Payment gateways and their working
A payment gateway is an important part of the electronic payment processing system. It sends client information to the merchant acquiring bank, which further processes the transaction.
Payment gateway systems are improving to keep up with changing consumer preferences and technological capabilities. Previously, terminals accepted credit cards with magnetic strips from customers and needed them to sign paper signatures. The signature phase could be replaced by a personal identification number (PIN) entered directly into the payment gateway hardware as chip technologies advance. Contactless purchases are now possible, and many customers opt to pay with their phones rather than conventional credit cards.
Online payment gateways will need APIs for the respective website in order to communicate with the payment processing network. Payment gateways inside stores will use a POS terminal to connect to the payment processing network via an electronic link through a phone line or the Internet.
Why do businesses need payment gateways?
Several people abandon their shopping carts if the checkout procedure is painful, complicated, or time-consuming. Therefore, you must create a speedy, seamless, and better checkout experience to retain existing customers and attract new ones.
In addition to improving the checkout experience, a payment gateway improves transaction security, multiple payment options, fraud control, recurring billing (subscriptions), and much more. To recap, a payment gateway increases overall revenue and brand value by increasing sales, decreasing cart abandonment, and enhancing customer trust.
What are payment gateway charges?
The expense incurred by business owners to support online payment processing through the chosen payment gateway on their website and/or app is referred to as payment gateway charges or fees. It is usually calculated as a percentage of the transaction value and varies depending on the consumers’ preferred payment method and the risk level involved.
Accepting online payments is easier with a payment gateway integrated into your website or app. It also helps with transaction management to keep operations running smoothly and provide rapid refunds and a real-time bank settlement service. As a result, you may think of payment gateway fees as the cost of providing all of these services.
What are the factors involved while determining payment gateway charges?
- Interchange rates
The exchange rate is the fee charged by credit card companies such as VISA and Mastercard to the receiving bank for each payment made with a credit card. This rate covers the issuing bank’s transaction handling costs as well as efforts made to reduce the risk of fraudulent transactions.
- Merchant fee
Depending on the type of business and gross number of transactions, most merchant account providers charge a minor fee in addition to the interchange rate.
- Security for payment
Payment gateway fees are also determined by how customers use their cards to make purchases, such as in-store, online, or over-the-phone transactions, each of which involves a distinct level of risk
Other determinants/ components of gateway charges
- Setting up fee
This is a one-time cost that you pay when you first sign up for a payment gateway. The charge is one-time only and will be used to integrate a payment gateway into your eCommerce web portal.
- Maintenance fee
You will be required to pay a predetermined sum of money or a fee to the payment gateway provider on a monthly/yearly basis to cover maintenance costs for the services offered by the payment gateway. This charge may increase if you sign up for more services. For example, a prominent payment gateway in India may provide you with an EMI or auto-billing service, which allows you to charge a predetermined amount to your client’s credit card each month for a product or service he or she has purchased. The payment gateway provider may levy an additional fee in this scenario.
- Merchant discount
The payment gateway provider will charge you this fee for each transaction your eCommerce site completes. The credit/debit card issuer, the internet gateway provider, and your merchant account provider all share these fees. When your sales increase, the cost of most payment gateways lowers.
- Integration fee
Sometimes the cost of integrating a payment gateway into a website or application can also be charged.
It is to be noted that Zaakpay does not charge a set-up and maintenance fee.
Factors to consider before selecting an apt payment gateway
- Comparing transaction fees is the first step. Look for payment gateways that have a fixed price.
- It would be a good idea to evaluate and research the many payment options that are supported, as having numerous options allows clients to pay using their preferred manner.
- Next, look at the currencies that the payment gateway accepts.
- It’s a plus point to have a payment gateway that allows for rapid checkout and doesn’t require registration.
- Payment gateways that process transactions swiftly will help you increase your cash flow.
- A payment gateway that provides you with comprehensive support both before and after installation is a significant plus.
Why are payment gateway charges applicable?
When you consider the overall picture of online sales and profits, the payment gateway charges paid to a service provider are almost little. Integrating the most appropriate payment gateway will provide you with a slew of fascinating benefits. Payment gateway fees help service providers cover a variety of costs, including operational costs, software maintenance, and payment security, to mention a few.
Begin by examining the features of accessible payment gateways and then matching them to your company’s requirements. Before making a final decision, make sure you consider all aspects of payment gateway selection.
Payment gateways provide you and your customers with the security and convenience of digital transactions. It is critical to deliver a smooth checkout experience to your clients in order to make your brand stand out in the hyper-competitive online industry. Hence, a small fee to pay should not be considered a burden. One must consider payment gateways like Zaakpay as they offer competitive rates and features.