Having a payment gateway is the proactive approach of every merchant towards keeping their business running smoothly and customers happy. The right payment gateway not only provides your customers with a hassle-free checkout experience, but also allows you to receive payments, process invoices, and make mass payouts in an easy and affordable way. But to enjoy all these benefits, it is very important to choose a payment gateway carefully. If you’re planning to do the same, then this article is for you. Here, we will discuss all the key components of an online payment gateway. Knowing the major components will help you make the right selection. So, let’s begin!
Payment gateway provides a safe and speedy payment processing environment to the customers as well as merchants.
Key Components of Payment Gateway
Below are the key components of a payment gateway :
1.Integration with Multiple Payment Processors
A payment gateway can integrate with multiple payment processors. This offers the merchants the flexibility to select from a variety of options when selecting the bank they wish to use for creating a settlement account. Further, this also allows you to provide competitive transaction rates to your customers. The reason is, different payment processors have different rates depending on the volume of transactions.
2. Customer Experience
One of the main reasons for having a payment gateway is to provide your customers with a safe, speedy and smooth payment processing environment. In general, there are two types of payment gateways – hosted and self-hosted.
The hosted payment gateways direct your customers to the page of the payment service provider to complete their payment. They are very easy to integrate, secure and provide a quick checkout process.
On the other hand, self-hosted payment gateways allow your customers to make payments without leaving the site. After putting their favourite products in the cart, when your customers reach the checkout page, they can select their desired payment method and make quick payments.
Although both types of payment gateways are great, hosted payment gateways have got a slight edge over the self-hosted ones as they offer a variety of payment options and are easy to integrate. You can choose any one that aligns with your requirements.
Further, payment gateways also help you gain the trust of your customers. Because they are highly secured, your customers don’t have to worry about the security of their confidential data.
3. Exceptional Security
Although simplicity and speed are among the best qualities of a payment gateway, tight security is what makes it truly desirable for ecommerce businesses. The top payment gateways provide a secure payment processing environment to both the customers and the merchants. Almost all of them are PCI-DSS compliant, which is an international security standard for handling major card payments. Apart from this, some payment gateways also come with several additional security features like fraud detection, two-factor authentication, data encryption, GDPR compliance, etc.
4. Multiple Payment Methods
Online payment gateways allow merchants to collect payments via multiple payment methods. They can provide their customers with the freedom of using their preferred payment option, be it credit card, debit card, netbanking, UPI, digital wallets/cheques, and so on. By doing so, your customers are not forced to use any specific payment mode.
Another great thing about this feature is, it lets you operate your business in the global markets with ease. You can facilitate your international customers by providing them with the popular payment methods of their region. In this way, you can build a sense of trust and authority in your global customers.
5. Transaction Fees and Other Charges
Transaction fee is a small amount every payment gateway provider charges on a per-transaction basis. It is a reasonable charge and is totally worth the amazing features, functionalities, and security you get. Although transaction rates vary from one payment gateway to another, they greatly depend on the factors like the type of transaction, volume of transaction, location, payment method, etc.
Apart from this, the other payment gateway charges include the set-up and maintenance fees. The good news is, some payment gateways offer zero initial set-up cost, which means you don’t have to pay anything for integrating the right PG with your site. Others may come with a fixed small amount of one-time setup fee, which is totally worth the services you’ll get. As far as the maintenance charges are concerned, they are variable and need to be paid on a fixed interval of time. The maintenance services make sure your payment processing happens in a frictionless manner.
6. Payment Reconciliation
Payment reconciliation is the process of matching the transactions recorded in a payment gateway transaction to the total account balance of the merchant. It is a very important step, which every merchant needs to take at the end of the day, week, or month. Most of the technologically advanced payment gateways offer a simple and easy reconciliation process. They come with advanced dashboards and analytics features that help you access and view all your transactions on a single screen, and with a few clicks.
Here are the details most of the payment gateways provide to help you with reconciliation :
- Transaction amount, time, and date
- Unique transaction number to identify each payment
- Total amount of settlement
- Merchant Discount Rate
- Date of settlement
Using these details, you can easily keep an eye on your incoming revenue.
7. Instant Payment Settlement
If you don’t already know, the settlement cycle is the number of days your earned funds take to reflect in your account. In other words, it is the time taken by the customer’s money to reach your merchant account after making a transaction. Here is how this process works:
Once a customer makes payment after purchasing an item, the amount is received by the payment gateway’s acquire bank. After that, the PG transfers this amount to your merchant account. Note that this process doesn’t get completed in a single day. Generally, the standard settlement cycle is T+2 days. Here, T is the date of transaction, the day when the customer makes the payment after completing the purchase. In fact, the settlement period can be much longer than T+2 days.
But don’t worry, there are some great payment gateways that offer the facility of instant settlement. This means you can access the funds you’ve earned on the same day.
8. Recurring Payments
The best payment gateways offer recurring payments functionality. Using it, you can charge your customers on a subscription basis and even automate your entire invoicing process. Besides, you can maintain a smooth cash flow, provide better customer experience, improve retention rate and make informed decisions for your business.
So, these are some of the key components of a payment gateway. Having a payment system with all these features and functionalities is no less than a boon for a business. If you’re planning to get one for your business, make sure to look for all these features.