Online Shopping 101 – Part 5: PayPal and payment gateways

Now that you know how shopping carts work and how to create an effective shopping cart, you should decide on which payment gateways you will use for your site. Payment gateways are the method through which you receive money from your customer… it’s really important your website has the right one!

What is a payment gateway?

A payment gateway processes credit card transactions for your online web store. It validates your customer’s credit card and accepts or declines credit card transactions on a business’ behalf via secure internet connection.It is just what it says; a gateway between your business and your customer.

Payment gateways require the business owner to have a merchant account. A merchant account is simply an online bank account that holds your money temporarily until it is moved to your actual bank account. Merchant accounts are usually set up with your bank and cost money.

Therefore, to accept online credit card transactions, you need two things; a merchant account with your local bank and a payment gateway.Unless…

How is a payment gateway different from PayPal?

Unlike a payment gateway, PayPal does not require business owners to obtain a merchant account before conducting a business transaction. With PayPal, you can start processing transactions much faster and the initial costs are cheaper compared to using a payment gateway. However, some people are still unsure how to use PayPal and prefer a straightforward process of simply entering credit card details onto the screen.

How do you choose a payment gateway?

When you set up an online store choosing the best payment gateway for the number and type of transactions occurring on your website will save you money. Some payment gateways are difficult to implement and use so finding the right one will save you headaches in the long run. Here are some things to consider before choosing a payment gateway:

• Is it reliable?
  If a payment gateway cannot offer you 99.99% uptime, you need to consider a more reliable provider. Check user reviews of the product on third party websites.
• Is it secure?
  The payment gateway should be able to provide you anti-fraud tools and should have real-time fraud screening on all payments. You should be allowed to have direct control over all transactions and all fraudulent transactions, if there are any, should be completely visible to you, the business owner.
• Is it PCI DSS (Payment Card Industry Data Security Standard) Level 1 compliant?
  This is a mandatory requirement for all businesses that store, process or transmit cardholder details that ensures the security of the environment.
• Does it have reliable support services?
  Just in case problems will occur, you need to be sure that you will be provided assistance immediately.
• Does the payment gateway operate in different global markets?
  If so, you will be able to enter new markets quickly at affordable rates without the hassle of switching providers.
• Does the payment gateway provide add-ons?
  Are there free transactions every month? If there are, how much is the cost per transaction afterwards?

When you create an online store, you need to be sure that your payment gateways are set up properly, otherwise, you may end up losing orders due to customer dissatisfaction. You may also end up spending much higher transaction fees.

There are a lot of differences in payment gateways fees and services. With so much choice it’s easy to get overwhelmed. To simplify the process, contact us at Complete Cloud – we can help you pick payment gateways that will be best suited to your business. In our next article, we highlight what is required to keep your new payment gateway – and whole website – secure.

For updates join us at Google+