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Payment gateways provide a seamless checkout process, but some may suit your business more than others. Before choosing, take time to look at their wide range of features. You also want to compare their transaction fees.
But in the end, your customers are your main focus. Your payment gateway must fit their preferred payment method. If your Payment Gateway doesn't accept their card or digital wallet, they'll abandon their shopping cart. And this will negatively impact your bottom line.
Understanding Payment Gateways
A payment gateway is a software application that acts as an intermediary in a four-step digital sales transaction. Once a customer enters their payment information, the gateway encrypts it before transmitting it to the merchant, then to the customer's bank to authorize payment, and then to the merchant's bank to process and apply it.
According to research conducted by payment gateway, Stripe, e-commerce sales are projected to reach $6.35 trillion globally by 2035. As the number of customers who prefer to place orders online continues to grow, businesses that fail to provide secure seamless gateways that work with all payment methods and currencies can lose customers to competitors.
At the same time, fraud and cybercrime are expected to grow, costing businesses a projected loss of $362 billion between 2023 and 2026. This makes choosing a payment gateway that adheres to PCI DSS compliance standards mandatory if you want to protect your business and customers.
Key Features to Look for in a Payment Gateway
Before you start searching for a fitting payment gateway, you should understand what it is you’re looking for and what features are critical to your store.
Security and Compliance
The payment gateway must be PCI-DSS compliant, meaning it satisfies the Payment Card Industry Data Security Standard.
- Critical information must be encrypted using SSL (Security Socket Layer) or TLS (Transport Layer Security) protocols.
- Fraud detection algorithms, AVS Address Verification Service and CVV Verification Value Codes are also desirable measures.
Payment Processing Fees and Transaction Costs
No matter how large your monthly sales volume is, the ongoing monthly fees can affect your e-commerce profitability. Depending on the gateway:
- Monthly subscription fees can range from $25 to $50.
- Payment processing fees can vary between 2.4% and 2.9%, plus a fixed per-transaction charge.
Ease of Integration With Shopify
Shopify integrations allow merchants to connect third-party services, apps, and tools to the Shopify platform, permitting use without leaving the platform.
Supported Payment Methods
Offering payment options like credit and debit cards, and digital wallets like PayPal, Amazon Pay, Apple Pay, and Google Pay are essential. Not including them is risking losing customers who, when they don't find their preferred payment method, go in search of a website that does.
Customer Support and Service Reliability
Whether your merchant account is a fixture on Spotify or just getting started, it's essential that, when needed, you can access customer support with a minimum of delay.
Multi-Currency Support For Global Reach
Apps that can issue invoices and accept payments in foreign currencies benefit everyone. They speed up the transaction and the time it takes for funds to be directly deposited into the merchant's bank account.
Top Payment Gateways for Shopify
Now, let's take the time to review the 8 most popular payment gateways used on Shopify online stores.
1. Shopify Payments
Shopify Payments is available to all Shopify merchants, so there's no need to set up a separate merchant account or third-party payment provider. In addition, it's compatible with several sales channels, allowing you to take payments through popular sites like Instagram, Google, and Facebook. Last but not least, it gives free card readers for processing cash sales.
Pros
- Consolidates order management, payment processing, and analytics.
- Accepts several currencies and automatically converts them.
- It has lower processing fees, and when using Shopify Payments on third-party gateways, saves up to 2% in transaction fees.
- Accepts multiple payment methods including credit cards, digital wallets, PayPal, and Buy Now Pay Later
Cons
- Can take up to three days for payments to reach your bank account.
- Unavailable in some countries.
2. PayPal
In existence for almost 25 years, PayPal is a globally-recognized name, so customers feel safe purchasing from businesses that accept it. In addition to accepting credit cards, digital wallets, and Venmo, PayPal allows customers to pay with funds in their PayPal accounts. Since it requires neither a contract nor a start-up fee, if you're new to the world of e-commerce, you can start your online business today.
Pros
- Offers a variety of payment options
- Accepts 25 currencies and is available in 200 countries.
- PCI-DSS plus encrypted payment information and built-in fraud-detection algorithms 0ptimze security
- Dynamic one-touch button speeds up the checkout process, improving customer experience.
Cons
- Can take 4 – 5 days for funds to appear in your bank account.
- Customer support is hard to reach
- Costs run high – 3.49% of each transaction plus a 49-cent transaction fee.
3. Stripe
Accessible in 47 countries, and accepting over 165 currencies via debit and credit cards and ACH (Automated Clearing House) transactions, Stripe is popular with online merchants. Its extensive toolkit makes customization simple for those with technical skills.
It can be integrated with online shopping carts like Shopify, Adobe Commerce, WordPress, and WooCommerce. Stripe can also process in-person payments via the Stripe POS system.
Pros
- 24/7 customer support
- PCI-DSS,3D security, and machine-learning fraud detection
- Payment options include debit and credit cards, bank transfers, Buy Now Pay Later, bank transfers, digital wallets,
- Integration with some e-commerce shopping carts
- Can be tailored to service subscription services and accept recurring payments, and cash vouchers.
Cons
- Difficult to customize for those without technical skills
- Expensive for small merchants
4. Authorize.net
With its simplified payment setup, Authorize.net gives merchants the ability to accept payments via debit and credit cards, digital wallets, and electronic checks.
