A payment gateway is required in order to take credit card payments only if you want to accept credit cards online. This means that payment gateways are essential for not just pure Internet businesses, they’re also important for brick and mortar stores that also want to maintain a website in order to sell to a wider audience across geographical barriers or when their physical store is closed.
What is a payment gateway?
A payment gateway is a software application service that
- is the final step in the sales process to ensure that customers pay for the goods/services they purchase
- makes online transactions secure and swift
- authorizes credit/debit cards and encrypts sensitive data
- serves as a conduit between the e-commerce website and the card issuing bank
- transfers your credit card transactions to your credit card processing company or processor so that the funds are released into your merchant account
- sends information to the card user from the card processor/processing company regarding approval or decline
- may provide additional options like addition of tax or conduct anti-fraud screening
- can sometimes process debit cards, e-Checks, or cryptocurrencies, in addition to credit cards.
Payment gateways are used by businesses that take orders over the Internet. This means that they’re mainly used in card-not-present transactions.
Advantages and disadvantages
Payment gateways ensure that transactions are swift, secure, and relatively affordable and they protect merchants and customers from fraud. They are very simple to use and anyone with a basic understanding of how to use the equipment can perform business transactions without expensive training or set-up. They’re quick and easy to install and merchants can set them up swiftly to begin accepting payments from customers.
Customers find shopping easier when they have more payment options. A survey conducted by the Baymard Institute reports that 8% of people ditched their shopping carts because there weren’t enough payment options. Most payment gateways today are feature-rich and provide customizable, convenient and affordable benefits. These include choice of payment options such as credit or debit cards, advanced security features, etc. The features you require according to your needs, preferences and budget can be turned on or selected. Surveys show that shoppers often prefer to use certain types of payment so you can customize your payment gateway to cater to your target customers.
On the other hand, payment gateways are software applications, which means that a blip or interruption of service can potentially harm your business. That’s why it’s important to partner with a reliable, reputable payment gateway provider to give your customers confidence. Your business can benefit greatly in terms of reach, ease and added value when you work with the right payment gateway provider.
For more information on whether a payment gateway is necessary for credit card payments, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.