We share a guide to help you determine the best payment gateway for your online store.
As we have seen in other posts, payment gateways can make an important difference in the shopping experience, that’s why you should spend time evaluating which payment gateways are best for your eCommerce.
Choosing them wrong one can translate into a high cart abandonment rate and a low conversion rate, so today we will dedicate ourselves to understanding what they are, how they work and which are the main payment gateways in Mexico; and we will also give you some tips to help you choose the best one.
What is a payment gateway?
The payment gateway is the service that works as an intermediary between an online store and the payment processor that receives the money from a customer. Basically, it is a software integrated in the web, which registers the payment information given by the customer, to send it securely to the paying bank, through the payment processor (i.e. the channel of interconnection of the payment information between the acquiring bank of the merchant and the issuing bank of the payment card).
It is a vital tool in eCommerce that has two functions; the first is to maintain communication between the online store and the banking centers. The second function is to maintain transaction security for both the customer and the merchant.
How payment gateways work
Payment gateways work by doing several steps in a few seconds. The process is more or less as follows:
- After the customer selects the products and proceeds to checkout, your website displays a form to enter the payment information (either their debit or credit card or PayPal account).
- The customer clicks on pay, then the information is passed encrypted, using SSL or TLS protocol to the payment gateway.
- The payment gateway sends the information to the payment processor, which in turn sends it to the customer’s card system (VISA, MasterCard or American Express, for example).
- The card system is responsible for verifying with the customer’s bank that the data provided is correct and that the account has sufficient funds for the transaction.
- The result of the verification goes back to the payment processor, which in turn sends it to the payment gateway, who informs the customer and your business of the result with a short message: payment accepted, pending or cancelled.
- At the end of the day, the sum of all transactions made on the site is sent to the merchant’s bank account, deducting the commissions of the card system, issuing bank and payment process, and others.
The keys to choose the best payment gateway
As you can imagine, there are several payment gateways available on the market, but if you don’t know which one is the best for your business, here are some keys for you to evaluate them and choose the best one.
It is always best not to complicate the integration of the payment gateway, especially when you already have the online store completely designed. It is best not to complicate the installation, so choose the one that does not ask for any extra plugin.
If you have decided to implement a virtual point of sale terminal, consider that the process may take longer, because you have to have the permission of the bank and the supplier.
2. Cost of the service
If you are interested in making a quick and easy comparison on the price of payment gateways, you can use Payment Brain, but it is best not to skimp and choose the cheapest option to save money, because this can make you lose more money in the long run.
In addition, you have to evaluate the commissions that the payment gateway charges on each transaction, for example PayPal, can charge commissions that are excessive for small businesses, as they usually go between 1.9 and 3.4%. While in a virtual point of sale the commissions depend on what the bank stipulates.
An important point to determine the best payment gateway is the security they can offer, for this there are several locks that can help you assess the level of security of payment gateways, for example AVS (Address Verification System) with which the authenticity of the owner of the card is identified, thus verifying that it is the holder of the same. It is an anti-fraud mechanism that requests the fiscal address to which the card is linked.
Now that you know what a payment gateway is and how it works, and you have criteria to compare and choose the best one for your business; it is time to introduce you to the different options:
- Paypal is the most recognized payment method today, but its years of experience have also placed it as one of the best payment gateways today, it has worldwide presence, and it offers immediacy in the purchase and verification process. Its strongest advantages are the ease of integration to your website and its popularity, especially among the under 40s. However, its biggest disadvantage is its commissions.
- Stripe is an ideal platform if you have subscription services or a marketplace, one of its advantages is that it has been redesigned to make payments easier, it even works well from mobile devices, another advantage is that it adapts very easily.
- Payu is another of the most used payment gateways in the world, in Mexico it offers the advantage of accepting payments made from convenience stores such as Oxxo, Seven Eleven or Farmacias del Ahorro. In addition, the integration to your store is very simple. The main disadvantage is that it does not offer interest-free month plans, and it does not have a physical point-of-sale terminal.
- 2CheckOut is one of the most used payment gateways and this is partly due to its ease of integration and customer support. However, one of its main disadvantages is that it does not have a physical terminal, and it does not support bank transfers or bank deposits.
- Some banks offer this service and the main advantage is that the commissions are usually lower than with other virtual platforms. However, the main disadvantages are the difficulty to process the transaction and the difficult integration of the service in our online store.
- ComproPago is a completely Mexican payment gateway that has the advantage of verifying the payment quickly, it can also charge by SMS and receives transfers by SPEI. The most important disadvantage is that it does not accept payment by credit and debit cards.
- Banwire is another Mexican payment gateway, this one is very complete, as it has a simple integration and API, accepts payments with credit cards, debit cards, from convenience stores, interbank transfers, it also has a mobile point of sale terminal. The most obvious disadvantage is the difficulty to create an account in the gateway, because you have to submit several documents for it, also the integration is more complicated than with others and you can only receive the money on Tuesdays and Fridays.
If you have evaluated the offer of payment gateways and you can’t decide on just one, what you can do is to use a gateway integrator software, this will help you to improve the service for your customers and can increase the conversion rate in your eCommerce.
In conclusion, stopping to evaluate each payment gateway is the best thing you can do for your business. A bad experience with this service can mean big losses for your business, so evaluate what you need and which of these options can satisfy your needs and remember not to go only for the cheapest or the one that charges less commission, because your priority should be to provide an excellent service for your customers.
Tell us, did you know about the importance of a payment gateway?