Payment gateways enable businesses to handle electronic payments by offering a SaaS platform the ability to securely connect to an ACH payment or credit card payment disbursement solution. The Payment Gateway serves as the secure conduit to move sensitive credit card or bank account from the application user to the back end payment processor or acquirer.
Choosing a payment gateway depends on the needs and type of business. Here is some information on Payments Gateways to you better understand how to properly utilize a gateway.
The Role of the Payment Gateway in Online Payments
Payment gateways authorize, securely encrypt, and submits a transaction for processing. Payment gateways are the communication portal between business and the customer when an electronic payment is submitted, and therefore handle loads of information.
When a direct-debit or eCheck transaction occurs, a funds request is sent to the payer’s bank. If sufficient funds are available, the funds will be pulled and deposited into the payee’s account. For credit card transactions, the card-issuing bank sends an authorization request to verify that the card is valid.
Once verified, the transaction is submitted to the credit card processor. The processor then deposits the funds into the merchant’s bank account. A failed authorization request means that the deposit will not be completed, and an error code will be sent through the gateway to the merchant.
Selecting a Payment Gateway: What to Consider for Online Business
Selecting the correct payment gateway is pivotal for the success of your business. Here are some things to take into considerations:
- Ensure your payment gateway partner provides an easy, defined process for onboarding and continued support.
- If your payment gateway partner also provides the merchant account[s], negotiate great deals for your users [you have the power]. Hopefully, just by using your product the business will save time and money. If you can, in turn, save them money on processing fees you are again creating goodwill.
- Make sure your payment gateway offers payment options via ACH Integration. Especially for recurring payments multiple payment options with cost savings are a competitive differentiator.
- Revenue share model: Your payment gateway integration provider [especially if they can also set up merchant accounts] should offer you a transaction revenue share model. If done properly your clients get better service and more payment options. Your company gets a more loyal client and a new revenue source.
- Improved client retention rates: By delivering value beyond expectations you generate more loyal clients. This increases lifetime client value and your ability to cross-sell, upsell and leverage potential referrals.