Guide to Payment Processing Gateways for Online Vendors

People are spending more and more of their retail dollars online. Presently, e-commerce is about 10% of total retail sales, and this number continues to grow. Online merchants need to have a seamless and secure checkout process to attract customers to their online store. That is where a payment processing gateway comes in. Many gateway companies, such as Blue Snap, are available today to use for payment processing needs.

What is a Payment Processing Gateway?

Typical business owners lack the expertise needed to connect their online store to all of the different payment sources they wish to allow their customers to use. A payment processing gateway company offers one place the merchant can connect to where payments from a myriad of sources can be processed. These payment sources include credit cards, Paypal, Apple Pay, Masterpass and a host of other payment sources available globally. The merchant can have one place where they can manage all of their transactions, even if they come from multiple sources. Fees for this service can be monthly or transaction based.

Modern vs. Classic

Classic payment gateway providers require merchants to apply for a merchant account where all processed payments would flow into. Alternately, the newest trend among payment gateway companies is to allow merchant funds to flow directly into any bank account that merchant specifies in their account settings. The classic accounts are more of a hassle to get started. However, they typically charge lower fees. A more modern gateway account is very easy to get set up, but fees can be higher.

Hosted vs Integrated

A hosted payment site is very similar to Paypal. When a customer places an order, they will be redirected to the payment processing website to complete the order process. In an integrated system, the customer never leaves the merchant’s website and instead connects to the payment processing gateway via an API. 

The benefit to a hosted system is that all of the security around the transaction is the responsibility of the gateway provider on their website. Whereas on an integrated system, the responsibility is on the merchant. However, in certain countries, a hosted payment site is not trusted, and the merchant could lose customers. Deciding which type of payment processing gateway to use needs to be carefully considered by online business owners.