How to find the best payment gateway service provider

There are quite a few moving parts that make up a transaction. As a merchant, you have to be fully aware of how each of these moving parts works. From the swipe of the card to the deposit of funds into your bank account, understanding the process is crucial to ensure you’re providing great customer service and only paying for what you actually want and need.

One of the cogs in that very complicated piece of machinery is the payment gateway. Unfortunately, it’s one of the least well understood parts of the process too but is absolutely the most important. Here, we’ll take a look at exactly what a payment gateway service provider is, how it differs from some of the other cogs in the machine and how you can find the best one for your business.

What is a payment gateway?

When a customer comes into your store and wants to pay for a product or service with a credit card, you have to be able to take that information and translate it into a universal language that the banking system can understand. The payment gateway does just that. Whether it’s online or in-store, the payment gateway takes the customer’s credit card information, encrypts it and packages it to be sent along to the payment processor.

A quick reminder: Payments involve a lot of different players and steps. First, a customer swipes their card or inputs their information into your website. Your payment gateway packages that and sends it to the payment processor who, using the various card networks like Visa and Mastercard, query the customer’s account to ensure the charge is permitted. If approved, the merchant will receive a payment authorization and the transaction is complete. At the end of the day, all of the merchant’s sales are batched and sent for clearance.

Payment gateways are so important because they are the first in a line of steps to get payments settled. This means that several items need to be top notch:

1. Reliability: Payment gateways need to work all the time, no matter what. Without a payment gateway, merchants won’t be able to take any payments.
2. Security: The security of a transaction starts with the first step, ensuring that the customer’s payment details are secure.
3. Ease of use: Merchants and customers alike need to be able to operate gateways quickly and easily.

Payment Gateways vs. Payment Processors

They kind of sound the same, we know. But they’re importantly different and both are essential. This is especially true in the world of online payments.

Payment Processors

• Payment processors manage various aspects of the transaction, including authorization, settlement, and reporting. They communicate with the issuing bank and the acquiring bank to ensure that the transaction is valid and that funds can be transferred.
• Examples: Stripe, Square, Adyen, and PayPal (which also acts as a payment processor in addition to being a payment gateway).

Payment Gateways 

• A payment gateway serves as an encrypted bridge between the customer, the merchant, and the payment processor; they also offer fraud detection, currency conversion and integration with e-commerce.
• Examples: Authorize.Net, Braintree, and 2Checkout.

Sometimes they’re both!

Generally these two activities are done by two different companies. Every now and again, however, they’re the same company. PayPal and Stripe, for example, are both a gateway and a processor. Having these two services together can provide some efficiencies and make things a bit more straightforward. If you’re a smaller business and/ or don’t want to be concerned with managing a few different vendors, having these two services combined may work well. You will, however, often pay more per transaction for this ease.

So how do I find the best?

As with all things, finding the best payment gateway for you is going to depend on your specific situation. Make sure you carefully research what you need your payment gateway to do and perhaps more importantly, what you don’t need it to do. No need to pay for something you’ll never use!

And before we get into seeing what’s best, remember that Swipesum can help you take care of all of this. Why sweat whether you’re getting a good deal or not? Let us take care of the decision process for you; we’ll work hard on your behalf to find the best payment gateway for you, saving you time and money.

Size and volume

Payment gateways generally charge a percentage of the sale plus a fixed fee for their trouble. It’s crucially important that you look at the pricing tiers for the size of business and volume of transactions you plan to undertake. Sometimes payment gateways will offer different prices if you bring in more transactions. Shopping around is key.

Bundling

There are going to be pros and cons with bringing more services under one roof but the fact remains that you can realize some money and time savings by doing so. Payment gateway providers often offer merchant accounts, for example, and having one can often lower your per transaction fees. 

International or domestic

Most payment gateways will be able to handle international transactions but they may charge additional fees. Some of them will only work domestically, meaning you’ll have to get a different service if you do business internationally.

Integration

Make sure your chosen payment gateway provider integrates seamlessly with your website, even if you don’t sell merchandise online. You may not be selling merchandise online at the moment but if your payment gateway doesn’t integrate, you’ll never have the option.

Reporting

Make sure you can get the reports and data you’d like out of your payment gateway. If your business is small or simple, this may not be as important but as you diversify into different products and services, you’ll want to make sure you understand exactly where the dollars are going.

Research, research, research

Say it once and say it again, it’s crucial that you do your research and understand exactly what you’re getting. Not all payment gateways are created equal - ensure the gateway you select matches your goals and provides the service you need in a secure, compliant fashion.

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