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How to Choose the Best Payment Gateway for Small Business

How to Choose the Best Payment Gateway for Small Business

Being a start up is challenging but fulfilling considering the current market scenario. Because of the technology, it has now become easy for growing businesses to expand their customer reach but simultaneously they need to work on improving their cash flow. Small businesses need to streamline their customers’ payment processes to upgrade their cash flow. Payment gateways are not only feasible for customers, in fact, these payments also reflect instantly on your end and improve your cash flow. 

If you want to receive online payments, it is necessary to have a secure payment system that will manage your customers’ sensitive data. In essence, this is what a payment gateway is designed for: it allows online payments and charges your customers’ credit cards securely. 

Marketplace offers different payment gateway options to the entrepreneurs making their job difficult. As a new business in the market, you need a Payment Gateway that is not only safe and quick but also offers different payment options to the customers. 

How Payment Gateways Securely Authorize Online Payments? 

  • Validating customers’ credit card details securely.
  • Make sure enough funds are available to complete transactions.
  • Approving transactions and transferring the amount to your account.

How Do Small Businesses Start Receiving Payments?

The following three things are prerequisites with regard to receiving credit payments:

  • A merchant accounts
  • A business bank account
  • A payment processor

Although, the merchant account is a temporary holding account. It acts as a receiver for payment processors and then transfers all amounts to your bank account. The purpose of using a merchant account is to minimize the incidence of recalled payments. Creating a merchant account is the initial step in the payment receival process.  

Types of merchant account 

  • Dedicated Account 
  • Aggregate Account

Dedicated Account

This account is set up for an individual and is a lot like an individual bank account. It involves a lot of underwriting and often the account provider does a risk assessment before giving you the account. Holders regulate a dedicated account and have the authority to perform activities, such as, set custom holding times, negotiate rates, and more. This type of account is suitable for brick-and-mortar stores that want to go cashless and is open for online payments. 

Aggregate Account

This is a shared account, where your money is held in a commonly shared account with other companies’ money. It is easy to get started with an aggregate account but the holder does not dominate to negotiate transaction rates. Aggregate accounts are apt for eCommerce businesses.   

Things to Consider While Choosing a Payment Gateway

Payment GatewayThe right payment gateway is significant for a company’s smooth and effective functioning. Before finalizing a payment gateway make sure it aligns with your business model, the wrong choice can poorly impact your cash flow and you might end up losing both money and customers.


Below we have discussed certain factors that every small business should consider while choosing a payment gateway:

Cost

Choosing a payment gateway does not come free; you’ll have to incur its cost. Utilizing a payment gateway includes three types of cost: set-up fee, monthly fee, and transaction fee.

At the time of choosing a payment gateway, consider both the volume and value of your transactions. Many payment gateways available in the market include a competitive transaction fee rate of 2.9% + 30c. This formula might work in a situation when the value of a transaction is not that high; if the transaction value is exorbitant then your transaction fees can increase your expenses. 

If your company deals with sky-high value transactions, then you should go with a payment gateway that provides services on a monthly basis and with a low transaction fee. 

Types of Cards

Almost all payment gateways accept Visa, MasterCard, and Amex because these are the most used credit cards. However, not all customers prefer to use these cards; some make transactions using other cards as well, such as debit cards or a Diners Club card. Make sure your eCommerce software development payment solution supports all kinds of cards that your customers can use.

Review the Purchasing Funnel

Too many steps on the payment confirmation page result in consumers dropping off. As an organization, you need to be certain about the information you are asking from your customers, too much info can be a recipe for disaster. 

Evaluate the purchasing funnel available on the Payment Gateways website or ask them to display the demo. In this way, you’ll get an idea of the process that will function. But when it comes to Hosted Payment Gateway, it does not offer much liberty as compared to Integrated Payment Gateways.

Integrated Payment Gateway gives users multiple checkout options, such as one-page checkout, multi-page checkout, and style form fields. By using analytics data, it is easy to eliminate the barriers to conversion.

Holding Time

Even though payments are approved instantly, the money is usually held for a few days before it is settled in the final account. This is to allow for handling of refunds and chargebacks. These holding periods differ from 1-7 days depending on the payment service provider. 

Multiple Currency Support

If you are planning to expand your reach globally then make sure that your payment gateway supports payment in all different currencies. To gain loyal customers it is important to give customers a familiar feeling and allow them to make payments in their currency. 

Recurring Billing

If you are into a subscription-based business, then you need to choose a payment gateway that is efficient enough to handle all the moving parts that go into recurring billing. The provider you choose to work with should be able to save and store customer details for future transactions. The provider can automatically charge credit cards on their scheduled subscription and can offer retry options on failed transactions.

Security

Receiving payments online means your sensitive financial information is at risk. Hence, it is of utmost importance to prioritize the security of eCommerce software development payment methods. A payment gateway with level-1 PCI DSS compliant is more secure and reliable. 

Mobile Payment Support

A majority of customers make payments using mobile phones, so now it has become important for organizations to select a gateway that can support payments from mobile devices as well. This way your customers can enjoy the flexibility and can make payments regardless of what device they use. 

Mobile Payment Support

Integration With Other Systems

It is a bonus if your payment gateway can connect with your accounting software, this way whenever an online payment occurs, the corresponding invoice will update automatically in your bookkeeping system. This integration will save your time and effort because consequently, you won’t have to indulge in the process of updating payments manually to keep track of payments. 

Wrapping Up

Choosing the right payment gateway will make your payment process smooth and hassle-free. Though it is a time-consuming task to find a payment gateway that suffices to all your needs. Hence, before deciding on any eCommerce software development payment solution make sure that it serves all your business needs, can be used in your region, is capable enough to receive payments globally, and comes at an affordable rate.

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