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- Payment gateways are technologies that enable brick-and-mortar and e-commerce businesses to accept payments from customers using credit cards, debit cards, and other types of payments.
- This is the interface that customers interact with during the checkout process, either in person or online.
- Payment gateways are separate from payment processors who move money to complete transactions. The payment gateway simply initiates the transaction process.
- In this article, learn what you need to know to choose the right payment gateway provider for your business needs.
What is a payment gateway?
A payment gateway is a piece of technology, physical or digital, that enables businesses to process payments not made in cash. Think of it as the entry point (or gateway) for debit or credit card payment sales transactions. Payment gateways allow customers to pay for products with credit cards, debit cards, or electronic wallets such as Apple Pay and Google Pay. There are also payment gateways that allow businesses to accept cryptocurrencies.
A payment gateway is the consumer-facing front-end part of an electronic payment processing system. Businesses with physical stores can use their physical point of sale (POS) system as a payment gateway. POS systems have evolved over the years from magnetic strips and signatures to contactless payments using chip readers and personal identification numbers to mobile he devices. On the other hand, an online business can embed a payment gateway (or multiple) in their e-commerce store or his website. Some businesses choose to use multiple payment gateways to meet all their business needs.
How payment gateways work
Let’s take a look at what happens during the payment process and what role payment gateways play. Payments are processed in two main steps:
- A payment gateway collects payment information from a customer’s credit or debit card or other payment method and encrypts it in real-time before passing it to a payment processor.
- The payment processor confirms the payment and transfers it from the issuing bank (the customer’s bank account) to the receiving bank (the company’s bank). This often takes several days, and the customer’s transaction appears as ‘Pending’.
Basically, after a transaction passes through a payment gateway, it continues to a sales processor for actual payment processing. However, some payment processors also act as payment gateways, so there can be overlap between the two.
In-store payment gateways use POS systems that customers interact with. A POS system hooks into your phone line or internet connection and allows you to connect to a payment processing network. Online payment gateways, on the other hand, provide an application programming interface (API) that allows you to embed a digital shopping cart on your business website. This API allows customers to enter their card information directly into your site.
Should I use multiple payment gateways at once?
Some companies choose to work with multiple payment gateway providers. This can happen for a variety of reasons, such as having a clear business need that cannot be addressed by a single solution. For example, not all payment gateways accept Mastercard, Discover, American Express, and Visa. So if you want to accept all major card types, you may need to consider multiple payment gateways.
However, before you decide to get some payment gateway, research factors like monthly fees, transaction fees, and accepted payment methods to make sure it’s worth it.
How to choose a secure payment gateway provider
The payment gateway provider you choose for your startup or small business depends on your business needs. If you’re running an online store with no physical location, you don’t need a payment gateway to serve your POS system. At the same time, if you only have brick-and-mortar stores, you need a solution that can process debit and credit cards face-to-face.
Here are the main things to look for in your payment gateway provider:
1. Price
Check your cost per transaction. This comes in the form of transaction fees or exchange fees. Next, look at chargeback fees to see how much you’ll pay if your credit card company demands payment for a disputed or fraudulent transaction. Also, check to see if there’s a monthly fee (some of these solutions charge an additional monthly fee) or if there’s a setup fee you pay to activate the payment gateway. Also, be aware of cross-border fees for currencies other than the US dollar if you are selling items worldwide.
2. Payment method
You need to make sure your payment gateway has the right payment types your business needs, including physical terminals, POS systems, online checkout, and mobile payments (for iOS and Android). Also, find out what credit cards the gateway accepts, as not all card types are accepted.
3. Functionality
Check out the advanced services offered in addition to the payment types. If you need an overview of your sales, such as invoicing (for clients who want to pay that way) or financial reports, find a payment gateway that offers these services. The same is true when integrating with the accounting software you already use. If you’re a small business or sole proprietorship, you may only need minimal functionality.
4. Security
You should ensure that any options you use comply with the Payment Card Industry Data Security Standard, also known as PCI compliance. These standards ensure that sensitive financial information of our customers is protected. When your website or store displays trusted payment options, your customers feel better knowing their data is better protected. Also, look for options that include automatic fraud detection and fraud prevention to help your business avoid false charges.
Best Payment Gateway Providers of 2022
The payment service you choose to use with your small business is an important decision. Whether you have an e-commerce platform with one or more payment pages or a physical store determines the type of payment gateway you choose. Below is a list of our favorite payment gateway options currently on the market.
