In an e-commerce portal, the average cart abandonment rate is 69.57 %. There are a lot of factors that can be altered to reduce this number.
These factors can be :
- Displaying a clear call to action.
- Continuous reminders of cart contents.
- Multiple payment methods.
A good payment gateway can gradually reduce this number, leading to more and more conversions.
So let us start today with what is a payment gateway, what merchants need to know about payment gateways, types of payment gateways and some of the best examples available for e-commerce business portals.
What is a payment gateway?
A payment gateway is a system that connects a bank account to a related payment processor. It will transmit transactions virtually or through web payment services, even personally through a payment terminal or APIs. This payment service will authorize different modes of online transactions like credit cards, debit cards, internet banking, UPI and other types of digital wallets.
A new business owner needs to take into account the necessity of payment gateways. It guarantees smooth transactions and secure payments as well as protection of sensitive data. A lot of payment gateways come with screening tools for frauds like CVV, OTP verifications, address verifications to reduce the risks of loss of information and any kind of theft.
The working of Payment Gateway
A payment gateway will assist you in authorizing and processing transactions between customers and retail merchants irrespective of online or offline stores. So let us look at the workflow of the payment process.
- A customer completes a transaction at a physical store or places an order online.
- The transaction is securely transferred by the payment gateway to the bank(Either merchants or acquirers).
- The payment gateway later assesses which credit card/debit card provider issued the buyer’s card or banking information.
- This transaction information is then routed by the payment gateway to the accurate payment switch.
- The transaction request is sent to the issuing bank by the payment gateway as well as the information to the credit card network or debit card provider bank.
- Banks also run this transaction procedure through their fraud detection tools or processes. This leads them to conclude whether the transaction is legitimate or not.
- At last the issuing bank approves or declines the transaction based on the data and sends that information through the credit card network, debit card bank to the merchant’s bank as well as the payment gateway.
Different kinds of Payment Gateways
Hosted Payment Gateways
It is a simple redirection gateway that directs the customers away from the site’s checkout page. The customers are redirected to the Payment Service Provider by clicking this link. The customer will fill out their payment information and then they are routed back to the merchant’s website to complete the checkout process after they have ordered. These hosted payment gateways can be customized according to your needs, they are fully secure as the transactions are PCI compliant and protected by fraud safety tools.
API hosted payment gateways
With the help of Application programming interface gateways, the customers can input their credit card or debit card details directly on the checkout page of the merchant's website. The payments are handled efficiently using APIs or HTTP queries. This is a favourable gateway because it is customizable providing a complete overview of the customer’s journey and user interface. It also provides integrative capability with the freedom of using it on any kind of device.
Self-hosted payment gateways
This is a simple type of gateway where the payment information inside the merchant’s website is gathered from the customer. On requesting the information the data collected is sent to the URL of the payment gateway. A lot of payments need a particular format for the payment information whereas others need a hidden key. It is advantageous because it provides better customer service and the whole transaction is completed in a single location. The whole payment journey of the customer can be monitored by the merchant.
Local Bank integration gateway
In this kind of payment gateway, the customer is redirected to the website of the payment gateway (i.e the bank's website), where the payment and contact information is filled out by them. After that, the customer is redirected to the website of the merchant after the payment process is completed. Once it is redirected the payment notification data is sent. It is simple, very easy to install and is beneficial to small enterprises that require a simple one-time payment system.
Some of the most popular and well known payment gateways are mentioned below:
So these were some of the popular e-commerce gateways, for your information. So, now that you have set up an elegant and functional online store, when the customers try to initiate payments do not go through and the customers are stuck. Payment gateways can either prosper your business or dismantle it the same. So, you need to choose the right payment gateway that will provide the customers with a hassle-free experience.
Lucent Innovation will assist you in creating integrated payment gateways with your e-commerce store irrespective of their CMS system. We help you choose the correct payment gateway logically with reason and reputation. Each Payment gateway comes with limitations but they can be minimized or eliminated. Lucent Innovation helps you consider multiple payment gateways at the time of redundancy, also ensuring failsafe if one malfunction.
Lucent Innovation is a full-service software design and development company and an expert e-commerce solution provider. We create custom applications for our clients leading to an improvement in the efficiency, increased growth and profitability of the business. We also build e-commerce websites that are ready to sell, scale and grow.
Contact us for your next project!
Also, read: Neobanking- A fresh way of banking