An e-commerce gateway is a software service that facilitates payments for online transactions. eCommerce gateways help to encrypt shopping cart information, and also verify credit card numbers, expiration dates, and addresses.
We will discuss the types and examples of major eCommerce payment methods and gateways in 2022.
What is an eCommerce Gateway?
An eCommerce gateway is a piece of software that allows you to sell your products and accept payments from customers directly from your website. It’s also called a payment gateway, and it works in conjunction with your merchant account.
Basically, an eCommerce gateway is a service provider that authorizes electronic payment transactions between a business and its customers. It helps ensure that the payment information sent to (and by) your company is secure, so your customers can feel confident when they’re doing business with you online.
Without an eCommerce gateway, merchants have to manually input credit card data into their payment system, which means they’re vulnerable to fraud. Additionally, due to the sensitive nature of the material being transmitted via these gateways, they are required by law to be PCI compliant.
Free to use: 37 Payment Form Templates
Payment Gateways vs. Payment Processors: What’s the Difference?
If you’re new to the world of eCommerce, you might be wondering what’s the difference between payment gateways and payment processors. Are they the same thing? What do they do? And how are they related to our business?
The short answer is that payment gateways and processors play very different roles in your sales process. And when it comes to helping your business succeed, both are crucial.
Payment gateways provide a secure connection for card information during the checkout process. The gateway encrypts this data and sends it directly to the payment processor, which verifies and processes the transaction.
Get Your Hands on This: Free Affiliate Application Form Template
The processor then sends a response back to the gateway, which shares it with your store via Shopify’s API. The primary benefit of this two-step process is security.
Payment processors typically only work with developers who provide secure payment gateways. As an added bonus, eCommerce platform providers like Shopify also ensure their associated payment gateways are PCI compliant.
Meaning they adhere to strict requirements around protecting customer data and preventing fraud. A great example of this is Shopify Payments, which is available to all merchants who use Shopify as their eCommerce platform.
Read: Best Chrome Extensions for eCommerce & Dropshipping Stores
3 Types of Payment Gateways
There are typically three types of payment gateways: onsite payment gateway, direct, and off-site payment gateway.
1. Off-site Payment Gateways
Off-site payment gateways take you away from the website where you’re shopping to process your payment. When you click “Checkout” on a site that uses an off-site gateway, you’ll be taken to another webpage to finalize your order. This is the most popular type of gateway because it provides an extra layer of security for both the shopper and the business. PayPal is an example of an off-site payment gateway.
2. Redirect gateways
This is where you’re redirected to a page hosted by the payment processor, where you can enter your credit card and shipping information. You’ll then be redirected back to the site where you placed the order. A redirect-gateway sends the client’s credit card information directly to the merchant account without any buffering or routing through another company’s servers.
3. On-site payment gateways
These gateways allow you to complete your purchase without leaving the website where you’re shopping. The payment form will be embedded on the site and clicking “Checkout” will finalize your order. While this option is typically more convenient for shoppers, it doesn’t provide as much security as off-site gateways. Braintree and Stripe are good examples of on-site payment gateways.
Read: Online Shipping: Best Delivery Tools for eCommerce Stores
Major Payment Options & Methods in eCommerce
In the early 2000s, if you wanted to make a purchase online, your choice of payment methods was pretty limited. Today, there are so many different ways to pay for goods and services online that it can be hard to keep track.
There are also alternative payment methods (APMs), like PayPal, that can be used to make purchases. All of these payment methods have their own processing method, and this adds an extra layer between the consumer and the business they’re buying from.
TCredit cards allow you to buy what you need now and pay later, while apps like PayPal and Venmo allow you to send money instantly or request money from someone else. Some consumers prefer using cryptocurrency like Bitcoin to make their purchases because they can securely use it as a method of exchange without having a bank account.
You might also see consumers using “e-wallet” options such as Apple Pay or Google Wallet that allow them to safely store their money in an electronic account so they don’t have to carry cash around with them all the time. There are also many other ways for people to make purchases online nowadays.
Apps like Amazon Prime which offer free shipping on orders over $25 USD (about $32 CAD) or Amazon Fresh which lets customers order groceries at any time during the day and pick them up at designated pickup locations near their homes.
Try this out: Product Comparison Survey Template
Examples of Gateways
PayPal: PayPal is one of the oldest and most trusted payment systems available. Customers can create an account with PayPal and use that account to make payments on sites that accept it. It takes less than two minutes to sign up, and customers don’t need to provide their bank information to use it.
Amazon Pay: Amazon pay is becoming more popular, especially among Amazon users who trust the brand and are familiar with how it works. The service allows users to use their Amazon account information as a way to pay for goods instead of entering payment information each time they buy something from a site that accepts Amazon pay. You can use your Amazon account without leaving your current shopping experience or website to make a purchase, which means less friction at checkout and more sales for you.
Apple Pay: Apple Pay is one of the newest payment systems out there, but it’s already seen some great success. Customers can use their iPhone or Apple Watch to pay for items at the checkout by holding their device up to the register at select stores (or online).
