As a consumer, when you check out of your local convenience store, you may swipe your credit cards through a point-of-sale device and your gas, coffee, and donut are paid. But what if you are the retailer and your business is an online shopping site? It’s not like you have a card-swiping device at every customer’s PC! There must be a way for you to process that information. Essentially, that is the job that a payment gateway does for online retailers.
What is a Payment Gateway?
Online Payment gateways allow online merchants such as e-commerce & eStore owners or auction sellers to accept payments on website. They authorize the cardholder’s credit—that is, they check to ensure that the customer has enough money on their credit card to cover the charges. They then place a hold on that amount so the buyer can’t turn around and spend that same money elsewhere before it gets transferred to the retailer’s merchant account. Banks describes this as “the technology…necessary to consummate a payment transaction.”
A Payment Gateway is NOT a Merchant Account.
Many people confuse merchant accounts with payment gateways but they are not the same. Merchant account services act, for the most part, as a liaison between your business bank account and the payment gateway. When a customer places a product in the shopping cart in your online business their card is processed via the payment gateway. The money is then moved over to the merchant account service. The merchant account service then moves those newly captured funds to your business bank account.
3 Tips for choosing a Payment Gateway:
- Is it PCI-compliant? PCI-compliance means that the company’s security has been audited by a third party and found to be up to industry standards. Since a website payment gateway store all your customers’ credit card information (sparing you the stress), it also means you can sleep better at night, knowing your customers’ valuable information is safe and sound.
- Good customer support.
- Lastly, it is important that the payment integration services that you choose be integrated to the third-party solutions you are planning to use. That means things like store front platforms and shopping carts—you want them to be compatible with your gateway.
Payment gateway solutions will not only allow you to collect the monies from your sales, many also offer an array of security features, some of which will help you avoid becoming a victim of fraudulent orders! In the end, they will make your ecommerce business a less-stressful, more pleasant experience—for both you and your customers.