Congratulations, you’ve finally taken the plunge to become an entrepreneur, be your own boss and start your own company! You surely have everything figured out to get that online cash register ringing, but a critical part of this journey is selecting the right payment processing partner for your business – just as in life, the selection of the right partner can completely change the outlook of your future!
Not just from a purely operational point of view, a trustworthy and reliable payment gateway also impacts your customer’s confidence in your business. Too many failed transactions, poor user interface, and inadequate security, amongst other things, will not only make for an upset customer but might also cost you the customer altogether.
Deciding from the various options available can seem daunting. Don’t worry, we have prepared a guide of 5 fundamental aspects to consider. Let’s start by understanding the players working behind-the-scenes and the process involved. Thereafter, we will analyse the parameters that you should consider to evaluate a payment gateway.
How does it all happen?
Firstly, the different stakeholders in the payment process are:
a. Merchant – That’s you and your business.
b. Customers – The people buying from your business.
c. Payment Gateway – The bridge that connects the shopping cart on your site to a
payment processing network (for e.g. MobiKwik, Paytm, Instamojo, etc.).
d. Payment Processor – Moves the transaction through the processing network and
generates a bill for the customer (quite often your merchant bank functions as your
payment processor).
Thereafter, the payment process is completed in 4 simple steps:
– Collection – Compiling the purchase and payment details of the customer and sharing
it with the payment gateway.
– Authentication – Verifying the billing information and ensuring sufficient balance in
the customer’s account.
– Authorisation – Generating order confirmation and a bill after approval of the
transaction – you can deliver your products or services to the customer now!
– Settlement – Delivering the amount to your bank account – this could be done real-time
or may take several business days.
That’s it!
How much do you have to pay?
The most important factor for your startup or business is the charges levied by the payment gateway. This is typically split into 3 parts:
a. One-time setup Fee – Certain payment gateways charge an initial amount to start their services.
b. Transaction Deduction Rate (TDR) – Percentage of the total transaction value charged for each transaction.
c. Maintenance charge – Operational costs charged typically on an annual basis.
While the ecommerce giants can afford all pricing structures, for start-ups, every penny counts! Leverage your negotiation skills when you approach a payment gateway provider. Choose a payment gateway provider willing to waive off the set-up charge and the maintenance charges. Your TDRs depend upon the monthly volume of your business – the more the volume, the lower the TDR. Even if those volumes are not flowing in at the beginning, you can always renegotiate the TDR as your sales begin to pick up.
Ensure a secure payments process
With the rising threat of data breaches, it is necessary to keep in place safeguards that protect your customers’ data. This challenge is biggest during the payments process due to the highly sensitive nature of the information shared.
Thus, choosing a secure payment gateway is extremely important and below is a checklist that you could use to ensure that your choice tackles this threat effectively:
a. SSL Certification,
b. PCI DSS Compliance & Certification,
c. 128-bit encryption and
d. Two-factor authentication
A payment gateway ticking all boxes on this checklist will allow you to fulfill the implicit promise you have made to your customers – keeping their data secure.
Enrich your customer experience
Selling services and products online is a tricky business. The customers’ attention and confidence in your business should not waiver during the buying journey. This becomes even more important as they reach the final purchase decision – the payment gateway.
Thus, you should choose a payment gateway that satisfies the following criteria:
a. Establishes trust by keeping familiar elements: This includes use of familiar logos for payment methods such as Visa, MasterCard; explanation accompanying any off-site payment methods.
b. Integration via API: An integrated API ensures that the user stays on your platform and is not unnecessarily alarmed by being led away from a website they trust – your website!
c. Pay with minimal effort (clicks): The experience provided by the payment gateway should be similar to the one provided by your website in terms of loading time and length of pages.
Doing so would ensure that your users have a great experience even at the final stage of their buying journey thereby increasing the possibility of repeat purchases.
What metrics should you check?
Some important metrics to compare various payment gateways include:
a. Transaction Success Rate: A transaction can fail due to issues arising at any of the players involved – issuing bank, acquiring bank, payment gateway or the customer. Thus, it is in your best interests to choose a payment gateway that minimises the failure rate. It usually ranges between 0.5% – 15% depending upon the mode of payment.
b. Time taken to set up payment gateway: It could range from a few minutes to days depending on the effort and expertise needed to integrate the payment gateway (API) to your website. Choosing one that offers complete online onboarding would save your time on any paperwork.
c. Time taken for settlement: It could range between 2 to 5 business days. Once the online transaction is complete, it is imperative that you receive the money in your bank account in the shortest amount of time. Thus, choose the payment gateway that offers the shortest settlement period.
After evaluating the above points, you will have a better clarity of your requirements and the best fix for your business. Start exploring MobiKwik Payment Gateway here.
References:
https://www.linkedin.com/pulse/payment-gateways-101-what-know-before-choosing-provider-josh-l-viar/
https://gocardless.com/guides/posts/payment-gateways/
https://woocommerce.com/2015/07/payment-gateway-guide/
https://www.linkedin.com/pulse/payment-gateways-101-what-know-before-choosing-provider-josh-l-viar/
https://www.paytabs.com/en/security-imperative-payment-gateways/
http://www.citruspay.com/features-security.html
https://www.paytabs.com/en/security-imperative-payment-gateways/
https://woocommerce.com/2016/03/payment-gateway-ux/
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