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Making sense of payment gateway services

Payments are more complicated than a utility but they’re just as vital—every business needs to get paid. Getting payments right can boost your bottom line, so it’s worth taking time to become an educated consumer of payment services. Thankfully it’s a subject of great interest: how payments flow from your customers to your business bank account.

Payment gateways are a vital part of the payments ecosystem that make the world of modern commerce possible. This express guide explains gateway services in plain language, answering frequently asked questions posed by business owners and managers just like you.

What is a payment gateway?

A payment gateway is simply a connection point within the payment processing journey. A payment gateway connects your shopping cart service, point of sale system or virtual terminal to the next point within the processing and authorization of a payment. Gateway services are used for in-store and eCommerce businesses.

Payment gateways are essential tools in creating exceptional customer experiences. Those holistic customer journeys are punctuated by the purchasing experience, so checkout has to be simple, safe and fast. Payment gateways simplify essential payment processing functions—so you can focus on your business.

Does my business need a payment gateway?

It depends. For in-store transactions your payment processor may already be using a gateway. For eCommerce, the more relevant question most businesses need to ask is “does my payment solution have a gateway built-in, or do I need to add a stand-alone gateway to accept credit cards?”

Payment providers often bundle gateway services with integrated solutions. For example, point of sale (POS) and eCommerce service providers often bundle gateway service with their solutions. Your business may very well already be using a gateway service.

How are payment gateways used?

Though they’re often invisible, payment gateways serve a vital function in making payment authorizations happen seamlessly. Let’s look at some common real world payment scenarios to see how payment gateways fit in:

#1 – You’ve developed an eCommerce website, contracted a shopping cart solution and partnered with a reputable payments partner. A gateway is likely built into your shopping cart.

#2 – You’ve selected a point of sale (POS) that also provides credit card processing and gateway services as part of a comprehensive payments solution. You don’t need an additional gateway service.

#3 – You’re setting up a mail order / telephone order business and plan on processing orders on the web via a virtual terminal provided by your credit card processor. You likely still need an add-on payment gateway service. Your payment partner can help.

#4 – You’re working with an independent software vendor (ISV) that integrates payment functions directly into a branded app for your business. You probably don’t need an additional gateway service.

Payment gateways serve as an essential link in payment innovations, like subscription services. Subscription services offer a combination of convenience to consumers and predictable income to businesses that make them wildly popular. The recurring payments that anchor subscription services require payment gateways to deliver the fuel that sustains subscription-based businesses.

Can payment gateways help with cross-border sales?

Payment gateways are often the key link in processing international payments. Yet cross-border sales can be complicated. International gateway services can help your business offer multiple currency options so international customers can pay in their currency of choice. Many international payment gateways offer dynamic currency conversion as well as simplified international payment authorizations and settlement.

What are the benefits of using a payment gateway?

Payment gateways offer a wealth of benefits for businesses that accept credit and debit cards:

  • Simplicity – Payment gateways can simplify essential payment processing functions so you can focus on your business
  • Security – Payment gateways often include security technologies like encryption and tokenization that help protect your business by keeping sensitive payment data safe
  • Cost effectiveness – Payment gateways often offer convenient turnkey payments with low, transparent costs
  • Flexibility – Payment gateways also often offer businesses easy options to connect to their credit card processor of choice—even to multiple processors simultaneously

How much do payment gateways cost?

Unfortunately there is no single, simple answer.

Payment gateways should not be confused with interchange or other fees from your credit card processor that are charged separately. In determining what payment gateway service may be the best fit, be sure to make apples-to-apples comparisons. For example, compare bundled solutions against other bundled solutions with the same functionality.

Are you ready to learn more about how payment gateways can help your business? Whether you have a laundry list of questions or are ready to start accepting payments right away, one of our payments experts can help.