Which payment gateway should you use for your e-commerce store? A lot of people struggle with this question. After all, payment gateways and online payments in general can be intimidating, especially if it's your first time around the block.
With dozens of online payment options to choose from, it can be a complicated decision. But this is where this guide comes into play. Here, we tell you what to look for in a quality online payment gateway and present five of the top solutions in the market.
In a hurry? Here's our summary of the top payment gateways out there:
Table of contents:
👉 What is a payment gateway?
👉 How does a payment gateway work?
👉 How to pick a payment gateway
👉 Best payment gateways compared
👉 Summary and final recommendation
Let's start with the basics:
What is a payment gateway?
A payment gateway is the middleman between your online store and the payment processor that receives the payment from your customer.
In other words, once a customer enters their payment details on your site, the payment gateway takes care of sending that data securely to the payment processor.
You can think of it like this:
A payment gateway takes care of authorizing the payment and making sure that the data entered is enough to finalize the payment. The gateway protects the details of the credit card by encrypting all sensitive information it holds. This process ensures that personal private details are passed securely between the customer and the merchant.
A payment gateway is part of the “magic” that occurs in the background when a transaction takes place on the web. By sending information securely between the website and the payment processor, and then returning transaction details back to the website, it is a primary component that enables e-commerce stores to function.
If you have an (e-commerce) website and you are interested in accepting credit card payments online, you will need a payment gateway. It is effectively the bridge between your product sales and the customer.
How does a payment gateway work?
The good news is that, as an e-commerce store owner, you don't have to understand how the payment gateway actually works underneath. In practice, all you need to do is pick a gateway and then integrate it with your online store via what's usually a user-friendly setup wizard. After that, it just works and allows you to collect payments from customers.
But just to give you an idea, here's a general look at the steps that take place:A customer places an order on your website. They enter the cart, proceed to checkout and fill in their payment details. The payment gateway takes the payment information, encrypts it and sends it through a secure channel to the payment processor. The customer gets redirected to the payment processor. The payment processor takes the customer through the steps to finalize the payment. The payment processor verifies if the payment was successful and displays an adequate message to the customer. The customer can return to the online store.
What this means in practice is that the payment gateway is only responsible for allowing the customer to communicate with the payment processor. The gateway is just what the name suggests – a “gateway” that takes the customer's personal information through a secure channel to the payment processor.
How to pick a payment gateway
Here's what to look for in a payment gateway: