Payment Gateways, and Why They Matter in Ecommerce

Every ecommerce store needs a safe and effective way to accept payments. No matter what you’re selling or what ecommerce platform you’re using, your business will fail if you’re customers don’t (or can’t) make a purchase. In fact, that’s guaranteed.

Payment gateways allow ecommerce stores to accept credit cards and other forms of payment securely online. There are many different types of payment gateways to choose from, and several factors to consider in selecting one for your ecommerce website.

Payment gateways basically fall into two categories: hosted gateways and integrated gateways. Let’s review the benefits and drawbacks of each type of payment gateway so you can make the right choice for your ecommerce business.

Hosted Payment Gateways

Hosted payment gateways take your customer off your website in order to process the payment. When your customer clicks to make a purchase on your website, the link will redirect them to a different website to complete their payment details. After they fill out their information, they are then redirected back to your website to finish the checkout process.

Pros

The main benefit of using a hosted payment gateway is that you are much less responsible for payment security and transactions. You do not need to capture or store credit card information on your website, and therefore you do not need to take additional measures like acquiring an SSL certificate.

Cons

Taking your customer off-site in the middle of a transaction greatly increases the risk that they will abandon their purchase. When the customer is redirected to a different site to process their payment information, they may become confused or concerned that their information is not safe.

An off-site payment processor also interrupts the ecommerce shopping experience. Instead of offering a smooth, end-to-end shopping experience on one website, your brand and credibility may be damaged by using an off-site payment gateway.

Integrated Payment Gateways

Integrated payment gateways are built in to your website’s ecommerce system. Your customer provides their payment details directly on your website, and your integrated payment gateway processes the payment for them.

Many payment gateways offer on-site integration, including Stripe, PayPal, and Amazon Payments. The best ecommerce site builders usually offer integrated payment gateway options. In fact, integration with third-party payment gateways should be a big factor in choosing an ecommerce platform.

Pros

With an integrated payment gateway, your customers enjoy a seamless checkout process, which increases the likelihood that they will complete the transaction and not abandon their cart. Plus, your brand and professional credibility benefit from providing an end-to-end checkout experience.

Cons

With an integrated payment gateway, you do need to take a few more steps to set up the gateway on site compared to an off-site gateway, but the process is fairly simple and easy. Most ecommerce platforms provide payment gateway plugins that eliminate most of the work.

Final Thoughts

The basic goal of a payment gateway is to provide a way for your customers to make a purchase, but not all payment gateways are created equal. A hosted payment gateway takes the responsibility of security off of your website and places it on a third party, but your customer’s checkout experience is slightly interrupted. An integrated payment gateway may take a little more time to set up, but it creates a seamless checkout experience which may reduce your cart abandonment rate.

No matter what payment gateway you choose, be sure to keep your customers in mind. When your customers are happy with you, your business will be successful.