You need a proper payment gateway because it is the one that validates a shopper’s credit card details and ensures you receive payments.
A payment gateway is simply a service that allows credit card payments for on- and offline companies. It is more or less like a physical POS terminal in a restaurant or shop. It enables a customer to present their credit card details and safely passes this confidential financial info to the merchant, and then further to the bank.
It is through the payment gateway that you learn whether the cardholder’s bank has approved the charge. After that, it submits these charges for settlement. Settlement involves deduction of the payment from the buyer’s credit card account; and depositing into the merchant’s account.
How payment gateways operate
Payment gateways work in four easy steps:
- Collection – Gateway collects client financial info when a buyer adds it to the payment page.
- Authentication – The gateway then verifies this information, and securely sends it your business bank account.
- Authorization – Here, the payment gateway approves the sale and you the merchant is free to deliver the paid-for product or service.
- Settlement – Finally, the bank verifies this transaction data, and the amount from the sale is deposited to the retailer’s account. The payment gateway determines how fast the money arrives in your account.
What Are the Requirements for Taking Payments With A Gateway
- A business bank account
- A business plan and perhaps a page summary about your business’ operations
- A website (for online traders)
- A merchant account
What to Look For When Picking A Payment Gateway
Here are useful questions to help you select a competent payment gateway.
- How soon can you start in on taking payments?
A first-class payment service provider should get a merchant account ready complete with a payment gateway in 3 to 4 weeks. But some, like PayPal, may sign you in and allow you start accepting buyer credit cards right away.
2. What’s the cost of a payment gateway?
Before committing to a gateway provider, be sure to go through the fee structure. Consider set-up, transaction and administration costs.
For retailers that take low volumes of payments, try avoiding costly setup fees and high monthly fees.
3. How soon will you be receiving funds from a sale?
While you are informed when payment is approved, it lasts a few days for it to be settled. Moreover, the timing varies from one provider to the next.
There are gateway providers who even hold onto a merchant’s funds (or a percentage of it) for as long as 30 days while some settle funds as fast as on the next day.
4. Does the gateway allow international payments?
Also, if you’re looking to accept international payments, be sure to find out if the gateway offers global/multicurrency payments.
What’s more, find out if these multi-currency or offshore payments will require you to have a merchant account in a given country.
5. Is the Payment Gateway Secure Enough?
When it comes to taking payments, security remains a key concern. Be sure your provider is level 1 compliant with all Payment Industry standards and offers in-built security facilities like tokenization.
Also, look into the screening and anti-fraud tools they use. The payment gateway should offer several fraud protection tools like filters.
Don’t just commit to a payment gateway before inquiring the service details when you know the questions that can get you an experienced service provider.