One of the most popular questions asked by merchants is how to choose a payment gateway. In electronic commerce, a payment gateway is the term used to describe an application service provider that authorizes and processes electronic payments between merchant, his customer, the customer’s credit card-issuing bank and merchant’ s own bank.
Choosing the right payment gateway is very important for the success of an online store, so it’s absolutely necessary that merchant spend some time researching on the best payment option for his business line.
Some of the key factors that you should consider while selecting a payment gateway
Never compromise on the security of your online payment system, make sure that your payment gateway is safe and utterly secure. It should protect all the credit card and transaction information of your customers. It must use cutting edge technical tools, like fraud monitoring system, 3D secure function, Address Verification System (AVS), IP geolocation and others that will decrease threat of damage caused by fraud.
Merchant account can have a variety of fees, some of them are set by the merchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank according to a schedule of rates called interchange fees, which are set by Visa, Discover, and Mastercard.
When choosing a gateway, you will generally encounter three different fees that vary by company: discount rate (the rate charged to a merchant for providing debit and credit card services based on factors such as volume, average ticket price, risk and industry), transaction fees (is charged when you got authorization for each transaction), and setup fees (a one-time fee charged upon the creation of a new account).
- Various features
Payment gateway service providers offer different features. Depending on your business requirements, choose the features that are necessary for your business. For example, if you want to offer your products and services worldwide, your payment gateway should be capable to accept different credit cards, debit cards and currencies.
- Ease of integration process
Having done financial part, it will be necessary to integrate the payment processing with your website. In many cases the best solution is to select a provider where you will send your customer to their website where the customer enters his credit card information, and the service provider sends them back to your online shop once the transaction is complete.
The easier your provider makes it to integrate, the better.
- Payouts time
Find out the stated practices of each payment gateway service for remitting payment back to you. Some payment gateways have a no-reserve policy, but take from a couple of weeks to month to remit your funds. While most payment gateways may maintain reserves for risk assessment, it is important for you to know all the conditions and time when you will be able to access your funds.
With a global audience multicurrency support becomes essential for those who have customers worldwide. Though it is not an extremely essential feature, it is helpful to be able to charge your customers in local currencies, or at least US Dollar currency.
- Reserve funds
Consider the company policy concerning the rolling reserve which is a portion (usually 5-10 %) from every transaction that is held for 3-6 months, then settled to the merchant. This reserve account is held as security against an account being brought into a negative balance due to consumer returns, chargebacks and reversals and is standard practice in the payment processing industry.
- Company Reputation
You should learn more about your future payment gateway provider, consider the recognizability and reputation of the company. As for users the most important to be ensured that their personal data is securely being collected and sent across the Internet.
- Customer Support
You should choose a payment gateway service provider that provides excellent customer service has a well-staffed and trained support team working 24 x 7.
Don’t let it be a block to setting up your online business, analyse and choose the best option for your business line. Overwhelmed by all of the options? Although there’s no way around choosing a payment gateway, if you want to sell online, you have to make a choice.