A payment gateway is used to validate the credit card details of a customer in a secure manner. It is considered the equivalent of a point of sale terminal in a brick and mortar store, except that it’s for online transactions. The gateway will pass the customer’s financial information from the Internet to the banking network. It will then confirm whether the charge has been approved and convey that information back to the merchant’s website, and submit the charge for settlement if appropriate, at which point the payment is deduced from the buyer’s account into the merchant’s.
It’s important to note that a payment gateway is different from a merchant account. If you plan on selling through the Internet using credit cards, you will need both. The gateway is there to enable you to approve or decline a transaction, while a merchant account stores all the money received from a transaction, before it is deposited into your business’ bank account. Both a merchant account and a gateway will normally be provided by your merchant account provider.
Choosing the right payment gateway
There are several factors to take into consideration when choosing a payment gateway or a full service payment provider. First, you may want to consider the timeline. Some merchant account providers provide instant approval, whereas other providers typically take 3 to 4 weeks to set everything up.
Cost is another consideration. It is standard to charge around $600 to $900 for setup, but if you shop around, you can find a provider that has no setup fees.
Next, you may want to take into consideration the amount of time it takes for a gateway to deliver your funds. Timing can vary between different providers. Some gateways may hold onto the funds, or a percentage, for up to 30 days, while others pay out at regular intervals, such as once a week. The gold standard is to find an account that typically settles within 3 days after each transaction.
Another major concern is security. A good gateway will be level 1 compliant with the PCI DSS (Payment Card Industry Data Security Standard). Gateways can come with many other security features such as tokenization, fraud protection and screening tools, and others. Be sure it offers good encryption. Military-grade is ideal.
You’ll also probably want to look at the gateway’s support service, which can help make your experience much better. Ideally, it should offer 24/7/365 live customer support.
Finally, if you plan to do business with international clients, then it’s a good idea to make sure that your gateway accepts international and multi-currency payments.
For more information about payment gateways and how to find the best one suited for your business, or to open a merchant account, please call (888) 924-2743 or go to Charge.com.