Every time a customer orders product online, the checkout page has a sort of hidden link to a payment processing center. When a credit or debit card is used as payment, the encrypted information is sent to the processing center, and this service is known as a payment gateway. If you are operating a business that offers customers the opportunity to purchase a product over the Internet, consider the many benefits of using a payment gateway.
How A Gateway Works
A gateway service incorporates a series of coded text into the checkout pages of the website, and when a customer hits the submit button, his or her credit/debit card information, the amount being paid, the customer’s shipping address and email are sent along to a processing center. The gateway will determine if the transaction is valid, authorize and capture the payment, and in most cases send an automatic confirmation email to the consumer. In one or two days the funds will be transferred to the merchant’s business checking account.
In decades past, credit card transactions were generally conducted over the telephone, with the card information being entered and submitted by the retailer to a merchant account company who then processed the entire transaction. A gateway service is more in line with the needs of merchants and service providers who receive the bulk of their orders online. It is also a secure method of processing credit card payments, something the consumer will demand when shopping online.
Setting Up A Gateway
Often the designer or host of the merchant’s website will have some sort of agreement with a gateway provider and can offer their services directly when a new site is completed. This can be extremely beneficial considering how long it might otherwise take the business owner to establish a good credit rating with a traditional merchant account processing company. A payment gateway can be set up in just a day or two, allowing immediate authorization of any credit or debit card transaction. A computer technician will write in the appropriate html coding into the checkout pages of the retailer’s website, then the retailer can visit the online pages of the gateway company and program various things such as confirmation messages, whether he or she wants to authorize payment only, or capture the payment immediately. A customer page can also be set up that will contain information such as customers’ usernames and passwords, the buying histories and the details of the transactions, such as whether the payments were always accepted for a particular card.
Costs Of Using A Gateway
These vary depending on the individual company and the extent of their services. Many gateways will have a flat fee for each transaction, regardless of the order amount. Others will have a base fee plus a small percentage of the order total. And others will only process payments for physical products and not virtual products or services such as downloaded information.
When choosing a payment gateway, make sure you understand exactly what fees may be charged in addition to the per-transaction costs. These may include small penalties for charge-backs, fraudulent transactions, reports of stolen cards and refunds demanded by the customers.
Will A Payment Gateway Be A Good Investment?
The most important point to consider here is the volume expected per month. If the orders placed are frequent enough and average a certain amount of profit per sale, a gateway is likely to be a very good investment based on the amount of sales you actually make. Play with the numbers and see if the amounts paid per month in gateway fees are low enough when compared to the expected monthly sales volume.