When you start a dropshipping business and open a store on Shopify, WooCommerce, or other ecommerce platforms, you need to know about the payment gateway and choose your store’s payment gateways to make transactions. The payment gateway integrated into your store is how people securely transfer money from their account to yours. Without a payment gateway integration, the customers won’t be able to pay for the services or products they are buying online. There are many different payment gateway options available. And with the right payment gateway, you can make it easy for customers to pay for your products. The article will introduce how to choose the right payment gateway and what are the best payment gateways for dropshipping store.
How To Choose The Right Payment Gateway
You should consider the following to choose the right payment gateway:
1. Supported by your e-commerce platform
There are different payment gateways available based on the different encommerce platforms where you open a store. If you use Shopify, then you’ll need a gateway that integrates with that specific platform.
You can check which payment gateways your e-commerce platform works with. Just enter to the platform's official extension catalog or documentation and look into the “payments” section.
There are the lists of payment gateways available on some top ecommerce platforms:
The security of the network can avoid your customers worrying that their financial information and ensure your customers that financial will information remains secure when purchasing from your store. To make sure that your payment gateway is secure, always check that they are PCI compliant. It is critical when accepting credit cards online.
There is the short list of payment gateway security layers:
①Every payment gateway has high-level encryption (SSL encryption 128 Bit encrypted) to avoid all types of breaches.
②The second layer of security is the digital signature. Even if a hacker got your ID your account is still safe with digital signatures.
③After digital signature comes the Dynamic IPs, if your account is used from another IP address then it will be denied.
3. Attention to the fees
Make sure to carefully check the fee structure with your gateway before you commit to it long term.
Most commonly, there are three components of the final price tag:
Set-up cost: varies from $0 - $250.
Monthly cost: $10 - $50.
Transaction fees: Usually, it's $0.00 - $0.25 + 1% - 5% per each transaction. You have to pay both the fixed fee and the percentage of the transaction.
In addition, there may be other fees, such as chargeback fees, payment processing fees, termination fees, etc.
The following are the fees that you can make yourself aware of:
Monthly statement fee
Minimum monthly fee
How much you pay to transfer the money from the merchant account to your regular bank account.
If you want to receive the money before the standard credit card deadline.
If you have a high-risk business, processors may ask for an initial warranty.
4. Good customer experience
It is necessary to provide a good and convenient shopping experience for customers. Avoid too many steps, too much time, or too much personal information in case your customer abandon the purchase. Try to look for a payment gateway that allows you to accept all major credit and debit cards, as well as being integrated with all major shopping carts. What’s more, the payment gateway should be optimized for mobile users as well.
5. Use more than one payment gateway
You should use more than one payment gateway to make it easier for customers and give everyone other options. More options will translate to more convenience for the customer and less friction at checkout. Paypal is a necessary payment gateway for it is available in most countries around the world which allows you to sell internationally. And you should know your target audiences’ preference about the payment methods and see if the payment gateway support them. Each payment gateway supports a different set of payment methods.
6. Choose providers with good reputations
Payment processing is critical to your business. It is a good idea to work with a provider who has an overall good reputation in the industry. In general, as long as you pick a large payment gateway and processor that has been in the market for a while, it will be okay. Be careful that some payment providers have had problems with outages. And some have a reputation in some circles for blocking merchants' money without due cause.
7. Available support
Check if the provider offers live technical support, at least within standard working hours. Thus you can quickly resolve any technical problems. Most payment gateways will not support processing transactions related to high-risk business. Gambling, adult content, travel, tobacco, debt collection, electronic cigarettes, credit repair, MLM are high-risk business. In such cases, you'll need to choose a provider that specializes in so-called “high-risk” payment processing.
PayPal is one of the most commonly used payment gateway for dropshipping stores. It has worldwide acceptance in more than 200 countries. There is no doubt that it can be a profitable addition to the main payment gateway. It will bring more customers to the site. What’s more, if the main payment gateway goes down due to some technical issues, PayPal can act as a backup. It supports all prominent credit cards, such as Visa, Mastercard, American Express, Citibank, and more.
Stripe is available in 34 countries. And it gives you complete control over the checkout experience and this makes it popular. It is quite popular among the American and Canadian dropshippers. And it also not charging you the monthly fee. What’s more, it has many useful and powerful features, from in-store payments to comprehensive security and an in-depth dashboard. In addition, it accepts quite a few different payment options, including multiple eWallets. However, it doesn’t accept PayPal and you can use multiple different payment gateways to solve the problem. And it is made specifically for developers that it is difficult to handle.
Authorize.net is currently available in more than 33 countries. It is one of the oldest and most trusted payment gateways available for credit card users. Actually, it supports all major credit cards – including MasterCard, Visa, American Express, Diner’s Club, Discover, and JCB. It also supports digital payment services like Apple Pay, PayPal and Visa Checkout. What’s more, it features multiple extensions for easy integration with WooCommerce stores. And it also has the lowest transaction fee or 2.90 + $0.30 for ecommerce and dropshipping stores.
2Checkout is a great option for dropshippers with a multinational presence. It operates in more than 87 countries worldwide across 15 languages. It is one of the best credit card gateways and supports all major credit cards such as Mastercard, Visa, Diners Club, American Express and others. And it is available in many third world countries, where it is used in combination with another payment gateway.
