Ecommerce Spot

What is a payment gateway?

What is a payment gateway?

What is a payment gateway?

Most ecommerce sites want to accept credit cards. To accept credit cards online you need two components. One is a merchant account, usually with a bank. This allows you to accept credit cards, online or otherwise. The other piece is a payment gateway. This is a service that connects you website with your merchant account to process the payment. The payment gateway is the link between your website and your bank.
There are also "integrated merchant accounts". They have a merchant account and payment gateway integrated into a single service. They are more convenient, but often have high fees.

What will this cost me?

Merchant accounts usually charge a percentage of the transaction. They may also charge:
  • a setup fee
  • a monthly or yearly fee
  • a fixed amount per transaction

Before you shop around, you should know roughly the number of transactions per month and the average value of each transaction. Higher volume will normally give lower fees. Some banks might be reluctant to give a merchant account to a business with no trading history.

Payment gateways have similar fees. Many charge a fixed amount per transaction rather than a percentage. They will often have extra features (sometimes for a cost) such as fraud detection.

How does this integrate with my website?

There's a few ways to integrate with your website. Regardless of how you integrate, your shopping cart will need to support your payment gateway. Most shopping carts support most major payment gateways.

The first method is that the shopping cart lives on your site, and once the customer has filled their basket and is ready to pay, they are sent to a page on the payment gateway site. The shopping cart passes on the total cost and customer details (name, address, etc, if known) to the payment gateway. This is the easiest integration option, but is a jarring experience for the customer to suddenly see a different site at the time of typing in their credit card. This will likely lose you a percentage of your customers. A similar option allows changes to the appearance of the payment gateway's page to look more like your site. Different payment gateways allow different levels of customisation. You may need to know some HTML and CSS to do this.

The last option is to collect the payment on your site, but then use the API of the payment gateway to process the payment. An API is a way computers can talk to each other. When the customer enters their details on your site, your shopping cart then talks in the background to the payment gateway, which in turn tells your shopping cart if the transaction was successful. Your shopping cart responds appropriately depending on how it was programmed.

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