Adien
Adyen is a global brand opening only in the US in 2021. Since this is a digital payment gateway, this option is suitable for a completely online business. It can also be suitable for businesses that operate across borders, as it can accept many global payment methods such as Apple Pay, Amazon Pay, and Google Pay. Certified PCI compliant and provides fraud protection. For each transaction, we pay a processing fee of €0.10 plus his second fee depending on the payment method used by the customer.
Amazon payment
Amazon Payments is another complete digital payment solution that offers businesses an API to integrate into their sites. Essentially, customers can purchase from your online store using an already created Amazon account. Adding this option gives you more flexibility during checkout, as many of your potential customers already have an Amazon account. Customers can pay with credit or debit cards (but not Amazon gift cards). The transaction fee is 2.9% + $0.30 per web and mobile payment transaction.
Authorize.net
Authorize.net offers both face-to-face and digital payment solutions. Debit and credit cards can be accepted on site using compatible POS systems, however chip reading capabilities are currently limited. Alternatively, you can insert the API into your site for online sales. Customer information is stored in PCI-compliant data centers to provide a free Advanced Fraud Detection Suite. There are two plans with two tiers of pricing depending on whether you already have a merchant account (or business bank account).
brain tree
Braintree is a global payment service provided by PayPal. Braintree allows small businesses to add his PayPal or Venmo payment options to their website. You can also accept payments from debit and credit cards, digital wallets, and local payment methods. Braintree is a digital gateway only, so if you’re looking for a face-to-face payment solution, you’ll need to look elsewhere. It has built-in fraud detection and is PCI compliant.
business tracking
Chase Payment Solutions is not technically a payment gateway and uses Authorize.net as its payment gateway. However, I found it helpful to look at the example of a traditional bank. Chase allows you to accept direct credit card payments using a variety of terminal options (including contactless options) or online checkout. Also, you can get the loan as soon as possible. This option is suitable for businesses that already bank with Chase as it does not charge an additional monthly fee.
Helsim
Helcim is a payment gateway that offers digital and face-to-face solutions. Unlike many of our competitors, you pay an interchange rate that fluctuates rather than stays the same, depending on factors such as card type and where you use it. This pricing system can save you money compared to flat rate pricing. Its average in-person fee is 1.82% + $0.08 and online or keyed in is 2.38% + $0.25.
Payline
Payline can provide users with an online API, a physical card reader from trusted companies such as Clover or Verifone, or a mobile card reader. The company offers transparency on pricing and provides a calculator that allows you to see an estimate of what you will pay to use the system.
PayPal
PayPal offers another solution on this list, Braintree, but there is another PayPal payment solution with several tiers. In addition to allowing your customers to choose their installment payment preferences, you can also use one of over 100 currencies with multiple payment options. PayPal has its own POS system called Zettle, which can accept in-person payments. Mobile and online payments using QR codes can also be accepted, and the platform provides fraud protection for businesses.
stripes
Stripe’s payment gateway is integrated into its software. It’s primarily known for allowing online payments using its API, but it can also accept in-person payments using its Stripe terminal. You pay a flat fee of 2.9% + $0.30 per transaction. There are no setup fees or monthly fees to use Stripe, and it accepts over 135 currencies. Your and your customers’ data is encrypted with all Stripe’s PCI-compliant systems.
square
Farmers markets and food truck vendors often rely on Square to accept payments on the go, but Square offers much more. We offer integrated payment gateways, online checkout solutions, face-to-face or mobile terminals, and digital invoices. A flat rate of 2.6% + $0.10 is charged for each transaction when the card is present, and up to 3.5% + $0.15 for payments when the card is not present.
verifone
Formerly known as 2Checkout, Verifone is more of a payment processor than a payment gateway, but it does have payment solutions that you can use for your business. It is a global payment platform that allows businesses to sell worldwide, offering local currencies and local payment methods in many countries, making it ideal for customers looking to sell on an international scale. . Prices range from 3.5% + $0.35 to 6.0% + $0.60 per transaction, depending on which plan you choose.
All information about these payment gateways is collected separately by Nav. This software is currently not available from Nav.
Nav is your cash flow partner
After choosing the right payment gateway for your business, you need to keep track of all payments. Sign up for Nav to get detailed insight into your business’ cash flow and make sure everything is in order. That way, when you’re ready to apply for a business credit card or small business loan, you’ll be ahead of the game.
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