Payment Gateways 101
Whether you run an online business, mail order business, or operate a traditional brick-and-mortar storefront you will need to choose an effective payment gateway to accept credit cards with your computer or website. The gateway is a crucial part especially for an eCommerce business. Choosing the correct gateway provider to handle your credit card payments can be confusing but with the proper research and education deciding on and integrating your gateway can be a simple process.
What is a payment gateway?
A payment gateway is a hosted software application that links your shopping cart with your merchant account at a processing bank. It accepts the transactions, encrypts the purchase information, checks validity, and passes them over to your merchant account. But it also has many features that benefit the business owner besides passing the transactions. It also stores records of your transactions, provides an interface to view and organize them, it monitors and finds fraudulent transactions, and it can build reports for you so you can analyze everything.
How it works on your site.
A payment gateway will facilitate all of your online payments by connecting your merchant account directly with your website order form on a secure Internet connection. Through the secure internet connection the gateway interface transfers and verifies all of the data on the submitted form and presents it to your merchant account for processing. When your merchant account/bank responds electronically, the gateway then presents all of the returned information to your site as a completed successful or unsuccessful transaction. It does all of this in real time so your customers know right away whether or not their order was successful.
Secured processing flow
The gateway supplies your website with a secure connection between your site, your customer, and your merchant account. It works behind a secure connection, encrypts data, and stores all sensitive data with PCI compliant servers. Along with secure transactions, gateways also play a huge role in keeping fraudulent activities from occurring on your site. Tools such as AVS (address verification system), Card ID verification (3 digits on the back of the card), Buyer authentication (verified by Visa or Mastercard SecureCode), and Fraud Control Modules all combined and in place can prevent 99.9% of fraud. When choosing a gateway you’ll want to make sure your pick has all these tools.
Features to look for in a Gateway
Not every credit card processing payment gateway company will be ideally suited for your eCommerce business. Here are six important features you should be aware of and consider when choosing a gateway.
1. Does it process in real time?
2. Does it accept eCheck payments?
3. Is there a Virtual Terminal?
4. Is there a Quickbooks Solution?
5. Does it support Multi-Currency Processing?
6. Is there a Customer Billing Database that is user friendly?
If your business or product will require many payments or monthly payments you’ll also want to make sure it has a recurring billing feature. Also make sure it can support the shopping cart you use for your online business. Not all gateways will integrate smoothly with certain shopping carts so it’s important to check before picking a gateway.
Integrating your Gateway
In order to use your gateway correctly your web developer will need to integrate your shopping cart with your gateway. This is usually a straight forward process that requires copying a source key from the gateway which is just a small code and pasting it into the shopping carts settings. If your cart is custom built your web developer will need to know how to build an integration system into his code. Not all payment gateway companies allow all of the payment processing to transpire on the company website though. Instead, they might redirect your customers to an alternative site before being redirected back to the original. Even if this type of system is secure, your customer might view it as a breach of security and stir them elsewhere. The best gateways look seamless on your site and perform transactions right there behind the scenes with the proper integration.
As with most ecommerce business decisions, by doing your research you can choose the payment gateway that is right for your eCommerce business. Be sure to visit our gateway section to get more education about the gateways we provide, and be sure to ask us about our own eMerchant Gateway that we are launching very soon that will make your whole payment processing experience feel less confusing and more integrated.