Pros
- Optional Shopify integration for smooth payment processing
- Advanced fraud protection algorithms
- Accepts a variety of currencies
- Easy-to-reach responsive customer support
Cons
- Expensive for small merchants
- UI is not user-friendly
- Charges a monthly subscription fee
5. Square
Square, with its signature compact payment reader, was designed for online merchants on the go. But once its online processor is in place, it can also accept mobile payments in brick-and-mortar establishments. All that's needed to accept card and digital wallet payments are the Square payment reader and your mobile device. Square is available in the U.S., U.K., Canada, Australia, Japan, and Ireland, and accepts 27 currencies.
Pros
- Easy setup
- Relatively low processing fees
- Can generate invoices and issue receipts
- Flexible payment system
- An algorithmic fraud prevention system monitors activity and immediately flags suspicious activity.
Cons
- Not scalable
- Poor phone support
- Funds can be frozen if irregular activity is detected.
- Expensive for merchants who generate high-volume transactions,
6. Adyen
Adyen uses over 200 payment methods to process payments in over 180 currencies across 100 countries. This makes it suitable for large online businesses that focus on international sales and those that offer subscriptions and recurring payments.
Pros
- Payment options include local payments, digital wallets, and all major credit cards.
- Secure online options include mobile apps, in-store transactions, and digital tokens.
- Round-the-clock customer support
Cons
- Transaction fees differ according to location.
- Mandatory monthly invoice minimums put it out of reach for low-volume businesses
7. 2Checkout (Now Verifone)
Previously called 2Checkout, Verifone maintains its focus on fraud prevention and secure payment processing. To this end, it offers merchants a variety of secure devices and software, enabling them to process online e-commerce payments as well as debit and credit cards.
Pros
- Responsive customer support
- Ease of use.
- Intuitive interface
Cons
- The touch screen is often non-responsive, causing user frustration.
- Frequent chip reader malfunctions make it difficult to process payments
8. Razorpay
Created for merchants in India, RazorPay Gateway fights fraud by requiring authentication of both sellers and buyers from their respective banks.
Pros
- Uses multiple connections to ensure successful transmission
- Integrates with native-built websites but also provides plugins to other gateways, including Shopify, WordPress, Magento, and WooCommerce
- Can handle 800 transactions per second without deterioration.
Cons
- Poor customer support
- Fees and bank charges make it unsuitable for small businesses.
Table Comparing Payment Gateways
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Best Use Cases For Each Gateway
Finally, let’s summarize the best uses of the 8 payment gateways we’ve reviewed so far.
Shopify Payment Gateway is best for merchants who use Shopify as their e-commerce platform or on their Point of Sale (POS) device. Since it allows e-merchants to process in-person and online payments without outsourcing them, it's ideal for those just starting their online businesses.
Paypal is well suited for businesses new to e-commerce because it requires no contract, nor does it charge start-up fees. And once they've established their account, merchants get access to its collection of tools that will help them run and grow their business.
Stripe includes features like on-file card retention and recurring payment billing, making it ideal for businesses that offer subscriptions.
Authorize.net is suited to businesses requiring multiple payment methods. It accepts credit and debit card payments, virtual wallets, checks, and recurring payments, plus the ability to set up virtual terminals and POS,
Square is ideal for in-person on-the-go transactions at farmer's markets, street fairs, and at table payment processing restaurants,
Adyen uses 200 different electronic payment methods to process payments in 80 different currencies from just under 100 countries. This makes it a good choice for large enterprises that deal in global online mobile sales.
2Checkout (now Verifone) with its wide range of software and devices that facilitate e-commerce and mobile payments as well as credit and debit cards are suitable for virtually every type of business.
Razorpay is limited to use in India.
Frequently Asked Questions
What is the best payment gateway for small businesses on Shopify?
Shopify Payments is ideal for small businesses on Shopify as it integrates seamlessly, avoids extra transaction fees, and supports multiple payment methods. Stripe and PayPal are also popular for their flexibility and ease of use.
How do processing fees affect my store's profitability?
Processing fees reduce your store’s profitability as they are deducted from each sale. Shopify Payments offers reduced fees compared to external gateways. Consider these costs when pricing products to ensure you're covering fees without hurting profits.
Can I use multiple payment gateways on my Shopify store?
Yes, you can use multiple payment gateways on Shopify. This allows customers to choose their preferred payment method, improving user experience. Shopify Payments, third-party gateways, and PayPal can all be configured to work together in your store.
What security measures are provided by Shopify payment gateways?
Shopify payment gateways offer security features like PCI compliance, fraud detection, and encryption to protect customer data. Shopify Payments, for example, ensures secure transactions and helps minimize chargeback risks through its built-in fraud analysis tools.
Conclusion
Without a payment gateway on your website, your online shoppers would have no way to pay you. With so many offering tools like analytics and foreign currency conversions, your first concern should be the ability to seamlessly and securely transmit credit card information to banks, and send authorization back to your website for payment settlement.
Your second should be transmission fees and recurring payments, since they can eat into your bottom line.
Lastly, since your customers are apt to be anywhere in the e-commerce universe, you want a payment gateway that can be accessed from anywhere in the world.
In addition to reading this guide, you need a payment gateway expert for personalized recommendations and guidance. That's why we invite you to contact Transform Agency and talk to one of our experts.
Expert in ecommerce website development topics. Skilled SEO Specialist with a proven track record of improving website visibility and search engine rankings. Experienced in keyword research, on-page and off-page optimization, link building, and content strategy development. Passionate about staying updated with the latest SEO trends and algorithm changes to ensure optimal online presence.
Experienced SEO Specialist with a proven track record of improving website visibility and search engine rankings. Skilled in keyword research, on-page and off-page optimization, link building, and content strategy development. Passionate about staying updated with the latest SEO trends and algorithm changes to ensure optimal online presence.
