Payment gateways are technologies that merchants use to accept debit and credit card payments. The term includes both physical card machines for businesses found in retail stores as well as payment processing portals found in the ecommerce payment system. Small-scale business payment gateways in recent years started to accept phone-based payments using QR codes or Near Field Communication (NFC) technology.
Payment gateways enable consumers and businesses to make online payments, keeping the payments ecosystem running smoothly. Covid-19 took the eCommerce world by storm, with online sales reaching £5.7 billion in 2022, according to Statista. Meanwhile, payment-related fraud was also on the rise, resulting in £41 billion worth of losses in 2022. These statistics show how important is a payment gateway in tackling the complexities of an ecommerce payment system while ensuring a seamless and secure checkout experience.
To ensure PCI-DSS compliance, the payment gateways adhere to several strict security procedures, including audits and recertifications every year. It is the front-end technology responsible for sending customer data to the merchant acquiring bank, where the transaction is processed in an online portal as well as face-to-face payment using a card machine for business. Payment gateways are key components of electronic payment systems.
In the world of payment gateways, technology, and consumers’ tastes are constantly evolving. The terminals of the past accepted credit cards with magnetic strips and demanded paper signatures from customers. As chip technologies develop, signature phases could be replaced with personal identification numbers (PINs) entered directly into payment gateway hardware. Customers are now able to make contactless purchases with their phones instead of plastic credit cards, making it easier to pay.
Depending on whether the payment gateway is an in-store gateway or an online payment portal, the architecture will vary. Applications programming interfaces (APIs) are required to communicate between an online payment gateway and the underlying payment processing network. POS terminals connect to payment processing networks electronically via a phone line or the Internet for in-store payment gateways.
Assessing the relationship between online payment, customer experience, and sales
You need to know how to enhance your payment procedure as an online e-commerce store owner so that your customers have the best shopping experience. You must provide your customers with the best user experience to retain them and increase sales. In the end, if your customers have an unsatisfactory experience, your online store will suffer from a bad reputation, which will lower your sales. To make sure your customers have a good shopping experience with your store, you need to make sure you provide them with what they are looking for.
Shopping experiences that are intuitive, easy to navigate, and rich in content always appeal to consumers. While merchants and e-commerce sites/apps have been continuously innovating and striving to improve the customer shopping experience, the key to maintaining customer stickiness is a factor of the Payment experience.
When it comes to the overall shopping experience, a payment gateway plays an important role. It is therefore crucial to choose the right payment gateway solution. It can result in negative customer experiences and the loss of valuable customers if your payment structure is cumbersome, lacks familiar payment methods, or involves multiple redirects.
To ensure an effective payment experience, the following key considerations need to be taken into account:
Providing popular methods of online payment
Provide popular online payment methods. A lack of preferred payment methods can lead to cart abandonment. Expand your online payment options, such as credit cards, debit cards, e-wallets, UPI, and more, and provide a seamless checkout experience.
A high success rates
Payment gateways should not only offer multiple payment options but also ensure that they are highly successful. Customers should be offered alternative payment methods in the event of transaction timeouts and declines, rather than being forced to abandon the transaction.
A marketplace for small and medium-sized businesses
Banks and merchant aggregators need to support small-time merchants by providing them with a marketplace where they can showcase their goods and services. With the increasing need among small and medium merchants to take their business online, they need to provide them with a marketplace.
Offers and promotions tailored to your needs
In addition to supporting features such as loyalty rewards, redemptions, and promotions, customers and merchants prefer flexibility in payment options such as EMI schemes and BNPL (Buy Now Pay Later).
Checkout that is secure and unified
No matter what payment method a customer uses, they want a simple and secure checkout experience. An easy payment process can be achieved with saved cards, a single checkout page that allows customers to enter their OTP/PIN, and a smooth transition to payment approval.
Branding at the checkout
Customers need to be able to connect the bank brand with the merchant brand at checkout. Banks and their merchants can manage their brand with a white-labelled payment gateway platform, provided by top online payment gateway providers.
The online payment process plays a critical role in making the shopping experience smooth and influencing customers’ evaluation of the value proposition. To improve the payment experience for both Merchants and Customers, the payment gateway should focus on both Merchant and Customer centricity. When buyers and merchants have a positive experience at the Checkout stage, their relationships will improve significantly.
How to choose the right payment gateway services for business?
An important decision your business must make is choosing the right payment gateway. You may lose money and customers if you pick a gateway that doesn’t fit your business model. When choosing a payment gateway, it is important to think about the total cost involved. You will have to pay three types of fees when you use a payment gateway: a set-up fee, a monthly fee, and a transaction fee. Make sure your business can afford the payment gateway you choose.
API-integrated gateways or hosted gateways are two options for payment gateways. With API-integrated payment gateways, customers can quickly complete their purchases without encountering any hassles. Hosted payment gateways, on the other hand, redirect the customer to other secure payment gateways, which adds more steps to the payment process. It is important to note that both methods are secure, but online store owners prefer API-integrated payment gateways, i.e., a one-page procedure, to provide their customers with the best customer experience. If you’re using payments gateways integrated into your site, you should also ensure a simple checkout process.
Consider the type of customers and the location of your online store before choosing your payment gateway. The preferred payment gateway varies by region and customer type. The choice of your payment gateway should be based on your targeted customers.