There are numerous payment gateways out there available for e-commerce projects. What are the criteria to choose the best payment gateway?

Ecommerce has become one the fastest growing market segments at the current moment of time — the competition is all-time high and the consequences of wrong choices can be nothing short of catastrophic for any nascent eCommerce project.

According to the research — online sales share continues to grow year by year. In 2017, it was around 13% and it is to grow up to 17 by 2022.


Because of that, it is important to know how to choose the best e-commerce payment gateways for your platforms and how to refine the right combination of the options that will cover all the needs and preferences of the target audience.

With a little help from this guide, you will be able to do just that. We will explain what are the main elements of online payment systems to pay attention to. (In our next blog, check out the e-commerce platforms comparison.)

Four Foundational Aspects of the Best Ecommerce Payment Gateway

First, we need to set the record straight on the definition of the subject (sure, this is Captain Obvious moment, but you won’t believe how many times we are asked about that — so we’re just cutting it off right here once and for all.)

What exactly is a payment system? In a nutshell is an operational network governed by-laws, rules, and standards that links bank accounts for monetary exchange using bank deposits. It is designed to perform monetary transactions between mutually obliged parties.

There are four elements upon which any payment system is built upon:

  • Technological — inner machinery that makes performs operations;
  • Economic — set of principles that shape the operations;
  • Social — set of need required for the operations;
  • Regulatory — set of rules that enable operations;

Let’s break them down.

Technological aspect

The technological aspect is the infrastructure of any e-commerce payment processing system, which constitutes the mechanics and sets standard operating procedures for the monetary transactions.

Any consumer, whether it is a regular Joe Schmoe or Goldman Sachs representatives, need to be sure that deposition and withdrawal of money from one bank account to another bank account is going according to plan and completely safe from harm. At the same time, they need an accessible, comprehensible interface in order to perform the operation without breaking into tears.

This requires maintaining four vital elements:

  • Validity — ability to verify the identities of involved parties as those who they claim to be in order to prevent malicious misrepresentation, unauthorized or fictitious transactions, and other kinds of financial sabotage;
  • Privacy — the ability to secure and limit access to information about the transactions and relations between involved parties from unauthorized outside parties while maintaining the complete anonymity of the process;
  • Accuracy — ability to avoid transmission errors in the transaction process. Also, includes protection from outside tampering with the transmitted data;
  • Non-repudiation — ability to prevent consumers or merchants from denying the commitments they confirmed by the act of transaction. Also, includes recording and verification of the time of the transaction, quantity of purchase, and various supplementary agreements in order to prevent the data from an alteration in the midst of a transaction.

Economic aspect

The economic aspect is the backbone of the payment system. There is one unwritten rule that stands behind any money transaction — it should make sense and it must be feasible. 

The economic needs of the payment system can be divided into four main elements

  • Cost of the transaction — costs incurred by sellers and buyers in the process of the transaction (i.e. how much does it cost you to perform the transaction). This includes direct costs (actual cost of product or services) as well as indirect costs (for example, shipping, fees, taxes, etc)
  • Atomic exchange — means that the payment system involves consumers paying money in a transaction. (Fun fact: this term actually comes from theoretical physics, because economists couldn’t find a word to explain the fact the transaction happened.)
  • User reach — the number of users that can access and use payment solutions (your target audience should be assessed here because they are the ones who will use your payment solutions.)
  • Financial risks — the possibility of failure or mistakes of the system. Includes consumer concern about the level of security and accuracy of the transactions. It is a crucial factor in calculating possible damages or financial losses users can suffer in various scenarios. There are three types of financial risks:
    • user-related — if one or more involved parties make some kind of mistake during the transaction;
    • system-related — if something goes wrong in the system during the transaction — a glitch, hacker attack, server failure, etc.;
    • independent factors — any game-changing political, social event that directly affects the state of the economy. Any kind of event that it is completely out of reach for any involved party albeit directly affecting their finances.

Regulatory aspect

If something is happening — it must be happening according to a certain set of rules. These rules are imposed by authorities in order to maintain the fairness of operation.

Financial systems are ruled by government regulation and in order to maintain legitimacy — the payment system has to abide by the rules. There is a wide variety of legislation that regulates online transactions in every country in the world. While details may vary — essentially they cover the following:

  • Digital signatures — math scheme that demonstrates the authenticity of digital operations;
  • Fund transfers — the movement of money from one place to another via the computer-based system;
  • eCommerce contracts — i.e. terms of use agreement
  • Technical requirements and standards
  • Customs and taxation regulation
  • International agreements

Social aspect

In many ways, the social aspect defines what payment systems should have and maintain in order to be a legitimate institution. These are not rules set in stone — these are more of abstract matters that build user’s trust.

