Making sense of payment gateway services
Nobody gets into business to become a payments expert. But everyone needs to get paid, so it's important to understand a few things about payments to help you along your business journey. For those who own and operate small businesses, striking that balance means getting straight talk about how payments flow from your customers to your business bank account.
Payment gateways are a vital part of the payments ecosystem that makes the world of modern commerce possible. This express guide will explain payment getaways in plain language, answering questions posed by business owners and managers just like you.
What is a payment gateway?
A payment gateway is simply a connection point within the payment processing journey. A gateway connects your shopping cart, point of sale system, or virtual terminal to the next point within the processing journey of authorizing a payment. Payment gateways can be used for both in-store and eCommerce transactions.
A payment gateway is simply a connection point within the payment processing journey.
Does my business need a payment gateway?
It depends. For in-store transactions, your payment processor may already be using a gateway as part of your processing agreement.
For eCommerce, the more relevant question most businesses need to ask is “does my payment solution have a gateway built-in, or do I need to add a stand-alone gateway to accept credit cards?”
Payment providers often bundle gateway services with integrated solutions. For example, point-of-sale (POS) and eCommerce service providers often bundle gateway service with their in-store solutions. Your business may be using a gateway and not even know it.
How are payment gateways used?
Payment gateways are often invisible, but they serve an important function in allowing payment authorizations to happen seamlessly. Let’s look at some common real world payment scenarios to see how payment gateways fit in.
- You’ve developed an eCommerce website, you’ve purchased a shopping cart solution, and you’ve contracted with a reputable payments partner. A gateway is likely built right into your shopping cart solution.
- You’ve selected a point-of-sale (POS) solution that was recommended by your merchant bank that also provides credit card processing and gateway services as part of a comprehensive payments solution. You don’t need an additional gateway service.
- You are setting up a mail order / telephone order business and plan on processing orders on the web via a virtual terminal provided by your credit card processing partner. You still need an add-on payment gateway service. Your processing partner will help you with this solution.
- You’re working with an independent software vendor (ISV) that integrates payment functions directly into a branded app for your business. You probably don’t need an additional gateway service.
Payment gateways simplify essential payment processing functions so you can focus on your business.
What are the benefits of using a payment gateway?
Payment gateways offer tremendous benefits for businesses that accept credit and debit cards.
- Simplicity. Payment gateways simplify essential payment processing functions so you can focus on your business.
- Security. Payment gateways include security features like encryption that help protect your business by keeping sensitive credit card data safe from fraud.
- Cost effectiveness. Payment gateways are a convenient option for merchants that are seeking a turnkey payment solution with low and transparent costs.
- Flexibility. Payment gateways offer businesses easy options to connect to their credit card processor of choice, or even to multiple processors simultaneously.
How much do payment gateways cost?
Unfortunately there is no single, simple answer.
Payment gateways should not be confused with interchange or other fees from your credit card processor that are charged separately. In determining what payment gateway service may be the best fit, be sure to make apples-to-apples comparisons, comparing bundled solutions against other bundled solutions with the same set of functionality, for example.
Are you ready to learn more about how payment gateways can help your business? Whether you have a laundry list of questions or are ready to start accepting payments straight away, one of our payments experts can help. Give us a call and we’ll work with you to make payments work for your business.