Choosing the perfect payment gateway for your eCommerce website

Before buying something today, the first thing we do is to check its price on eCommerce websites such as Amazon, Flipkart, Walmart, or Macy’s. eCommerce websites have transformed how the world shops by moving nearly 20% of global retail sales online. The main reason for the popularity of eCommerce is the on-demand trend. As time becomes increasingly short in supply, we find ourselves swamped with work and have no time to go out and shop. Additionally, the COVID-19 pandemic gave eCommerce a massive boost as an increasing number of people started shopping online.

eCommerce—helping customers shop on-demand 24×7

This is where eCommerce comes in—offering a convenient, safe and secure mode of shopping no matter where you are. With the advent of mobile apps, international chains such as Decathlon and Walmart have moved their entire checkout process online, helping to make even in-store shopping contactless and safe. Large retailers have also started pick up from store options that allow shoppers to buy things online and pick them up from a dedicated counter in-store.

Payment: the most essential element of a shopping portal

You must pay for what you purchase. On eCommerce portals, the most important aspect is the payment gateway. This bit of an eCommerce portal brings the entire website together as one cohesive, integrated unit that brings variety, convenience and the capability to pay for what you purchase in real-time.

What is a payment gateway?

A payment gateway is an application that enables customers to make online payments safely. These gateways enable the safe and secure transfer of financial (credit card, debit card, UPI and internet banking) information from an eCommerce website to the credit card authentication network for payment processing. The payment gateway gets financial information from the website, secures it, forwards it to the bank or credit card network, receives the response from the financial institution and forwards it to the eCommerce website. In short, this payment gateway acts as a middleman in the payment system.

How does the payment process work with a payment gateway?

Here’s how the payment process works with a payment gateway:

Step 1: the customer places an order on an eCommerce website, fills their financial (credit card, debit card or any other financial instrument of their choice)

Step 2: The information is encrypted by the eCommerce website and transferred to the payment gateway

Step 3: The payment gateway forwards the information to the issuer bank’s server for approval

Step 4: The bank’s server creates an “Auth-Hold” (auth-hold means blocking the amount required for the transaction), and depending on the information received from the payment gateway it approves or rejects the request

Step 5: The request status (approval or rejection) is sent to the payment gateway

Step 6: The payment gateway forwards this information to the eCommerce website

Step 7: The eCommerce website displays the information and completes the payment process

Step 8: The bank changes the authorization hold on a successful (approved) transaction to a debit. This leads to a settlement with the vendor’s bank.

How to choose the right payment gateway?

It is essential to choose the payment gateway that fits your eCommerce website or app’s needs. Depending on your website or app’s flow, your needs may differ from other eCommerce websites. Here’s what you should look for while choosing a payment gateway:

  1. Fees and service agreement
    Payment gateway pricing can vary depending on the type of transactions (online or in-person), revenue consistency, transaction volume and geographies served. You must compare how your business model works with the fee structure. Payment gateways often charge fees if payment thresholds are breached or not met in a quarter or a given month.
  2. Device support
    Choose a payment gateway that supports the devices your target group uses. Today, nearly 80% of eCommerce transactions are done on mobile phones, and this number is steadily growing. Device compatibility is essential to ensure a good checkout experience for your users.
  3. Setup time
    Many payment gateways require bank authorization to set up and do not process setup requests on the weekends. Others have a completely online process that works 24×7. This setup time can matter during website maintenance or if you need to reinstall or change your payment provider for any reason.
  4. Mobile payments support
    Mobile payments are popular in countries like Japan and are picking up in other countries around the world. Additionally, mobile wallets are quickly becoming the main mode of payment in India through mobile wallets such as Google Pay, PayTM, WhatsApp Payments and more.
  5. 24×7 Customer support
    No matter which payment gateway you choose, customer support is essential to provide a seamless experience to your end-users. Live support is a plus, and dedicated service contacts are nice-to-have. Choose the provider with the best support possible.
  6. Feature list
    Ensure that your payment gateway’s feature list exceeds your requirements so that you can pick and choose additional services as per need. For example, if you do not need to accept international payments today, your provider should allow taking them in the future if need be.
  7. Ease of integration
    Your payment gateway must be easy to integrate. Even if you have your own development team, the process should be seamless and support multiple platforms. Major established players usually support various platforms and have mobile and PC SDKs and APIs available for easy integration.
  8. Hosted and integrated solutions
    Hosted payment gateways redirect your customer’s payment request to the payment processor’s website, and there is no payment information shared at your end. This reduces the amount of risk for your portal.

    Non-hosted or integrated payment gateways offer a seamless experience on your website, and there is no additional page to go to. Ensure that your payment gateway provides PCI-DSS compliance for security.
  9. Payment security
    Receiving payment online exposes your customer’s sensitive credit card, debit card or banking information to your website or your payment gateway. It is your responsibility to ensure the safety of this information and prevent data theft or leaks. Ensure PCI-DSS compliance and other safety measure offered by them before you choose a payment gateway.
  10. Easy settlements
    Settlement of payments and refunds must be quick to ensure that your customers are satisfied. If a payment gateway takes too long to settle a transaction, your customers might get frustrated and cancel the order. Refunds and payment settlement speed must be high to ensure smooth operations. Additionally, check the settlement period to ensure greater cash flow levels for your company.

Top 5 payment gateways (domestic and international)

Here’s a list of the best-known India-specific and international payment gateways that you can consider.

Note that Pack Web Hosting does not endorse any of these payment gateways and is not responsible for any losses or risks that your business might get exposed to if you use these payment gateways.

  1. PayPal
    Possibly the most well-known and one of the oldest payment gateways globally, PayPal is a well-established company with over 325 million customers worldwide. PayPal is easy to integrate, offers 24×7 customer service and supports most payment methods, including QR code payments. The only downside is that their charges are a bit high for smaller transactions, and they charge a flat fee of 5%+ ₹3 per transaction. Visit the PayPal website for current prices and terms.
  2. PayTM
    PayTM is synonymous with digital payments in India. With millions of daily users and a simple, easy-to-use interface that supports all major payment sources, PayTM offers a T+1 settlement schedule. Thousands of large companies such as Uber, Zomato and others use PayTM in India. They do not charge a fee for UPI transactions in India. Check out their pricing plans here.
  3. Stripe
    Stripe is a well-known payment gateway globally. Stripe offers an integrated solution and also accepts cryptocurrencies. Currently available in 21 countries, Stripe is exceedingly easy to set up and accepts most international currencies. Visit the Stripe website for their payment plans.
  4. Razorpay
    Razorpay is a fast-grown Indian payment gateway that offers instant activation and extremely easy and quick integration. They offer a host of payment methods, including credit and debit cards, UPI, wallets and more. Additionally, they provide many automation options that are API driven to minimize human intervention. Smaller companies can benefit from the zero-setup cost plans that they offer. Check out their pricing structure here.
  5. Instamojo
    Instamojo is a well-known and fast-growing payment gateway in India with over a million active customers. They offer over 100 payment modes and recurring billing to all customers. Additionally, their website and mobile integration capability, coupled with zero charges for NEFT and RTGS transactions make them popular amongst users. Instamojo does not support multicurrency payments. Check out their plans here.

Although this is a pretty comprehensive list, ensure that the payment gateway you choose scores high on each of these parameters (and more) to offer a great shopping experience to your customers. At Pack Web Hosting, we ensure that our outstanding and highly scalable servers can take all your transactional needs with ease no matter what your business volume. Check out our world-class web, VPS and email hosting plans today!