5. Shopify Payments
Shopify has partnered with Stripe to offer their own in-built payment gateway for Shopify users. It is hands down the best payment gateway for Shopify and available in 11 countries. Shopify Payments is already integrated with your store and it is extremely easy to set up and use. If you use Shopify payments on Shopify, Shopify will not charge you a small fee each transaction and only charge the regular transaction fee of payment gateways. However, there is a long list of exclusions for types of stores they don’t accept. And if you don’t use Shopify, then you can’t use Shopify Payments.
If you start a dropshipping business and open an ecommerce store, then you’re going to need a payment gateway. Payment gateways play an important role in the online payment processing system. And if you use the wrong gateway to accept payments from your customers, you will make your entire payment process on a downward spiral. Without a payment gateway, you won’t be able to securely charge your customers. And a payment gateway can also provide you with security, reliability, dependability. The article will introduce everything about payment gateway, including what is a payment gateway, how do payment gateways work, its features, limitations and types, top payment gateways, as well as how to pick the right payment gateway.
What Is A Payment Gateway
A payment gateway is a merchant service provided by an e-commerce application service provider. It can not only be provided by banks to their customers but also can be provided by specialized financial service providers as separate services, such as payment service providers. Payment gateway is similar to a POS terminal found in many retail establishments. Besides, it authorizes electronic credit card and Automated Clearing House (ACH) payments to provide seamless payment processing for businesses. Furthermore, it facilitates payment transactions through the transmission of information between a payment portal, such as a mobile phone, a website, or interactive voice response service, and a front-end processor or receiving bank. Payment gateways encrypt and store sensitive data to ensure that confidential information is safe when processing payments.
And there are three main elements of a payment processing system, including Payment Gateways, Payment Processors and Merchant Accounts. What are the key differences between them? There is a summary:
1. Payment gateway
Connects your eCommerce store to the payment processor and sends a transaction request to the payment processor.
2. Payment processor
Processes the request from the gateway and executes it. Take the money from the customer and deposit it in your merchant account or an account managed by a third-party.
3. Merchant account
It is where the funds get deposited after a successful transaction. There is no doubt that it is optional and you don't need to have one as an eCommerce business.
How Do Payment Gateways Work
The payment gateway process follows six steps which take only a couple seconds.
2. Payment gateway sent encrypted information to the payment processor, which actually processes the transaction.
3. Processor routes the transaction data to the credit card association.
4. The Processor sends an “approved” or “declined” response back to the payment gateway.
5. Transaction becomes authorized and the issuing bank then transmits the authorization back to the parties in the payment processing system.
6. Take between 24 to 48 hours for the funds to be available in your account.
Payment Gateway Features
In addition to processing online payments, payment gateways also have other features:
1. Payment Information Storage
Payment gateways can store the encrypted payment information securely. Thus the customers don’t need to constantly rewrite their information.
All payment gateways encrypt sensitive payment information before they transmit it to the processing bank.
3. Virtual Terminal
A virtual terminal is a browser-based version of a physical credit card terminal which allows you to input a customer’s credit card information. It can process the transaction directly through your computer’s web browser, even use a mobile device through an online web form. Processing rates will always drop when the card is present.
Payment gateways can integrate with other tools, such as accounting software like Quickbooks, shopping platforms like Shopify.
5. Recurring Billing
Subscription-based pricing is becoming popular payment gateway increasingly. The subscription provides a recurring billing feature that you can automate this process.
6. API Tools and Developer Information
Most payment gateways give you the chance to customize it to fit your specific needs on the technical side.
7. PCI Compliance
Payment gateways are PCI compliant so that you can accept payments securely and avoid costly fines.
Limitations of Payment Gateways
1. Gateways rarely accept all types of cards or payments
Many payment gateway providers like to advertise the universality of their gateways. However, the truth is that gateways rarely accept all types of cards or payments. And they won’t highlight when they can’t accept payments from specific card issuers and processing portals.
2. Gateways may be not optional for international customers
Different countries may have different popular payment gateways. If you look to capture broad international customers, you need to make sure your payment gateway can handle it.
3. Security flaws
A high-quality payment gateway is secure generally. However, there are some security vulnerabilities that you need to keep in mind.
TLS encryption helps most payment gateways process privileged data, such as card information. But once the data is on the server, the server remains a risk.
Mobile payment issues
You may control most of the security in a transaction, but you still can’t control who has access to a customer's mobile device.
It reads passwords and infiltrates user accounts. And it can still send apparently real transactions through secure payment gateways, even if the transactions themselves are fraudulent.
3 Types of Payment Gateways
When the gateway takes a customer to a PayPal or other payment page to handle the complete transaction, it becomes a “Redirect”. It is simple for the retailer. A small business can use a redirect-gateway to incorporate the convenience and security of a major platform such as PayPal. However, the process also means less control for the merchant.
2. Checkout on site, payment off-site
Likes Stripe’s payment gateway, the front-end checkout will happen on your site. And the payment processing occurs through Stripe’s back end. It also has advantage of simplicity. However, you can’t control the user’s entire experience through the payment gateway which will make you at the mercy of the quality of the offsite gateway and its quirks
3. On-site payments
On-site payments make the checkout and payment processing on behalf of the customer all work through your system. Large-scale businesses tend to use it and will have more control and more responsibility. When you handle your payments on-site, it’s necessary that you understand your options and responsibilities.
5 Top Payment Gateways
There are the top 5 payment gateways in the market: