Payment gateways are vital to online sales. If you want to sell products or services online, your website or application will need a payment gateway. A payment gateway determines which types of credit and debit cards and other payment methods are accepted.
As a result, choosing the right payment gateway for your online business is critical. The more online payments your store can accept, the greater its potential to generate profits. However, there are different types of payment gateways. So how do you choose the right payment gateway?
This post will explain what an integrated payment gateway is and how it differs from hosted payment gateways. However, before we explore the differences between integrated and hosted payment gateways, let’s quickly explain what a payment gateway is.
What Is a Payment Gateway?
A payment gateway enables an online store to process credit card transactions and other forms of electronic payment. A payment gateway is like a virtual cash register or POS system.
A solid payment gateway needs to be more than a payment processor. In addition to payment processing, a payment gateway should encrypt payment details to ensure user security and swiftly transfer funds into your company’s bank account.
It is important to remember that not all payment gateways are equal. For example, just because one payment gateway accepts payments from Apple Pay does not mean another payment gateway will.
Therefore, your business needs to understand how its target audience prefers to pay for products and services online and which payment gateway accepts the payments most vital to your organization’s success.
The Different Types of Payment Gateways
There are two types of payment gateways, hosted and integrated. There are pros and cons to each payment gateway approach. Let’s take a closer look at each so your business can determine which type of payment gateway is right for its operations.
Hosted Payment Gateways
A hosted payment gateway redirects customers to a third-party website or payment platform to complete purchases. Once the purchase is complete, the user is redirected back to the seller’s web page to receive translation confirmation.
The major upside to a hosted payment gateway is that the payment gateway provider handles all payment processing. In addition, all credit card data is stored by the payment service providers, so your business doesn’t have to worry about PCI compliance.
In addition, integrating a hosted payment gateway is simpler than the integrated payment gateway alternative.
However, there are cons to hosted payment gateways. Your organization won’t have very much control over the payment gateway. Your customers might not be as trusting of a third-party payment gateway, and redirecting customers off your website can hurt your conversion and retention rates.
If you want a custom payment gateway that reflects the unique nature of your brand, a hosted gateway is not the best choice for your organization. Hosted payment gateways best serve small or local businesses more comfortable using an external payment processor.
Integrated Payment Gateways
An integrated payment gateway lets customers pay directly through your organization’s website. Of course, your business could build its payment gateway, but most businesses use white-label payment gateway providers.
Payment gateway integration is accomplished through the use of APIs. However, many businesses want to integrate payment gateway services with custom features and branding. If you want to integrate payment gateway services with custom features and branding, you will need experienced developers.
In addition to requiring custom development, your business will need to obtain PCI/DSS compliance because it will be responsible for storing and securing customer transaction data and verifying transactions.
Integrated payment gateways give your business complete control over its payment system and merchant account. This solution enables businesses to provide fully branded, custom experiences and retain control over their payment processing flow.
Integrated, or non-hosted payment gateways, are best suited for medium and large-sized businesses that want to deliver a better User Experience and control the branding of their gateway.
Important Aspects of an Integrated Gateway to Consider
Not all payment gateways are equal. There are a few aspects of gateways that your organization should consider before making a final decision. The facets your organization should closely consider include the following:
- API quality
- Payment features
If you have chosen an integrated payment gateway, the quality of the API is vital. Some APIs are easier to integrate than others and provide more documentation and support resources.
How easy is it to integrate the API? Read reviews from other developers to discover what other people think about the API. A good API should be flexible and simple to implement either directly through code or via an SDK.
In addition, a quality API should include code samples that can be copied and pasted into your project. These code samples reduce errors and accelerate the integration process.
Scrutinize API quality before you make a final decision.
Payment gateways don’t always accept every form of payment. As a result, your organization must evaluate the payment features available and compare them to the methods most valuable to your business and customers.
For example, if you sell many products internationally, you need a payment gateway that accepts foreign currency payments and credit card transactions. Review API documentation and features carefully to ensure your chosen gateway aligns with your business needs.
Security is paramount when choosing a payment gateway for your business. You need to ensure that your chosen gateway is compliant with PCI regulations. In addition, you should also review fraud and chargeback management tools.
Your organization should prioritize security features above almost everything else. Your business is responsible for protecting the customers. In addition, it is important to protect the interests of the business and ensure that fraud and chargebacks are minimized.
It is important to consider the level of support you will receive from a gateway provider. A good gateway should make your life easier. If your gateway is causing issues and making life difficult for your organization, it is a bad payment gateway.
Your organization should review support documentation and other resources before making a decision. A good payment gateway platform will have rich support resources for developers and your organization when it comes to implementations and help configuring solutions for your product.
Most businesses prefer an integrated gateway over a hosted solution because they have greater control over the features and branding. In addition, it is rarely helpful to redirect users off your website or application.
If you want to learn more about integrated payment gateways, reach out to an experienced web app development partner like Koombea.