Online shopping over the next couple of years is expected to grow on a massive scale. Worldwide, e-commerce sales surpassed $4.2 trillion in 2020, and those numbers will only continue to grow. Now that consumers are growing used to the convenience of shopping for everything online, there really is no going back.
Speed and convenience is the name of the game. It’s what consumers have grown to expect: fast payment processing that is convenient in every way and safe to use. To make this happen and easily maintain it, e-commerce companies need industry-leading payment processing and the right payment gateway.
If you’re unfamiliar with these terms or how they really work, this information will help you become more familiar and know how to choose the right payment processor for your e-commerce business – and why it really matters.
Payment Processors vs. Payment Gateways
So what are payment gateways? And what’s the difference between a gateway and a processor? Payment gateways simply facilitate purchases when a credit or debit card is not physically present. Of course, this makes them a must-have for an e-commerce business. In short, it creates a secure encrypted connection to the card-issuing bank.
Meanwhile, a payment processor facilitates the transaction between individual accounts. For example, your merchant account, the bank that issued your customers’ credit card, and your bank. While most payment processors provide the equipment you need, not all will offer payment gateway services.
Why Choosing the Right Provider is Critical
There are many reasons why you might be looking for payment processing services, from looking to increase existing sales to improving your customers’ satisfaction and keeping up with the latest trends. Regardless of the reason, selecting the most suitable provider is crucial. It can not only impact your bottom line but also how often customers return to your business.
Every business type and industry is different. You need to make sure the provider you’re aligning with understands your needs and the challenges you face. If you experience high chargeback rates, deal with high volume sales or face frequent fraud attempts, your processor needs to know how to handle it and offer the right support and tools.
Some key points to look for:
- Convenience. You not only want your company’s operations to run smoothly but also provide the best experience possible for your customers. Make sure the provider you choose includes simple forms, protect customers’ personal details and their systems easily integrates with existing software.
- Fraud prevention. Ecommerce stores are huge targets for fraudsters, and the threats just keep growing. A reputable, industry-leading provider will offer automated security features as part of their product, making it easy for you to not only manage fraud but prevent it.
- Overall cost. It’s important to keep an eye on those tiny details and hidden fees – they add up very quickly. Most payment gateways and payment processors will charge a monthly fee for their services and a percentage of each transaction. Just be sure you read the fine print.
All in all, before you commit, make sure you know exactly what services your business needs, the biggest challenges you face (e.g. fraud), and the direction you want your e-commerce business to go. Then make sure the provider you choose understands your business type and industry and can create a custom product that fits your needs (e.g. square merchant account).