eCommerce is booming in part because it’s easier than ever to accept payments online. Payment gateways allow businesses large and small to accept online payments securely and efficiently. How can online payment gateways help your business grow? We’ll explain.
The eCommerce revolution is transforming the very nature of commerce itself, opening doors to new markets and expanding possibilities for businesses the world over.
This guide aims to introduce business people like you to the world of payment gateways: from accepting credit cards to alternative payments; security and fraud management to regulatory matters. We’ll introduce payment gateways and explore how they help businesses tap into the eCommerce opportunity.
UK consumers are clearly gravitating to eCommerce. In the UK alone eCommerce accounted for more than in 2018 sales. Worldpay’s 2018 projects those sales will grow 9% annually to reach £240 billion by 2022.
Let’s take a look at how online payment gateways can help your business grow.
What is a payment gateway?
provide connectivity for businesses to access payment processing networks via website, mobile apps and other payment applications like virtual terminals. Online payment gateways provide secure authentication for each and every transaction; safe passage in a common language.
There is a lot going on behind the scenes to . An online payment gateway connects your eCommerce service to payment processors, major credit and debit card networks and your customers’ issuing banks. That connection needs to be secure, efficient and fast.
Payment gateways share a few core functions. First, shoppers provide their payment information via a website, mobile app or other online service. The payment gateway securely routes and processes information about the transaction to the acquiring banks, and then card schemes, or other funding source. Gateways notify the shopper and merchant that a transaction is accepted or rejected. The gateway then routes those funds to the merchant, first through a merchant account, and finally settling into a business bank account once the transaction is complete.
Payment gateways are an essential part of providing customers with safe, seamless and delightful experiences.
What type of payment gateway is right for my business?
Let’s see how payment gateways work in a few common eCommerce scenarios: shopping carts, hosted payment pages and integrated payment pages.
Shopping cart services and integrated eCommerce platforms are popular among small and growing businesses for their ease and convenience in setting up shop online. The shopping cart is among the most important and complex systems in eCommerce. Cloud-based shopping cart and eCommerce platforms offer integrated gateway services and connectivity to a variety of payment processors.
Hosted payment pages are where the entire payment process is handled by your payment processor. When it’s time for your customers to pay, your website or app directs them to a payment page. Hosted payment pages can help reduce your security risk by offloading the infrastructure of payments to gateway providers and payment processors.
Integrated payments allow more control over the payment experience you provide to your customers. Third-party integrators such as shopping cart providers and eCommerce platforms offer payments seamlessly integrated with their services. Programming APIs are making integrated payments more accessible and driving innovation in eCommerce websites and mobile apps. Some businesses go even further to develop their own eCommerce infrastructure.
What types of online payments should my business accept?
The rise of eCommerce has forever altered the landscape of consumer payment methods. Today there are many payment methods in use throughout the globe. You’ll want to think about how your customers will want to pay and select an online payment gateway that serves your customers’ needs and what you want to offer them.
Start with the basics like taking credit card payments online. Credit and debit cards still dominate online payments in the UK; together they account for half of eCommerce payments according to Worldpay’s 2018 Global Payments Report. Visa and Mastercard acceptance are essential with the two card brands accounting for .
What about alternative payment methods?
Alternative payment methods were so named because they were alternatives to credit and debit cards issued by major card brands. Today there are over 300 in use globally. In some cases these “alternatives” have grown to become the leading payment method.
In the UK, alternative payment methods now account for half of online sales. Worldpay’s 2018 Global Payments Report finds eWallets like Apple Pay, PayPal and Visa Checkout accounting for 23% of CNP (card-not-present) eCommerce payments in the UK. Alternative payment methods like pre-paid cards, cash on delivery and eInvoices all registering meaningful share among UK shoppers.
Bank transfers are a growing alternative to credit and debit cards. Bank transfers accounted for and are only likely to increase in share due to open banking initiatives like . Bank transfers are popular for recurring payments and have contributed to the rapid growth in subscription-based business models.
Alternative payment methods haven’t lost their cool. But they’re not nearly as “alternative” as they were just a few years ago. Seamless convenience, state-of-the-art safety and lower cost of acceptance make these “alternative” payment methods essential parts of your eCommerce mix.
Can online payment gateways accept multiple currencies?
Being able to accept a diversity of currencies is vital for many eCommerce businesses. Seamless, secure and timely online acceptance of payments in multiple currencies is a complex service. Yet seamless international currency acceptance is essential to satisfy customers from around the world.