After all, what’s the use of it if no one cares about it and never bother to use it? There are several social needs any payment system needs to satisfy:

  • Anonymity — protection of user’s information about purchases and preferences from third parties;
  • Usability — the interface of the payment system must be thought through and easy to use so that any possibility of a mistake on the user’s side will be prevented and/or reverted in a short time span;
  • The adaptability of the system to a variety of the platform. In this day and age — desktop is not the only place from which monetary transactions occur. In order to be as accessible as possible — the payment system should be available on a variety of platforms — from desktop PC to mobile to gaming consoles and so on;

So What You Should Know About Online Payment Software

While all payment systems seem equal, each one is slightly different and this tiny detail can critically affect your business operation. Therefore, while it’s tempting to just stick to PayPal, Stripe, Authorize trinity because that’s what others are doing, don’t rush your decision.

Take the process of the best payment gateways choice seriously and compare the differences. While that might sound obvious, not everyone understands what is worth paying attention to. The choice of the payment gateway is regulated by your business requirements, model, and target audience.

Here are five key aspects that you have to consider before integrating with any payment gateway.

Functional requirements

One of the first things to consider is your business model and what your features would require, functionality-wise.

For example, we had a client who had to make two business pivots because the available payment systems didn’t allow cashback option in the form they needed and we have spent quite a while figuring out which payment system to integrate (and chose three: PayPal, MangoPay, and Stripe.)

Therefore, think of what you want your payment system to do and write it down (whether in technical words or not – doesn’t matter. Qualified developers’ team will understand or else clarify.)

Here are a few ideas for you:

  • Simple payments with direct transfer to your business
  • Instant payment to the merchant
  • Subscription payment
  • Split transfer to different merchants and your business (for example, if you have a marketplace like Etsy)
  • Holding payment for subsequent transfers
  • Store token-secured user data for further payments
  • Custom functions (for example, you want your customers to earn “bonuses” when they use your system)

Payment Integration and Use

If you have no idea how this payment system works and if its documentation is more complicated than a “Game of Thrones” book — it is probably better to stay away from this gateway until it sorts its bag out a bit.

Another important factor is the ability of the payment gateway to integrate with third-party software. It may fit seamlessly with the engine of your platform but at the same time, there might be some complication upon tying it together with your accounting system, shopping cart software, etc.

Consider four things:

  • Is it compatible with your platform?
  • Is it easy to integrate with your platform?
  • Is it easy to use within your platform?
  • Is it easy to maintain?

The fact of the matter: if something is not up to snuff — it is probably not worth spending time and money on. You need to find the solutions that will serve their purpose seamlessly without frustrating anyone and definitely don’t want to have glitches or even system crashes in the process.

Supported Types of Payments

The entire point of eCommerce platforms is in their ability to accept payments and it is important to define a combination of various payment gateways that will support all possible types of payment.

Depending on your business model and target audience — you need to secure full coverage of paying options for them. That means the gateway should support multiple currencies and multiple types of credit cards. (Granted, you should also think about your target audience – perhaps they need credit card payments from only one bank or using only one currency… but that would limit your audience. Just FYI.)

It is also important to maintain such options as recurring payments, subscriptions, and membership payments.

Reporting and Analytics

Another key element is the way the payment system reports on its activity and provides analytics. It is critical to understand where your platform is moving and thorough analytics can provide a deep picture of trends and patterns of your business. Because of that, it is important to get all possible info (within legal boundaries) from a gateway. That includes:

  • customer database,
  • tracking;
  • reporting.

Customer Service

No one is safe from the bumps on the roads, mistakes, or miscommunications. Because of that, there is a customer support service that can sort things out and explain what is going on if necessary.

Good customer service is able to fix things quickly and explain what happened thoroughly. You need to be sure that there is an option of live support 24/7 via e-mail notifications and reporting.

What Happens if You Choose Wrong?

We don’t want to sound too morbid, but the aftermath of the wrong or misguided choice of payment system can be catastrophic for your budding e-commerce store or marketplace. On the one hand, it can severely limit the audience while on the other it can scare off the sellers. Both due to lack of preferred options or lack of user reach of the particular payment system.

While outside of the context that may seem not very tragic — if you take into consideration every other element of eCommerce operation (products, shipping, discounts, accounting, etc.) — a poorly chosen payment gateway is basically throwing money out of the window.

Poor integration of the gate is even worse. If done wrong — not only the customer will be frustrated by the erratic operation but chances are you will be forced to refund the whole ordeal just because you haven’t bothered to make it right from the start. While such occurrences usually don’t happen more than once — even one such event is already a serious strike against your platform.

Read also: Payment gateway comparison

In Conclusion

Ascension of e-commerce changed the very foundation of consumer perception of The Internet — from the diverse bottomless pit of information and niche social interaction hub to a fully-fledged extension of everyday life with any product or service user can imagine at arm’s length.

That sea change made Payment Gateways a major force to be reckoned with. From the very start — digital payment systems offered an alternative — better, leaner, more transparent, etc. The industries built around them are brimming with opportunities because of that.

This attracted many who wanted an easy opportunity for profit. However, slight oversights, carelessness, and needless daring had proven that there should be a reasonable approach to the choice of payment integration.

We hope that this guide will be helpful for any e-commerce businessman.

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