Complete Guide To Payment Gateways For Ecommerce Sites

If you are planning to set up an online store then you would need to think about a payment gateway to ensure that your customers are able to make online payments through various channels in a safe and secure manner. Simply speaking, a payment gateway is an online version of the point-of-sale terminal located in a brick-and-mortar retail store.

The payment gateway is essential for your e-store because it uses advanced encryption for secure transactions and safe transfer of sensitive credit card details between the shopper, the merchant, and the payment processor. It also aids in detecting frauds and verification of credit card data such as credit limit and card validity.

How do payment gateways work?

A payment gateway is an e-commerce software application that acts as an interface between the banks of the shopper and the merchant and enables the use of credit/debit cards to transfer money from the shopper’s bank account to your account.

When a customer places an order through your e-store or m-store, the customer’s web browser encrypts the order information and sends it to merchant’s web server. The merchant’s server then sends the data to the payment gateway through SSL encrypted connection. This information goes to the payment processor who transfers the data to the card association. The credit card issuing bank authorizes or declines the transaction. The processor then forwards the response to the payment gateway, who in turn forwards it back to the merchant’s website. The merchant then takes the order and fulfills the transaction.

Some payment gateway service providers also check for fraud through latest techniques and calculate tax and shipping costs in real time prior to sending the authorization request to the payment processor.

Types of payment gateways

  1. Merchant side account: This is a popular type of payment gateway which requires the merchant to open an account. There are several benefits. Firstly, the entire payment process will happen on your own website and the customer will not be redirected to any un-familiar third-party payment site; secondly, you will get competitive rates and will save more money. But, you will need to ensure website safety to prevent frauds and misuse of credit card information; and you might not be able to accept some type of card payments.
  2. Secure order form with no merchant side account: Here the customer is redirected to the third-party payment processing page. The major advantage of this type of gateway is that you can set-up really fast and not worry about security as the service provider will have stringent fraud detection processes in place. But you will have to pay a higher rate of commission and per-transaction rate to the provider.

7 Questions to ask before you select a payment gateway

Is it safe for customers to give their credit card information?

Security one of the biggest factors in picking a payment gateway. A good payment gateway should have PCI level 1 payment gateway.The Payment Card Industry Compliance is a set of security standards designed to ensure that all companies that accept, process, store or transmit credit card information maintain a secure environment. A good payment system should have multiple checks to arrest fraudulent activity.

How good is their customer support?

Payment gateways, no matter how advanced or popular they are bound to run into issues. Issues could be anywhere from server failure or user internet failure. Failure of payment gateways lead to customer apprehension and could tarnish your brand with no fault of yours. Failure during the holiday season or seasonal discounts could mean the loss of money. How good is the support team? Do they have resource database for instant help? Do they have chat and call support? How do they handle emergency situations?

What is the pricing? Any hidden costs which making them look inexpensive?

As a merchant, you should pay attention to fee structure as you won’t get a clear picture based on the fee structure mentioned on the payment gateway website. There are typically 2 kinds of pricing in payment gateway systems.

  1. One wherein an initial setup cost is charged followed by a percentage for each transaction
  2. Second in which the setup cost is zero but you are charged only % of a transaction
  3. Few payment gateways even provide volume discounts if your ecommerce store is dealing with a high number of transaction each month.
  4. If you are selling internationally the % transaction charges might vary.

How is the experience on mobile?

Mobile is where most commerce transactions happen right now. But merchants usually give low priority to it. With mobile, a small pitfall in usability can hurt conversions heavily. See how the payment gateway flow is on the mobile phone before choosing a payment gateway. Ask your vendor for examples of their customers and go to their mobile checkout pages and test it out.

Where do you want to host the checkout?

There are two ways you can make payments possible through your online store.

API – Here you can integrate the vendor’s payment system right on your website. With this, your user can enter in his credit card details within your website. This can lead to higher conversion rates on your site. However, for this to be executed you should have a development team who can make your website PCI compliant and can implement the payment gateway on your site using an API. This usually takes time and is best to implement once you are scaling the business.

Hosted – Here the payment happens on the payment gateway vendor’s server. When the user tries to check out he is redirected to the Vendor’s page wherein he enter’s his credit card details and checks out. The advantage with this option is that you need not work on making your website PCI compliant. The drawback is that if the vendor you are working with has a non-optimized payment page and is not trusted by your user you might see a dip in conversions. This is a good option to start your online store with.

Do you give your users to pay using Digital Wallets?

Digital Wallets offer convenience to the user by giving an easy way to checkout without a need for entering their card details. Digital wallets increase repeat purchase and build a group of loyal customers. Examples of few digital wallets are Apple pay, Android pay and Paytm(India). Your payment gateway should give users an option to pay using a digital wallet. Checklist of payment gateways by a country which supports Apple Pay. Checklist of payment gateways by a country which supports Android Pay.

Is the payment gateway provider popular among your potential customers?

If your target market is dominant locally you should choose a payment gateway which is popular and trusted by the local audience. Familiarity breeds trust and having the payment gateway logo around during the checkout can help users know that his or her details are being used for a legit transaction.

Is the payment gateway compatible with your online store platform?

The payment gateway you choose should be compatible with your ecommerce platform. The service provider should have detailed documentation and tutorials on the integration of the payment gateway with your ecommerce platform. While selecting an ecommerce platform it is important to check if the platform is compatible with trusted payment gateway players in your target market geography.

Top Payment Gateways 2018


Authorize.Net is a stand-alone payment gateway which is highly feature-rich, reliable, and economical. If you already have a merchant account and a working e-commerce website, then it is easier to integrate Authorize.Net payment gateway. The fraud prevention tools are included free of cost. It is highly compatible and it offers pre-configured buttons for any type of store-front. You can fully customize your storefront through API access. It offers great merchant account features, e-commerce integration capabilities, and top gateway features. Overall it is one of the best payment gateways with over 375,000 merchants using the platform. But, for people looking for simplicity, ease-of-use, and quick set-up on a new website, Authorize.Net might require a bit more time and efforts. And if you do not wish to open a merchant account, then this payment gateway is not for you.


2. Flagship Merchant Services

Flagship Merchant Services is a great payment gateway and offers all that a business needs to start up or re-define their web store. Economical, reliable, secure, and feature-rich, Flagship offers easy e-commerce and integration. You can opt for simple HTML/XML based solution that is quick to implement and use, or the API based solution which is highly customizable. It also rates greatly in merchant account features and helps retailers get a merchant account quickly. The contract is monthly and can be changed or stopped anytime, so you don’t have to get tied up in a long-term agreement. It is a great service for small or medium business owners as it is quick, easy, and comes with all the ready-to-use features. You will need a merchant account for this gateway.

Visit Flagship Merchant Services

3. Intuit Payment Network

Intuit is again a good payment gateway that offers all the features and capabilities that you need to accept payments on your e-store. Intuit offers great deals for small businesses and start-ups. The monthly rates are considerably lower if you expect lesser sales, though it might turn out to be costly for large-volume sellers. A great capability offered by Intuit is integration with QuickBooks, as this makes account management seamless and saves a lot of time. Intuit has partnerships with Homestead, GoDaddy,, UltraCart, IA Modules, and PDG Software which makes it even easier to start-up your e-commerce website from scratch. Intuit also tops the charts in client support and has a vast array of informative videos, FAQs, guides and support team to help you. If you do not wish to use QuickBooks, then you will miss some of the cool features offered by Intuit.

Visit Intuit Payment Network

4. GoEmerchant

GoEmerchant is an appealing tool for people looking to build an e-commerce website from scratch as it offers e-commerce hosting, payment gateway, merchant services, QuickBooks integration, search engine optimization, fraud protection, web analytics, marketing tools, 24×7 support, low monthly fees, and a lot more. This all-inclusive e-commerce solution is great for start-ups. You might find that the pre-configured stores are a bit basic when compared to those offered by other providers. The solution is highly flexible and is easy-to-use even for people with minimal web-designing experience.

Visit GoEmerchant>>

5. Paypal

For many years people have been using PayPal to accept or make payments. The biggest advantage is that there is no hassle of opening a merchant account. With PayPal’s Website Payment Pro, clients can set-up a merchant account with ease and start accepting online payments. For individual sellers, amateur professionals, small businesses PayPal is a great solution, but for businesses with a larger volume of sales, PayPal will turn out to be expensive. It is extremely easy to implement and integrate with your shopping cart and the payments go directly to your account. The month-to-month service also saves merchants from a long-term contract. Though it offers fewer features than other providers, it brings a lot of reliability and security as it is an established player in the field of online payments. And, with quick set-up and hassle-free integration, PayPal Website Payment Pro definitely gets a thumbs-up.

Visit Paypal>>

After working 7+ years as a digital marketer for startups and large enterprises I quit my job to start EcommerceYogi. Here I share the exact same tactics which I have used to drive millions of users per month to e-commerce stores. Follow me on Linkedin and Twitter to stay connected.