Payment gateway providers are becoming a necessity in the modern business landscape. They play a pivotal role in the online payment ecosystem, facilitating and securing online payment transactions of eCommerce stores, online businesses as well as brick and mortar shops.
In a nutshell, an online payment gateway enables merchants to accept payment from their customers through a third-party service or application. The service encrypts all information related to the transaction such as credit card or financial data and customer information, ensuring no unauthorized entities can access, steal, and manipulate such sensitive data for their own purposes.
So how does a payment gateway impact your business? Here are some of the ways.
1. Prevent Credit Card Fraud
In the United States alone, US-based merchants lost a whopping $6.4 billion due to credit card fraud. Still, experts see the trend increase in the future as more businesses pop out and accept online payments.
According to the 2017 Global Fraud Management Survey, 72% of organizations will accept payments via the cloud and other online means. As more people are opting to shop online, there’s a greater risk for payment fraud.
In fact, payment fraud remains a major concern among treasury professionals. Forty-four percent said it is the greatest operational challenge they are facing. This was revealed during the 2018 Association for Financial Professionals Annual Conference.
So how does a payment gateway protect your business from credit card fraud? Most payment gateways, if not all, perform a variety of checks and other procedures to authenticate the identity of the customer before validating the payment and therefore approving the transaction.
Among these procedures include Address Verification Service (AVS), Card Verification Value (CVV), Device Identification, Flag Large Transactions, Payer Authentication (3-D Secure), Flag High-Risk Countries, and Risk Scoring.
2. Achieve and Maintain Total Compliance
PayPal, Skrill, and Stripe are some of the few popular international payment gateways. That said, there are several others that operate within specific territories and continents, making them highly specialized and compliant to prevailing online payment laws and regulations in those areas. PayRetailers is a widely-used payment platform that serves merchants in Latin America and Europe.
There are quite a few standards that merchants must abide by to process and accept online payments. The most popular of which is the PCI-DSS Compliance (Information Security), the GDPR (European Data Protection Rules), and the PSD2 (Third-Party Retail Banking Regulation). If you’re a merchant that sell to international customers, imagine keeping up with the said compliance regulations manually. It’s a total nightmare.
Payment gateways are compliant to existing compliance and laws by design. They are also built to seamlessly integrate with the merchant’s e-commerce solution. The setup allows for instant delivery and implementation of security over all transactions as per compliance standards, no matter how complex they may be.
The bottom line is you take care of your customers while the payment gateway handles all your compliance requirements.
3. Accelerate Payments and Increase Success Rate
Payment gateways speed up your transactions in more ways than one. For starters, you can embed a “one-click checkout” button or widget on your site and it will take your customers directly to the checkout page. Customers just have to fill in a few fields and purchase the product without much fuss, resulting in a very positive experience for your buyers and enhanced success rate at your end.
Payment gateways enable you to offer customers multiple payment options. This functionality is very useful in a number of cases. For instance, a failed transaction with one acquirer may be accepted by another. If a certain acquirer is down or offline, payment can be processed with a new acquirer. Special transactions and unique features like international purchases, 3D authentication, and dynamic conversions can be routed to different acquirers if they are not supported or declined.
Because your business can process payments faster through a variety of channels, your success rates increase. This impacts customer satisfaction. It increases their confidence and encourages them to do more business transactions in the future.
Ever Growing Demand for Real-Time Online Payments
The eCommerce industry is expected to grow by a significant margin in the near future. The 2019 edition of The Payments Ecosystem Report predicts the eCommerce market will increase its value, exceeding $1 trillion by 2023.
Along with such expected growth, consumers are also anticipating real-time payments. Buyers define “real-time” as immediate when used in a financial context. That means the velocity of the payment process will be a huge differentiating factor in the future, one that will shape the future of eCommerce.
Many popular payment gateway providers now offer real-time payment processing as others are now following suit. It won’t be long before payments are approved in seconds, instead of hours.
Online payment service providers that process payments in days will be greatly affected. So are the businesses that use their services. Make sure your business is up to speed, pun intended.