What is a Payment Gateway?
As the name may suggest, this is a “portal” of sorts that allows payment information to be safely transmitted to an authorizing authority without fear of prying eyes. To put it into non-digital terms, when you purchase groceries at the store with a credit card, you “swipe” your physical card in a card reader. That reader accesses the information on your card and sends it, securely, to the bank processor. That processor determines if there are sufficient funds available to the card and will send back an approval or denial, as appropriate. Payment Gateways are, in simplest terms, that device.
What do you need to know about accepting payments online?
There is no shortage of fraud in the world, and a great many things to consider. For the purposes of this post, we will focus on businesses that are looking to integrate payment processing into their website for customers to purchase goods and services digitally.
The most important thing to know about processing payments is that while it may seem simple, you absolutely should NOT attempt to bypass Payment Gateways using your own system. These authorizers have armies of security professionals to ensure that all the transactions they handle are safe and secure. They are so effective that the vast majority of malicious activity around credit card fraud occurs not from the processing, but from the sites that are handling the processing. They typically charge a percent of the gross transaction but that price helps you avoid the risk and headache of trying to setup your own system.
What do I need to know about setting up online payment processing?
Luckily, in today’s world, setting up online payment processing that links to a payment gateway is easier than ever. In the past, a lot of custom technology needed to be written that was prone to errors and security leaks, but no more. While certain large companies may prefer their own branded portals, small businesses can take advantage of the free payment processors like PayPal, Amazon, and Stripe. These create a secure, end-to-end connection for payment processing that can be setup quickly and easily.
Any decent web developer should be able to not only integrate this into your site, but guide you through the account setup and, in some cases, how to setup a physical processor with your cell phone or tablet should you need that too. It’s quick, easy, and will keep your customers happy. It is important to know that unless you or your web developer are very comfortable with code and know exactly what you’re doing do not alter the base components of these processors. If you want to capture customer details for future advertising or billing, there are prescribed ways to do precisely that. But attempting to alter the processes these modules put in place will void the legal protections for you and your customers and can get you in very hot water if anything goes wrong.
What about the fees?
Companies that provide payment gateways make their money by providing the processing service. The fees they charge on transactions are the reason they exist and can provide the security and convenience that comes with it. While not all are created equal, there are some minor differences in the fees they charge. Some offer a flat percentage, while most blend percentage with a fixed cost per transaction. Some companies may offer lower rates than others but buyer beware, there are often strings attached, like monthly subscriptions and long-term contracts. Do your due diligence and listen to the technology team that is integrating your system. A few percentage points might seem like it adds up over time, but it’s nothing compared to the cost of lost sales from bugs and lawsuits from defrauded customers.
A quick recap on how to protect customers from fraud?
- DO make sure you use a credible, insured payment processor like Stripe, Amazon or Paypal
- DO make sure you use the company provided code on your website
- DO make sure you choose a processor that’s right for you
- DO NOT try to build your own processing system
- DO NOT alter the code provided by processors
- DO NOT, as the saying goes, “step over dollars to pick up pennies” when it comes to selecting a solution based on fees.
The best thing to do in the case of online payment processing is to reach out to a technology professional who understands Payment Gateways. Together you can avoid a lot of headaches by looking at the fees, the protections, and the cost of integrating the solution into your business and website. By doing this you will be on your way to making the right call for your business and your customers.
By: Joe Adams, President, Cosmital Inc