Google Pay or Wallet: Google wallet lets you pay with just a tap, so you can check out at hundreds of thousands of stores faster than ever before. Add a credit or debit card once, then use it as many times as you want even if you don’t have your phone handy.
Explore: Ecommerce Form Templates
How Formplus Can Help eCommerce Businesses
Formplus allows you to create different kinds of forms according to your preference, using its over 1000 forms templates. If you are a dropshipper or eCommerce store owner, here’s how Formplus can help you:
- You can use Formplus payment integrations such as Stripe, PayPal, and Flutterwave to collect money for your services from anywhere in the world.
- Formplus can help you collect data about your products and customer opinion in a quicker time and with less effort.
- You can integrate Formplus into Google Drive, Dropbox, and other cloud storage integrations.
- You can create forms with the E-signature feature. That way it is easy for you and your partner to sign contract agreements. It will save you the rigor of sending them out, signing, scanning, and sending them back.
- You can automate your processes digitally. So you wouldn’t need anyone to write down any procedure. Fortunately, Formplus also has an offline data collection feature.
For You: Free Delivery Feedback Form Template
How to Set Up a Payment Gateway for Your Website
The first thing you need to know about setting up a payment gateway for your website is that, in 2022, there are so many options. It’s an incredibly exciting time to be an eCommerce entrepreneur!
But the fact that there are so many options means that it can get a little overwhelming to choose which one will be the best fit for your business. There are a lot of different factors to consider, including:
- How much control do you want over the look and feel of your payment experience?
- What kinds of fees do you want to pay?
When someone buys something from your online store, they enter their credit card information into your shopping cart. That information is then encrypted and sent through the gateway to your merchant account and processor, which checks that there are sufficient funds in the customer’s account and transfers them over to yours.
So how can you set one up for your company? It’s actually pretty simple. All you need is:
- Get a merchant account
- Find a payment gateway provider
- Connect those two things together using APIs
What Percentage of Payments are Made Online?
Nearly 40% of all payments are made online, and the percentage of eCommerce sales is growing year over year as more and more people become comfortable with the idea of making purchases online. Also, the percentage of sales that happen on the internet will continue to grow.
With so much money flowing through the world wide web, it’s important that you have a way to process those transactions and get paid. These days, almost all transactions take place online in the US, and 97% of payments are made online.
So e-commerce gates are a pretty big deal. They’re what keep the cash coming in, which means your business stays afloat.
Payment Methods by Country
There are a number of different payment gateways available for you to use to receive payments online. These include PayPal, Payoneer, Skrill, Bank Transfer/Direct Deposit, and Stripe.
In India, PayPal is the most popular eCommerce gateway, but it is only available in limited countries, so you will need other alternatives like Payoneer, Skrill, Bank Transfer/Direct Deposit or Stripe, etc. The USA and Canadian countries mostly use PayPal, Payoneer, Skrill, and Stripe as e-commerce gateway but European countries mostly use PayPal, Skrill, and Bank Transfer/Direct Deposit.
Stripe is also a popular option for eCommerce merchants. It’s a platform that can be integrated with hundreds of online stores and marketplaces. Merchants can use it to accept payments from customers all over the world. Stripe charges 2.9% plus $0.30 per transaction, but it doesn’t charge setup, monthly, or termination fees.
eCommerce Gateway encrypts sensitive information, like credit card numbers, to ensure that information travels securely over the Internet. It then transfers the information to the merchant bank to process and deposit funds into the merchant’s account.
What is the Most Popular Online Payment Method?
The most popular eCommerce gateway is PayPal, but there are many other options such as Authorize.Net and Stripe. If you live in the United States, then Venmo is the most popular way to pay online.
Venmo is owned by PayPal and it uses your phone number or email address instead of a credit card number. It’s free to use and you can transfer money directly into your bank account (or get cash out at an ATM).
Security Concerns about Mobile Payment Options
When it comes to mobile payments, there are several security concerns that consumers and merchants alike should be aware of. You might not be able to see it, but there are SO MANY things that could go wrong during this process.
For example, when you connect your phone to the wifi network, you’re opening yourself up to all kinds of vulnerabilities (hackers can intercept this data). Or perhaps someone hacked into the restaurant’s wifi system and downloaded malware onto it and when you connect to it, they can access your phone and steal whatever data they want from it: pictures, messages, etc.
First, consider the security of the app itself. If you’re using a third-party app to make or accept payments, you’ll have to trust that the company behind the app has taken measures to keep your information secure. To do this, check a few things: Are they using SSL (Secure Socket Layer)? Is their site reputable? If you’re concerned about the security of an app or website, don’t use it.
Second, consider your device’s security measures. Are you taking steps to secure your phone against malware and other potentially harmful software? If not, you could be putting yourself at risk for identity theft or credit card fraud. If your phone is stolen, you should also be proactive in securing your accounts before someone else does.
Conclusion
eCommerce gateways operate much like the point of sale (POS) terminals and card swiping machines at supermarkets, department stores, and other physical retail locations. They encrypt sensitive information, such as credit card numbers, to ensure that data passes securely between the customer and the merchant.
So if you are taking your business online you should consider integrating one to make your transaction swift.