How does Payment Gateway allow Merchants to go beyond traditional limitations?
The main principle behind business is that one party provides a service or goods in exchange for getting paid by the other party, so the whole profit part of this process demands the ability to accept payments.
What is a Payment Gateway?
A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers.
A payment gateway is a software application that payment service providers use to process payments for online purchases originating on a merchant’s website. It acts as an interface between the merchant’s website and a payment processing bank known as an acquirer.
Now let’s talk about
How does it work?
When a customer purchases a product or service on a website that is connected to a payment gateway, the gateway performs a variety of tasks to process the transaction. Once the customer places their order on the merchant’s website, they choose to checkout or pay and are then redirected to a payment page to enter their credit card details. If the merchant is fully compliant with the necessary security standards, the payment page can be generated on the merchant’s service and the cart information collected and passed on to the payment application in a secure way.
Let’s talk about how payment gateway allows a merchant to go beyond geographical limitations in terms of audience and to boost revenue from the extra capabilities brought by these systems.
The advantages of online payment processing are numerous — let’s go over the benefits enjoyed by businesses who accept online payments.
Top 3 reasons to use Online Payments:
- Reaching global audiences
Possibly the biggest appeal to accepting online payments is that a business can open up shop to the whole world. As a merchant selling online, your offering is available to much more than just your own nationals — about 56% of online shoppers favor shopping cross-border and therefore expand your sales reach to these global, eager audiences.
2. Reduced costs for transactions
In comparison to classic payment setups, where the shopper has to visit a store and pay there or mail a check, online payments take place in a much more automated environment. This translates into their reduced costs. Instead of having to employ a cashier or deal with the costs of processing payment slips, merchants are able to set up payment systems, often at no upfront cost, and subsequently pay low transaction fees whenever a sale is recorded on their site.
3. Payment security
Accepting online payments comes with lower financial risks for the merchant, by comparison to traditional methods, where the seller may have to verify the integrity of the cash payment or deal with the fees associated with a bounced check.
Reviewing each of these factors will guide you when you need to compare online payment gateways to choose the option that’s best suited for your business. Take into consideration the features you would like, the personalized format you’re capable of sustaining, and whether you would favor delegating security or managing it in-house.