If you’re planning to accept payment from beyond the UK’s shores, look to your payment service providers to better understand currency acceptance and conversion. You’ll want them to demonstrate a track record of seamless acceptance of the currencies you’ll be transacting in.
Is international payment acceptance a vital part of your eCommerce strategy? If so, you’ll require a gateway provider with experience operating at a global scale.
Do I need a merchant account to take online payments?
An allows businesses to accept credit and debit card payments. Every business that chooses to accept card payments will require a merchant account. At Worldpay, we can set up your merchant account and provide you with the payment products required to start taking card payments. Your customer payments go straight into this account, which then settle into your business bank account. We offer simple yet powerful tools that allow you to monitor your transactions in real-time. Your online merchant account is flexible, powerful, easy to manage and supported by round-the-clock UK support.
How can I protect my business from online fraud?
Being concerned about fraud is reasonable and understandable. UK Finance estimates that UK businesses suffered £310 million in eCommerce fraud in 2017. That means of every £100 spent online at UK stores, 9.3p was fraudulent. Payment fraud is a criminal menace that damages everyone: businesses, shoppers and the financial industries that serve them.
Small businesses have big partners in the fight against fraud. Payment processors, eCommerce providers and security experts work tirelessly to make commerce safer for everyone. From machine learning to artificial intelligence, big data to biometrics, battles are being fought and won. Small businesses should follow established best practices to protect their business — and their customers.
The most effective way to combat online fraud is to partner with payment and security experts. You’ll want a partner that uses the latest fraud prevention technologies like data encryption and tokenisation. Encryption uses powerful algorithms and secret keys to protect data from being seen by third parties. Tokenisation replaces secure data with tokens that are managed in a secure vault, making transaction data useless to thieves.
You can’t eliminate risk, but payment partners can help you reduce risk and make your business safer. Reducing risk means developing a comprehensive safety strategy covering card data security, data breach prevention, fraud mitigation and acceptance optimisation. Reducing risk requires knowledge gained from billions of payment transactions to connect the dots to model both “good” and “bad” payment behaviour. Reducing risk means you need to get control of your payments.
How do refunds and chargebacks work?
A chargeback is when a customer disputes a charge on card, resulting in any credits paid to a business to be “charged back” to the business in order to refund the customer. Managing chargebacks can be a challenge for eCommerce merchants as they represent a costly and time-consuming process. Nobody in business ever wants to reverse a sale, for any reason.
There are many legitimate reasons for chargebacks — the customer never received or was dissatisfied with the goods for example. Unfortunately, chargebacks can be a sign of fraud. Chargebacks can reflect direct fraud, when an authorised cardholder files a chargeback against fraudulent transactions after a card has been compromised. Other times “friendly fraud” is at play, where legitimate cardholders file a chargeback claim despite receiving goods as ordered or family members making purchases by mistake.
Worldpay offers chargeback management tools that help you work through the process more efficiently and effectively. Chargeback management tools can help you assert your rights in chargeback disputes while containing any chargeback-related losses.
Are there regulations for accepting online payments?
The Payment Card Industry Data Security Standard (PCI DSS) protects consumer credit card data by reducing the risk of data breaches and payment fraud. Major payment schemes including Visa, Mastercard and American Express established PCI DSS as a common security baseline for businesses that accept credit cards.
Every business that accepts credit cards needs to be in compliance with PCI DSS. Complying with PCI DSS is mandatory, but doing so offers benefits beyond compliance. Following data security standards reduces your vulnerability to potentially devastating impacts of data breaches and fraud.
Staying in compliance is easier than you think. Depending on how your payments are set up you may be able to achieve compliance through a self-assessment, reduce the scope of compliance, or your compliance requirements may be fulfilled by your eCommerce platform vendor.
Regardless of how you achieve compliance, PCI DSS standards represent common sense best practices that help reduce security risk and can save your business money.
Is it time to connect with a payments expert?
If you want to open your own online storefront, a conversation with a payments expert can help answer any questions you may have. Perhaps you’re ready to dive in and get the ball rolling. Whether you’re ready to connect to the world of payments or simply need to ask a few more questions before you get started, a payments expert at Worldpay can help.
An online payment gateway is the perfect solution for small and mid-sized businesses looking to connect with their customers and increase sales. Online payment services also enable more meaningful — and more profitable — connections with existing customers.