Category: E-Commerce

Nowadays, more and more people prefer not to waste time when making physical purchases. Instead, they opt to buy things or services online from the comfort of their homes. This is understandable and also a benefit of modern life. e-shopping means everything can be bought online, not just seen or enjoyed. Then, every merchant wishing to increase their sales should also consider integrating an online payment gateway.

What is a payment gateway?
This is a service provider that provides payment authorization.

In principle, it is a software application connecting a website to the bank, so that customers can pay you directly on the spot without leaving their apartment.

This type of service can be used by anyone, including e-commerce sites, other service providers who want their users to pay online, and even non-profit organizations that collect donations online.

Nowadays, online payments have become more and more popular. Even older people now use digital banking and pay for many services online. According to Statista, the value of transactions is also growing rapidly.

Let’s look at several issues that need to be considered before integrating a payment gateway. Understanding how everything works can assist you in selecting the best option.

It also helps in choosing the best system for your business. This is an important step because the convenience of the solution you choose can influence the purchasing decisions of your potential customers.
How does the e-commerce payment gateway work and why do you need it?
In general, online payment systems can be compared to the point of service that can be successfully used for any type of payment using your bank card.

In this case, its main role is to authorize and approve the transaction, the only difference being that you don’t have to use a physical point of service.
If you have an e-commerce site but are still wondering if you should implement a payment gateway, the answer for you is definitely yes.

You will need to implement it to have the ability to get payments directly from your customers. Even if you have a brick-and-mortar store, it’s still a good idea to add a payment gateway to your website to generate more customers and increase sales by serving people who could never get to your physical location.

All payments processed online are made in such a way that the transactions are without the actual presence of the bank card. This means that you don’t have access to the customer’s card, only to the information your customer enters in the suggested fields.

Without the physical presence of the card, it becomes a little easier to commit fraudulent actions at both ends. This means that the online payment system you use must be reliable and offer a high level of security.

All payment systems use approximately the same mechanisms. These are made up of several steps, most of which are hidden in the background.

There is a whole lot of “communication” between different facilities, rounds of approvals, complex remittance processes, etc. In short, the whole process is a bit like this:

• Confirm the order and provide credit card information.
• Encryption of information for security reasons.
• Information sent to credit card associations: Visa, MasterCard, etc.
• Transaction approval or refusal.
• If approved, the transaction changes to authorized status.
• Approval from the seller/merchant side.
• Payment is received by the card issuing company.
• The payment is sent to the relevant bank.
• The transaction is confirmed by the bank and added to the cardholder’s statement.

Some of these steps happen almost simultaneously, although the funds may take some time to appear in your account.

Modern gateways comply with all the operations and permissions mentioned to protect both parties and then let them finalize their transactions.

Now you see that the question is not whether you need a payment system, but how to include a payment gateway in a website and how to make sure you have chosen the right one.

How to choose the right gateway for your e-commerce site?

First, the choice is between integrated and hosted payment gateways.

Integrated payment gateways
The built-in options allow users to establish a connection with them through the API they provide for your e-commerce site.

In clear terms, you serve the customer directly on your site without sending them back. On the one hand, it’s great because it can’t hurt your conversion rates. On the other hand, it makes you responsible for the security and protection of your customers’ data. Most likely, you will need development from a professional programmer to handle most built-in gateways, as this is a do-it-yourself endeavor.

Hosted payment gateways
Hosted payment gateways take the transaction itself off your website to take place on a payment gateway’s processor.

In this case, you are not responsible for private data or PCI compliance. For example, PayPal works this way.

There are downsides to this type of gateway too, as some customers don’t trust third parties and you probably don’t want your customers to leave your website to make a payment. Indeed, it reduces the conversion rate.

To make the best decision, you must examine the e-commerce platform you are using.
If you’re using Shopify, there are special requirements to make sure your chosen gateway is compatible.

