Small business payment gateway

What is a payment gateway?

When just starting your own small business, accepting online payments from your customers won’t probably be the most complex thing on your way. Most likely, you’d integrate a basic payment solution by a popular local provider or choose a trusted global service like PayPal. But as your business grows, you start looking for any optimisation opportunities available, including ones in payment processes. This is when solutions like payment gateway come to your attention.

  • Payment gateway is a digital solution that allows processing online transactions for businesses. Its key functionality is encrypting customer’s credit card data that they enter on checkout to pay and securely transferring the encrypted data along with the transaction information to a payment processor. This way, a gateway acts as an intermediary between a merchant and a payment processor.

In simpler words, a payment gateway moves funds between your customer’s bank and your merchant account. In the case of an in-person purchase at a physical store, the tool needed to pass credit card data from the customer to the payment processor is a POS terminal. At the same time, for e-commerce transactions, it is done with the help of a payment gateway via APIs.

How does it work?

Let’s figure out how payment gateways work by imagining what happens when a customer wants to make an online purchase on a merchant’s website. Here is a list of the steps the process requires:

  • A customer clicks “Pay,” “Buy,” “Order,” “Deposit,” or whatever else button that leads to the payment page.

  • On a payment page, they choose the preferable payment option (of course, if the merchant supports a few options to choose from). Let’s say it is a credit card payment.

  • A customer fills in the checkout fields requiring their payment details.

  • A payment gateway encrypts transaction data to transfer it securely and prevent fraud, and forwards it to a payment processor.

  • Acquiring bank and card issuing bank approve the transaction.

  • Gateway informs a customer that the payment has been successfully processed.

Why do small businesses need payment gateways?

The primary purpose of using a gateway for a small business is the ability to accept payments online. If you have a tiny local online store, you’re good to go without a gateway, but we would strongly recommend having one for a small business aimed at growth.
Gateways make payment acceptance more protected, reliable, stable, and fast. They may provide you with a payment page that will meet the expectations of your client base, improving their experience and increasing the chances that they will return.

How to choose the best payment gateway for a small business?

There are a variety of payment service providers that offer merchants payment gateways of different types. Some top names of the payment providers include Stripe, Square, PayPal, Authorize.net, and others. However, choosing the company to power your payments just because it’s in the center of attention is not the best tactic. Instead, here is the list of what to look for in a payment gateway:

Payment processing features and capabilities

Choose a future-proof solution that is flexible and capable of meeting your business needs as it grows so that you don’t have to look for a different payment gateway in the coming months. For this, look at the payment methods supported. World’s largest payment systems, like Mastercard and Visa, are a must. There should be both local options and some popular global ones. Plus, mobile payment methods like Google Pay or Apple Pay. The solution also has to support all your sales channels, be it online, mobile, or even in-person payments. On the other hand, if you know for sure there are some features you will never use, opt for a platform without them - this way, you may save on fees.

Security

Dealing with payments requires maximum attention to safety. Choose a trusted and reliable payment partner with a PCI compliance certificate and all the encryption, masking, tokenisation, and fraud prevention solutions. You have to ensure the customers’ details are duly protected.

Reasonable pricing

Payment service providers charge various types of fees, including per-transaction fees, setup fees, monthly fees, etc. The first fee is commonly the lowest one, amounting to a few cents, while setup and monthly charges range from dozens to thousands of dollars. Carefully review the pricing of payment gateways before choosing one, and calculate your costs.

Technical support

As with everything that is online, payments are not immune to downtimes and technical issues . That’s why it’s important for the payment gateway to have decent technical support available to help you clockwise. You can connect via various channels: in chat, by phone, by email.

Ease of integration and quick onboarding

Small businesses usually can’t boast a big team with development specialists. Because of that, integration with the payment gateway must be quick and straightforward, without coding efforts on your side. The same is true for onboarding. The solution able to cover the needs of a small business should allow you to start accepting payments right away.

When choosing a payment partner, don’t neglect to check online reviews. The real experience companies have had with the payment gateway sometimes can tell you much more than a sales representative.

Pro tip

As you scale up, chances are you will come up to the point where a single solution is not enough. In that case, we suggest integrating more payment providers. It gives your business access to the combined capabilities of all the vendors you connect with, allowing you to build a robust payment strategy. However, it is more pricey, and it makes managing the money flows harder. By using a payment orchestration platform like Corefy, you will eliminate the major downturns of working with multiple service providers, bringing your payment game to a new level.

What additional features can payment gateways offer small businesses?

Trying to win over competitors, payment gateways increasingly support additional services and features besides payment processing.

For instance, some support automated reports generation and advanced analytics. You’d be able to turn numbers into insights that will help you tweak your operations.

Some platforms also offer chargeback and disputes handling assistance and solutions, which may come in handy if you’re in a high-risk industry.

Many of them also make processing more optimised, implementing technologies like smart routing and cascading.

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