There are multiple payment processors that help businesses to manage their transactions, such as Stripe, Square, PayPal, GoCardless, and more. But how do you choose the one that will cover all your business needs and will be convenient for your customers?
The right payment processor is one of the most important factors in eCommerce sales. Depending on your payment processors, you may pay greater or fewer fees, get money to your bank account faster (or slower) and manage orders from your mobile or only via a laptop. Online payment processing is not only a useful solution for eCommerce businesses but also a convenient way of payment for customers.
According to the report by the European Payment Council, 86% of customers make online purchases using their credit or debit cards. Moreover, 60% of them find an online gateway is their preferred way of payment. Let’s have a closer look at the most important factors that should be taken into consideration when choosing a payment gateway.
What is a payment processor?
A payment processor is an eCommerce tool that provides online payment transfers from a customer to the seller. It is a hassle-free and secure means of payment that makes online sales much easier. As soon as a customer makes an order at the seller’s website and fills in their credit card details, the payment processor will request approval from the bank and make a transaction. These two steps are called “authorization” and “settlement”. As a result, the customer gets the confirmation that the payment is committed and the seller gets the money in their bank account straight away. Note, that the payment processor charges a fee for each transaction from the seller.
Factors to consider when choosing the best payment processor
When beginning an eCommerce business, it is important to choose the payment gateway that best suits your business. You should take into account the popularity of the gateway, the processing method, fees, interface, and compatibility with other platforms. You may also find that you need to connect a few payment processors in order to optimize your business bookkeeping and accounting in advance.
Payment transaction processing
The flow of payment processing may be different. Depending on your type of business and product features, you may choose the best option for you. In general, there are three ways of payment processing: integrate a payment form into your website, use a redirect for payments, or have an Escrow system. All these ways have both advantages and disadvantages that may affect your sales.
ECommerce businesses can integrate a payment form into their website. So customers’ bank details are transported to the payment processor through a secure form. However, not all types of websites allow integrating a form, for example, websites created on some website builders.
Redirect payments are the most common way of payment processing. To pay for a purchase a customer is redirected to a secure page of a payment processor to enter their credit or debit card details. This way is convenient and secure for customers, as well as it is much easier for a seller to connect the payment gateway to the website.
The Escrow system is less popular among eCommerce businesses as it suits only a few types of companies. The Escrow system withholds the customer’s money for the purchase until the authority is granted. Usually, such a system is used by companies who act as an intermediary between a payer and a beneficiary.
Fees of payment processors
All payment processors charge a fee for the transactions made. It is a fixed rate that is withdrawn from each payment process. Usually, it doesn’t matter whether the payment has been made successfully or if it was declined. The payment gateway charges for the processing itself. The method of charging also varies. Some processors take a certain percentage from the payment, so you get, for example, not $100, but $100 – 2,5%. Other processors take their fee in addition to the payment and include the percent on invoicing – $100 + 2,5% (a payment processor fee).
Mobile version of payment gateway
Before choosing a payment processor, it is a good idea to use a trial period to test an interface. Our daily life has become very fast-paced, so customers make purchases literally everywhere, using their laptops, tablets, and mobiles. For eCommerce businesses, it makes sense to choose a processor that supports as many devices as possible, especially a mobile version, so your payment procedure can be more flexible for your customers.
Integration with other software
At the first step of organizing your payment processes, you must check whether your online payment providers can be integrated with accounting software. It will make your life much easier if you can automate not only the process of making transactions, but also the bookkeeping, as well as reconciliation, preparation of financial statements, and tax filing.
An example of such accounting software that covers all these tasks, is Synder. It is a smart finance solution that allows you to connect not only most of the payment processors (Stripe, Square, PayPal, GoCardless, IntegraPay, PinPayments, Authorize.net), but also your eCommerce platforms (Shopify, Etsy, Amazon, BigCommerce, eBay, WooCommerce, Magento, Ecwid).
It automatically synchronizes all your transactions into your books (QuickBooks, Xero), makes reconciliation in one click, collects all the data for full and detailed financial statements, automates invoicing process, and more.
Security of your payment data
Some people are afraid of using online means of payment because they think that their bank details may be stolen or used by financial scammers. Usually, online payment processors provide instructions on how to enter your personal data securely. Moreover, all online payment providers should comply with the requirements of Payment Card Industry Data Security Standard. It is a unified standard for organizations that work with credit cards. So, you can be sure that your bank details won’t be lost.
It is better when you can rely on 24/7 customer support in case there are some problems with transactions. Some eCommerce credit card processors provide only ticket or email support, others suggest 24/7 chats and calls. When customers have issues with payments, the company should solve the problem as fast as possible to keep the customer satisfied with their purchases. However, if you are not able to contact your payment processor immediately, you will hardly be able to help your customers.
Extra bonuses and features are always pleasant and can even be a deciding factor when choosing the right payment processor. For example, some payment processors accept payments in different currencies, which is rather useful for international companies. Also, some of them provide recurring billing or email reminders for clients who delay the payments. Even if you choose a payment processor that doesn’t provide these features, you can always connect Synder who sends eCommerce businesses payment reminders, recurring invoices, and even thank you emails.
List of the most popular payment gateways
- Amazon Payments
To choose the right payment processor, you should clearly understand your business needs. How many transactions do you need to process, in which currencies are most of your payments, what eCommerce platforms do you want to use, and so on? As soon as you know which online payment provider you will use, you should consider which accounting software would work the best for your business.