With the convenience of shopping online, most customers prefer to purchase goods from the internet rather than in a brick-and-mortar store. That’s why it’s essential for businesses to have an eCommerce site to boost sales. From the perspective of customers, the online payment procedure may look quite simple. However, the entire process is quite complex.
As an eCommerce business owner, you need to avail yourself of the services of a payment processor too. They will set up your eCommerce merchant account through which you will be able to receive your funds. However, it’s important to note that payment gateway and payment processor are different terms.
If you’re interested in knowing about payment gateway, how it differs from a payment processor, and its role in eCommerce, keep reading this article!
What Is a Payment Gateway?
A payment gateway is software that authorizes a transaction made by the customer. It creates a safe channel between the bank, the customer, and your store. Therefore, it helps you securely process payments to reduce the risk of fraud for sellers and customers.
It can be integrated with other accounting software, tax management tool, or eCommerce platforms. The most common examples of payment gateway are:
- Amazon Pay
- Apple Pay
What Is the Role of Payment Gateways in eCommerce?
You need to access the services of a payment gateway to process card transactions. Since it authorizes transactions, you won’t be able to receive funds in your bank account without a payment gateway.
Furthermore, it also accepts and handles online payments. As soon as a customer enters their credit/debit card information while making an online purchase, it temporarily stores the data in a secure way.
After the customer enters the credit/debit card information, a transit takes place between the banks and payment processors. And a payment gateway will make sure that the route is properly encrypted to keep sensitive info safe from the hands of cybercriminals.
Of course, this will maintain the trust between your business and your customers and prevent your goodwill from tarnishing.
Moreover, the payment gateway streamlines the reconciliation and bookkeeping process for eCommerce businesses by providing in-depth reports regularly.
How Is a Payment Gateway Different from a Payment Processor?
Although both terms are used interchangeably, it’s imperative to remember that they are not the same. Most payment processors (also called payment service providers) now offer the services of a payment gateway for a complete service package.
A payment processor creates a channel between the seller’s and customer’s banks. It will set up a merchant account for you, so you can receive funds in your account smoothly after releasing the funds once they are verified.
On the other hand, the primary goal of a payment gateway is to streamline your checkout process and provide an exceptional shopping experience to the customers on your eCommerce store by encrypting confidential data and securely processing payments.
How to Choose the Right Payment Gateway for Your Business?
Since there are a wide variety of payment gateway service providers, you need to make sure you choose the one that is right for your eCommerce business because the right one will impact your brand’s bottom line.
Asking about the pricing, terms, features, payment methods, integrations, customer support service, currency options, and flexibility of the plan will facilitate you in making an informed decision.