With the diminishing use of cheques and the convenience of using credit or debit cards compared to cash, the 21st Century’s love affair with our flexible plastic friend goes from strength to strength. According to the latest stats from BT, half a million credit/debit card transactions take place every hour in the UK. In 2010, over £58 billion was spent in e-commerce transactions. For businesses then, a payment gateway is rapidly becoming an essential rather than a luxury.
Payment gateways are provided in a variety of ways from a number of different providers. In order to work out the best solution for your business, you’ll need first to decide what type of payment gateway you need.
Payment Gateways: Gateways to…what exactly?
Payment gateway is something of a catch all term to describe the method by which your customer’s card issuer, the card association (e.g. Visa, Mastercard), your merchant account provider and your bank all communicate with each other to verify the authenticity of a credit/debit card transaction and release the funds to your account. Often the company which provides your merchant account will also supply the payment gateway, simplifying the process somewhat. Payment gateways are therefore the online equivalent of the PDQ (chip and PIN) machines and take the form of a virtual terminal or an online payments portal. They encrypt all the data that flows between the parties and provide notification of the success or failure of the payment request.
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Types of Payment Gateway
Which type of payment gateway is most appropriate for a business obviously depends on what’s being sold, how it’s being sold and to whom. Payment gateways take two distinct forms:
For businesses who sell by phone or mail-order. A web based payment portal is provided for entry of the customers card details. The transaction is verified within seconds and comprehensive reporting tools are provided to monitor transactions and calculate revenues.
These terminals ‘plug-in’ to your ecommerce website allowing automated online card payments where the details are entered by the customers themselves. Again, payment confirmation occurs almost instantly and reporting tools are provided.
Payment Gateway Providers: What to Look For
When choosing between payment gateway providers there are a number of factors you’ll wish to consider:
- Standing charges – a monthly charge for provision of the service
- PCI DSS Compliance – does the payment gateway provider comply with industry standard data protection and anti-fraud measures?
- Turnaround time – how long will you have to wait between the transaction verification and the money being released to your account?
- Automation – approved transaction details are sent to your merchant account provider in batches. Is this done automatically or will you need to batch receipts manually?
Quotes for Payment Gateways
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