, the easier you make it for customers to make purchases, the more they’re likely to make. By outfitting your site with a payment gateway that incorporates a wide variety of payment methods, your widening your sales net — 50 percent of regular online shoppers say they’d jump ship on a purchase if they couldn’t use their preferred payment method.

Using your site’s analytics, observe what countries have shoppers visiting your site — preferred payment methods may differ by country.

Plus, it’s also a matter of security: 40 percent of study participants said they would feel more comfortable shopping from a business that offers multiple payment methods. Chew on that.

Compatibility

Of course, an important consideration is how well your gateway will integrate with your current platform — both from a technical and design standpoint. If it takes an over-abundance of messy tricks to incorporate smoothly into your existing structure, you might want to rethink your choice.

Nobody got time for that.

And while many gateways (like Stripe, for example) can be customized to match your site’s feel, you want to make sure your gateway tool is compatible with your brand. Don’t make your customers’ purchasing experiences jarring with mismatched elements.

Payment Location

Some payment gateways allow customers to complete a transaction within the checkout processes of the website, while others lead users to another site to finish their purchases. Some gateways provide an API that incorporates directly into your site, others reroute visitors to third-party sites. Whatever you choose, consider what will provide the best user experience for your shoppers — if customers trust your site, they might not mind the extra diversion.