One of the most difficult decisions to make when setting up an eCommerce site, other than selecting a provider to get started, is deciding upon a payment gateway. A payment gateway is the software which transfers the money of customers and clients via your site to your bank account.
There are a whole host of payment gateway providers out there, each offering slightly different packages. The one that is best for you depends upon not only what kind of eCommerce site you are setting up (an online store, a forum for buyers and sellers, a site for high-end services) but also on the kind of payment experience you wish your customers and clients to have.
Processing payments is serious and therefore needs to be set up carefully. eCommerce webmasters cannot afford to make any rash decisions. We hope that this article will help those having to make this decision get a taste of the factors that must be considered from the outset.
Que #1: Do you want customers to pay directly on your site?
There are essentially three different ways in which the card details of a customer can be processed.
The first is when the card details are submitted directly onto your site and then saved on your server. This option allows for the smoothest checkout experience for customers, as you have full control of the design and brand customization of the payment pages. However, it also means that you are responsible for the protection and security of the card details. To process payments in this way, you would have to ensure that your site is PCI compliant – this is expensive, intricate and time-consuming.
The second option is to utilize an iFrame or redirect. Essentially the payment pages are managed (in the first instance) or hosted (in the case of the latter) by a third party. This allows you to keep your hands clean from payment details, but means that your control over the customization of these pages is limited. You will find that some potential customers will be unnerved when it appears that they are being redirected to a third party, just when they are about to input sensitive data.
The third option is a middle ground. Stripe.js are the leaders in this field. In this instance the card details are submitted into a form served from your site, but the payment code communicates directly with the Stripe (or other provider) server, meaning that the card details never pass through your server. Customization is restricted, but not nearly so much as with an iFrame or redirect.
Que #2: Do you already have a merchant account?
Any eCommerce site will need to have a merchant account. A merchant account allows you to accept payment from a credit or debit card. The merchant account does not actually store the money itself, but the card payment must pass through this account before being deposited into your business or personal bank account. All the sales from one day are grouped together in a ‘batch’ and deposited into your bank account at the same time. Merchant accounts are offered by banks, ISOs, financial service providers and other independent agencies.
To set up a merchant account, an individual or business must go through a credit check, sign a personal guarantee and provide relevant financial data. Businesses may also be asked to supply a business license and incorporation papers.
Providers such as PayPal (the PayPal Website Pro option) and Stripe offer a merchant account along with the payment gateway service. Essentially you are using their merchant account. (In a similar way, if you set up your own merchant account and have more than one eCommerce site, each domain can be connected to this account.) Set-up and monthly fees are usually cheaper when opting for the ‘all in one’ option, however transaction fees will likely be higher.
In addition to PayPal and Stripe, WorldPay and Skrill are popular and well regarded ‘all in one’ options.
Que #3: Do you operate in a high-risk industry?
There are certain industries that are regarded as ‘high risk.’This includes the legal sale of things such as weapons, marijuana and adult content. Gambling also comes into this category, as do companies operating in the tourism industry, principally because people often pay for tour and package holiday services months before the product or service is delivered.
Stripe will rarely offer their services to companies operating in high-risk sectors. PayPal, WorldPay and Skrill will generally assess each application on a case by case basis. There are an array of payment gateway providers that offer their services exclusively to high-risk companies. Two which come highly recommended are Durango Merchant Services and Vantage Payments.
These three points should be looked at from the outset, as your response to each dramatically dictates which payment gateway providers you should consider. Once you have worked out which brackets above you fall into, you will need to consider the more intricate and no less thorny questions such as: What payment options do I want to offer?, What are the fees?, and How long is the contract?
For further assistance in setting up your online store, have a look at our article on the best open source eCommerce software.