Offering an online payment solution is essential to get started in e-commerce. This practical sheet explains the importance of choosing payment solutions for your online sales site and offers an indicative list of solutions marketed by payment service providers (PSP).

The health crisis has led to an unprecedented increase in online purchases. According to a recent study, during the lockdown, 88% of respondents bought online at least once during this period, and almost half (49%) regularly used e-commerce.

E-commerce acts as an economic shock absorber for companies. It allows SMEs and VSEs that have been able to adapt to limit the impact of the health crisis.

Deploy an online payment solution on its e-commerce site

If the e-commerce solutions of the major platforms or those made available by other players, such as banks or marketplaces natively offer payment solutions in integrated lines, companies that choose to sell on their site must do what is necessary to offer an online payment solution.

Payment service providers (PSP) provide turnkey payment solutions that allow a merchant site to accept online payments, usually by credit card. These pre-integrated and secure payment gateways can now easily be integrated into an e-commerce site.

This practical sheet explains why online payment is an essential feature of your online sales site. What are the many advantages it offers and presents the different types of players present in this market? For each of them, a list of solutions is proposed as an example

Online payment: a win-win solution

Offering online payment to your customers has as many advantages for the seller as for the buyer.

For professionals, online payment is a guarantee of security and efficiency.

It gives a modern and professional image. An online store associated with a personalized payment system is considered more serious compared to a system based on payment by bank transfer or check.

It facilitates your accounting management: automatic sending of invoices, and/or email notifications, and real-time information on payments save you time and reduce the risk of error.

It offers the ability to collect payments 24 hours a day, without the merchant needing to be present, unlike a physical payment.

It allows, thanks to the customization options offered, a successful integration into your online store to showcase your brand to your customers.

It serves your marketing strategy, for example by allowing you to offer your customers payment facilities such as payment in installments at no additional cost.

It secures transactions. Online payment is indeed more reliable and secure than payments in cash or by check), in particular thanks to the 3D Secure security system. Used by many online shops, this security protocol makes it possible to prevent fraud, by sending a code when carrying out a transaction to ensure that the card is used correctly. by its true owner.

For the customer, online payment also offers real advantages, particularly in terms of guarantees.

First safety. His banking information remains confidential. The seller does not have direct access to it. In the event of an anomaly, for example, if an abnormal sample is taken, the customer is immediately notified.

Then, he benefits from guarantees in the event of disputes, such as being able to benefit from an advantageous refund policy if a purchased product proves to be defective, undelivered, or if it does not correspond to the quality promised by the seller.

A secure online payment service can therefore help to create a feeling of trust between customer and seller, conducive to establishing a good, safe, and qualitative brand image.

Tips for choosing and installing your online payment solution

When choosing your online payment solution, it is important to pay attention to the following points:

Ask your provider if the payment page is customizable. It is preferable to have a payment page in your company’s colors rather than a payment page with a different graphic chart.

Make sure that the chosen payment service provider will credit your account in less than 48 hours. Some service providers set a minimum amount of sums received before making a payment, others define a fixed frequency or only release the funds after a period of 7 to 45 days… Too long payment periods can create cash flow problems.

Choose a payment solution offering the possibility of creating a customizable bank wording. This will allow you to use your merchant site name and avoid any misunderstanding for the buyer, who could have the impression of being debited by another company. This is an important point in the trust that the merchant must establish with his customer.

Pay attention to the hidden costs of certain payment solutions, for example, the minimum billing, the billing of unfinished transactions, and the paid options…

A payment management back office will allow you to have full access to all your transactions, statistical and reporting tools as well as a financial reconciliation tool. Without the latter, often offered by banking PSPs, this repetitive and non-value-added task can be a nightmare for your accounts.

Take an interest in after-sales service (SAV). Choose a service provider with whom you will have a dedicated technical contact who can assist you in setting up and then optimizing the means of payment for your site.

Depending on the market, business sector, or geography, between 5% and 20% of payment transactions fail once a customer clicks on the “Pay” button!

