Narrowing down your options to the best payment gateway provider is one of the crucial elements to ensure business success.
Payment gateways have evolved over the years to suit the changing demands of businesses and consumers. A payment gateway is the route on how you accept payments from customers on your shop website. The payment gateway ensures that you can accept payments online or with the use of credit cards.
The main functions of a payment gateway are as follows:
- Verifies billing information
- Verifies there is sufficient fund for the customer’s preferred payment method
- Validates and approved requests
- Issues confirmation number
- Ensures you get paid
Classic or Modern?
One of the requirements when using a payment gateway is for business owners to apply for a merchant account. This goes for classic payment gateways. This will enable you to receive credit card payments for your online shop. Without a merchant account, your payment gateway would not be able to transmit funds into your account.
There are however a number of payment gateways that would not require you to open up a merchant account. These modern payment gateways can directly draw the funds from your customers’ respective credit cards or bank accounts, validate, and then deposit the payment straight to your account. This is how modern payment gateways work – all you need to have is a bank account and you’re all set.
One clear advantage of using modern payment gateways is that setting up an account is a breeze. The only downside though would be dealing with higher fees. Modern payment gateways like PayPal, Simplify Commerce, and Stripe are very easy to integrate or set up on your website. You also do not need to open up a new bank account to get it up and running. These payment gateways make it relative easier and quicker to get the business rolling from day one.
Classic payment gateways are considered cost-effective and ideal especially for bigger companies or stores. For smaller businesses or startups, the costs may not be a big deal at first but it can add up and can be a nuisance as you grow your business.
The only disadvantage to classic payment gateways is that this would usually require some technical knowledge due to API integration and is also much longer to set up than the modern payment gateways.
Hosted or Integrated?
PayPal is one example of a hosted payment gateway. With this setup, your customers are redirected to the payment processor’s platform for their payment information. With a hosted payment gateway, the provider takes care of data security and PCI compliance. With an offsite payment gateway, you wouldn’t have to worry about data breach or security. However, this can also cause abandoned shopping carts or failed conversions especially if customers are redirected to an unknown payment gateway.
With an integrated payment gateway, the customers would not need to leave your store for submitting orders and payments as there is a payment gateway that connects your website with the gateway’s API. This provides a seamless and convenient user experience for your customers.
Most ecommerce platforms are practically easy to set up although there are unsupported gateways that would need some programming skills to get it functioning.
Choosing the best payment gateway provider for Canadian business relies mainly on knowing the regulations and be able to select one that works best for your business needs and that which can translate to actual conversions or sales.