Accepting Online Payments: How to Implement a Payment Gateway

By Kristen Gramigna

The ability to pay for products or services on a website is becoming less of a convenience feature and more of an option customers expect. According to a study conducted by SurveyMonkey, 86 percent of respondents had made an online purchase using a credit card; more than 60 percent said it’s their preferred method of payment for personal purchases.

But implementing a payment gateway involves more than simply adding a shopping cart to a website — online transactions must keep customer payment information secure and private, and present the customer with a seamless transaction experience. Here are some important considerations to remember when implementing a payment gateway:

Ensure you choose the right products.

The terms “payment gateway” and “payment processor” are often used interchangeably, but they play very different roles in online transactions, both for business owners and customers. Understanding what each actually does is key to ensuring that it’s functionally appropriate to business needs.

A payment processor refers to the merchant that a small business establishes an account with in order to accept electronic payments, including those made by credit, debit, and e-checks. The payment processor’s role is to transmit data between the business that makes the sale and the banks/creditors involved in the transaction. Some payment processors are equipped to provide services to merchants who sell to both customers in person and online, while others serve only one type of sale.

A payment gateway is required on any website that allows customers to purchase goods or services online using some form of payment (credit card, debit card, or an electronic check) that involves their financial information — even if the site is not technically an “e-commerce business.” The payment gateway essentially acts like an online point of sale terminal that securely authorizes transactions and ensures the business making the sale is compliant with payment processing standards.

Payment gateways also reduce processing errors, expedite transaction processing, and ease reconciliation. Though some payment processors also offer payment gateway services for a “turnkey service,” not all do. If you choose to use two different providers for payment processing and payment gateway services, confirm that both are compatible so you can easily implement both to function properly on the website.

Consider fees and service agreement requirements.

Because pricing for payment processing and payment gateways are often based on the type of transactions a business conducts (online or a combination of in-person and virtual), as well as business sales volume, transaction frequency, revenue consistency, and the markets served, it’s important to compare how the business model coincides with the payment provider or gateway’s fee structure. Some services may require setup fees and contracts (and impose penalties for early termination of service), or they may increase transaction fees if the order and transaction volume that was estimated when service was established isn’t met.

Further, confirm the provider offers live technical support -- ideally 24/7, but definitely during business hours -- so you can quickly resolve any technical issues that may arise with online payments.

Make customers feel secure.

Because customers have become so accustomed to shopping online, it’s important that you provide them an experience that is on par with what they are accustomed to from larger sites — even if you’re a small business. For example, some payment gateways allow you to customize the entire payment experience to reflect your brand’s typeface, color palette, and logo so customers are unaware of the fact that they may be temporarily redirected to a third-party website to process their transactions securely.

Select the customization your business demands. If you sell to customers across the globe (or hope to expand into international markets), it’s important to select a payment gateway equipped to accommodate global buyers, including providing payment processing text in different languages, and to reflect proper currencies, tax policies, and address formats and shipping codes.

Aim for an efficient transaction.

An Econsultancy survey indicated that more than 25 percent of customers will abandon a purchase if they are forced to register for an account to complete it. If your checkout process utilizes a third-party shopping cart with a registration process built into the cart, make sure you are able to make it an optional feature that allows for “guest” checkout.

Similarly, your payment gateway should allow you to eliminate unnecessary form fields for simplified checkout. Bigcommerce estimates that online sellers can increase conversion by 50 percent by eliminating redundancies like requiring the customer to enter billing and shipping information.

Make checkout simple for all devices.

eMarketer estimates that at least 15 percent of e-commerce sales took place on a mobile device in 2013 — and that figure is steadily increasing. As you review your payment gateway options, confirm that you are able to provide a dynamic checkout experience that is responsive to various mobile devices and adjusts according to the device screen size and resolution.

Implementing a payment gateway isn’t challenging or cost-prohibitive if you understand the business needs that each process is designed to serve. By doing a bit of research before you choose either service, you can ensure a smooth implementation and a customer checkout experience that leads to more repeat purchases.