This automatically means a loss of 5% to 20% of sales for the e-commerce site and therefore a significant impact on its turnover.

But how does this black box that is the payment process work? How to avoid errors? And above all, how to optimize your payment system?

‍The Hidden Face Of The “Pay” Button

Each country or region of the world has its cultural habits of online payment. B2B uses bank transfers more often, while B2C will approach 100% card payments.

In the scenario of payment by credit card, there are several actors:

• The customer’s Issuing Bank
• The merchant’s Acquiring Bank
• The payment Service Provider (PSP): this is the heart of the process, it manages the different means of payment, works with acquirers (sometimes their own, sometimes local) takes care of the legal authorizations… and invoices your transaction fees according to all these parameters
• And of course the customer and the merchant

A payment procedure will take place in 2 steps.

Step 1 – Authorization:

Indeed when a customer pays online, he is not automatically debited from his account, he simply requests a purchase authorization from his bank: This is the authorization process.

The PSP receives the banking information and asks the issuing bank (your customer’s bank) if they wish to accept or refuse the authorization of the transaction. The issuing bank chooses whether or not to validate a transaction. To do so, it relies on financial and risk parameters.

From a financial point of view, the issuing bank will accept the transaction if the customer can pay (customer history, money in the bank account, payment limit, etc.).

From a risk point of view, the issuing bank will accept the transaction if it considers that it is not a fraudulent transaction (MCC- Merchant Category Code, secure site, location of the site about the customer, transaction history refused). Indeed, for financial and legal reasons, banks must maintain a low level of fraud and thus reject transactions in case of doubt.

Step 2 – Payment:

It is only later (between a few hours and a few days) that the merchant will receive the amount linked to this transaction in his bank account: This is the settlement process.

The merchant, via the acquirer, will send all the authorizations previously received to the card network (Visa, Mastercard, etc.) to collect the funds from the customer’s bank and simultaneously send the funds to the e-commerce site.

The 3 Main Reasons For Payment Failures

Technical Issues

The payment process involves many intermediaries. In addition to the PSP, other sub-suppliers are involved.

To reduce these so-called technical failures, the best option is to create a more flexible payment infrastructure: In effect, you can cascade multiple PSPs to ensure that your transactions always have a working route.

For example, depending on the geographical origin, you can route the payment to the PSP most suited to the region. Similarly, you can set up a payment route to test a first generalist PSP for example (at lower costs) then test a second more local one in the event of failure (at higher costs than the first but with a higher success rate for this region). Another example you can choose to disengage the 3DS when this service is faced with downtime and thus not block all your transactions. Anticipation, auditing, and knowledge of your PSP’s routing routes will be key in resolving these issues.

Risky Trades

Payment failures following a risk assessment generally stem from a lack of trust on the part of the issuing bank (that of the customer) or the acquirer (the intermediary between the PSP and the bank). Several parameters can be taken into account to define the risk profile of a transaction: location, country of the card compared to the country of the merchant, time, amount, etc.

There are many ways to “reassure” the issuing bank. The most important thing is to send the correct information to the bank.

Each bank has its payment analysis criteria and parameters. It is up to you to adapt to facilitate the evaluation of your transactions by them.

Customer Errors (Human Errors)

Failures due to “human” errors (wrong card number, missing information field, etc.) are fairly easy to prevent and repair. This can go through UX optimizations:

• Fields in red when an incorrect or missing element
• Return to the easy banking information page
• Highlighting the error with a clear explanation
• Fields more suitable for entering card numbers
• Avoid taking the user out of the site
• A “disengageable” 3DS, if the buyer is known, if the amount is low, etc.

Financial Failures

When a payment fails due to a customer’s financial problem (ceiling too high, lack, no liquidity present on the customer’s account, etc.), it is a question of thinking about commercial solutions rather than technical ones. This can range from offering payment in installments and pushing a credit offer, but also for service offers, taking the risk of giving access to the product while trying to pay again in a few days.

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