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Payment Gateway for Ecommerce Business

A payment gateway is a third-party service provider that offers a platform for safe online transactions for e-commerce companies and helps customers make online payments.

Payment gateways act as the middleman between the e-commerce platforms and the clients/customers.  The consumer must fill in some information, such as credit/debit card number, expiration date, and CVV, in order to accept payments. Following that, the consumer makes a payment, which is subsequently transferred from the buyer’s account to the merchant’s account. Now let’s go ahead and see some of the guidelines for choosing a payment gateway for an eCommerce website.

Guidelines for Choosing a Payment Gateway for an Ecommerce Website

The following guidelines should be followed while selecting a payment gateway −

  1. If you want to operate globally, you need to choose a payment gateway that can accept international payments.
  1. PCI 3.0 data security criteria should be met by the payment gateway.
  1. Do you require a payment gateway and a merchant account, or are you looking for an all-in-one payment solution?[1] 
  1. You must examine the charges that will be applied to each transaction.
  1. What methods of payment do they accept? VISA, for example, is a payment mechanism, as is Mastercard.[2] 

 

Steps involved

  1. Encryption: A payment gateway will encrypt (encode for private use) data for exclusive usage between the seller and buyer, between the user’s browser and the retailer’s server.
  1. Authorisation: When a payment processor gets approval from the payment company or financial institution to proceed with a transaction, it is known as an authorisation request.
  1. Fulfilment: Once the payment gateway has received authorisation, the website and user interface may go on to the next step.[3] 

 

Types of Payment Gateways[4] 

 

1.     Redirects

A “Redirect” occurs when the gateway sends a consumer to a PayPal payment [5] page to finish the transaction (processing and payment).

The redirect option provides the advantage of simplicity. A small business may use a Redirect gateway to combine the convenience and security of a larger platform but the procedure also means the merchant has less control – and clients have to go through a second step.

 

2.     On-site checkout with off-site payment

Consider Stripe’s payment gateway: the front-end checkout will take place on your site, but Stripe will handle the money processing. There are several advantages to managing your payments this way, similar to redirected payment gateways, including simplicity.

However, as previously said, you will not be able to manage the complete user experience through the payment gateway. You’ll be at the mercy of the offsite gateway’s quality and eccentricities.

 

3.     Payments made on the e-commerce site

Larger companies are more likely to employ on-site payments that are processed entirely on their servers. By doing so their systems handle the checkout and payment processing on behalf of the customer. Now, you’ll have more control, but also more responsibility.

When it comes to accepting payments on-site, every detail matters. Since retail has a cart abandonment rate of about 75%, any enhancements to the shopping experience can have a significant impact on your bottom line.

This is especially true for any retailer with a significant sales volume. It’s critical to understand your options as well as your duties when handling payments on-site.

 

Limitations of Payment Gateways (PGs)

When you choose a payment gateway, you must be aware of and accept certain constraints, many of which are inherent in the payment gateway architecture.

Let’s take a closer look at a couple of the most common payment gateway drawbacks.

 

1.     Not all cards/payments are accepted by all gateways

Many payment gateway providers prefer to advertise their gateways internationally, but they won’t say when they can’t take payments from certain card issuers or processing sites.[6] 

Adyen, for example, lists the payment methods it can take in different countries, such as North America and Europe, but doesn’t say anything about what it can’t accept (and where.) Before you choose a payment gateway, make sure you know what features your clients want, as well as the constraints and exclusions.

 

2.     International customers may be unable to make a payment

Consider that Alipay is far more prevalent in China than payment solutions that clients in the United States may be familiar with.

If a merchant wants to reach a global audience, they need to be sure their payment gateway can handle it. International customers may face increased pricing as well. Although a few payment gateway companies charge the same rate for local and international transactions, bear in mind that “cross-border” transactions are more expensive with Amazon Pay.[7] 

 

3.     Deficiencies in security

Due to security concerns, more than a third of consumers are hesitant to place a purchase online. Although a high-quality payment gateway should be safe, you should be aware of the following security flaws:

●  Data Breaches – Although TLS encryption aids payment gateways in the processing of sensitive data such as credit card numbers, once the data is on a server, that site remains vulnerable.

●  Issues with Mobile Payment – You may have a lot of control over transaction security, but you don’t have control over who has access to your customer’s mobile device.

●  Malware – Some Malwares that access user information like username and passwords can transmit transactions through payment gateways that appear to be genuine, even if the transaction is a fraud.

 

Advantages of PayU Payment Gateway

Merchants who utilise PayU as their payment gateway include:

• Since PayU offers redirection less experience, it keeps customers focused on products on the e-commerce platform and offers fast checkouts.

• With the card saving option, PayU offers a higher transaction success rate.

• Transactions are safe and secure since PayU is PCI-DSS certified and uses 128-bit encryption.

 

FAQ

  1. What exactly is PCI DSS?

The PCI DSS (Payment Card Industry Data Security Standard) is a collection of security guidelines developed in 2004 by Visa, MasterCard, Discover Financial Services, JCB International, and American Express. The Payment Card Industry Security Standards Council (PCI SSC) governs the compliance plan, which attempts to protect credit and debit card transactions from data theft and fraud.

2. What is TLS encryption?

The full form of TLS is Transport Layer Security. It encrypts data transferred over the Internet so that eavesdroppers and hackers cannot see what you send, which is especially beneficial for private and sensitive information like passwords, credit card numbers, and personal communications.

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