July 3, 2023

How To Select The Best Ecommerce Payment Gateway Provider

Discover the secrets to choosing the perfect ecommerce payment gateway provider. Learn essential tips and make informed decisions for your online business.
How To Select The Best Ecommerce Payment Gateway Provider
How To Select The Best Ecommerce Payment Gateway Provider

When an online shopper adds a product to a shopping cart, the final step in the checkout phase is to make a payment. Through payment gateways, customers can make payments for their products or services. And so your payment gateway can make or break your ecommerce store. 

A good payment gateway can improve your customer’s checkout experience, while a poor one can lead to lost sales. 

With this in mind, choosing the right ecommerce payment gateway provider is critical to your ecommerce success. But, with so many ecommerce payment gateway providers in the market, how do you choose one that suits your business needs? 

In this article, we will look at major factors you need to consider when choosing an ecommerce payment gateway provider. 

What is an ecommerce payment gateway and how does it work? 

An ecommerce payment gateway is a software or technology that processes payment from a customer to a merchant’s bank account. It transfers and returns transaction details and responses from the website to the payment network. 

So how does a payment gateway work? 

Although the payment process on an ecommerce site may happen in a few seconds, there are many parts involved behind the scenes. Here’s how a payment gateway works: 

  • The payment process starts when a customer places an order on an ecommerce site and proceeds to make a payment. 
  • The customer inputs their card details into the website and the payment gateway sends the transaction details to the payment processor used by the merchant’s bank. 
  • The payment processor then moves the transaction data to the customer’s card affiliation. 
  • The card’s issuing bank then approves or denies the transaction based on the availability of funds. 
  • The response is then sent back to the payment gateway. 
  • Once the payment gateway receives a response, it relays it to the website to allow the customer to process the payment. 
  • Once the transaction is completed, funds will be sent to the merchant’s bank. 

Difference between a payment gateway and a payment processor

You may have seen payment gateway and payment processor used interchangeably. But while they both work together to complete an ecommerce payment transaction, they carry out different tasks and are not the same. 

Payment gateways read and deliver payment details from the customer to the merchant’s bank account while the payment processor receives payment information from the payment gateway, confirms if the customer has sufficient funds, and proceeds to move funds from the customer to the merchant’s account. 

Types of payment gateways 

Here are three types of payment gateways merchants can choose for different types of businesses:

  1. Hosted payment gateway 
  2. Self-hosted payment gateway 
  3. API-hosted payment gateway 

Hosted payment gateway 

A hosted or redirection payment gateway works by redirecting the customer to the payment service provider (PSP) page to complete the transaction. The customer fills in their payment on this page before being redirected back to the website. The hosted payment gateway is user-friendly and offers high-level security. However, since this type of payment gateway is external, you won’t be able to control your customer’s checkout experience. An example of a hosted payment gateway is PayPal. 

Self-hosted payment gateway 

Self-hosted payment gateways like Stripe or Shopify give you more control over your customer’s checkout experience. Your customer’s payment details are collected directly on your website and then submitted to a third-party payment gateway for authorization. The major advantage of using a self-hosted gateway is that you can have better control as your customers won’t be redirected to a new page. 

API-hosted payment gateway 

If you want complete control over the entire payment process and website design, the API-hosted payment gateway will work best. Using the API or application programming interface, the payment and processing will be handled on the website directly. With this type of payment gateway, you can customize your checkout experience. However, keep in mind that you will be responsible for the security. You will need to ensure the gateway is PCI DSS compliant and pay for SSL certification. 

9 factors to consider when choosing the best ecommerce payment gateway provider 

Payment gateway providers use payment gateways to provide digital payment services to merchants. But as an ecommerce business owner, how do you choose the payment gateway provider that is best for your business? 

Here are some factors to consider before choosing the best ecommerce payment gateway provider for your business: 

  1. Security for customers 
  2. Fee structure and service requirements 
  3. Easy integration process
  4. 24/7 customer support 
  5. Payment methods 
  6. Check payout schedule 
  7. Scalability 
  8. Data analytics 
  9. Compliance with laws and regulations 

Security for customers 

Your customers expect that your site is not only high-quality but also secure for making payments. With this in mind, your payment gateway security should be a top priority. It is important to choose a payment gateway provider that has strong security features like an SSL certification. An SSL certificate ensures that the data moved between a customer’s browser and the server is encrypted. It ensures that sensitive information like passwords, and bank account details are not readable till they reach the server. 

PCI compliance is another security feature that ensures that the payment gateway provider is adhering to security standards. Card verification and address verification are also security measures that prevent fraudulent transactions. 

Fee structure and service requirements 

Payment gateway providers have varying fee structures and requirements. Some providers may have hidden costs like setup fees or chargeback fees. You want to choose a payment gateway provider with a transparent fee structure. Compare various prices and service requirements for different payment gateway providers to ensure you’re choosing one that provides the best value for your business. 

Easy integration process

You want to consider a payment gateway provider that offers a seamless checkout process. It should be easy to integrate your payment system with your ecommerce platform. The payment process should be easy and seamless for your customers. Overall, your payment gateway provider should not slow down your website’s user experience.

Payment methods 

Customers want to have the freedom to choose their preferred payment method. In fact, according to research, 9% of consumers abandoned their carts because there weren’t enough payment methods. 

With this in mind, you want to choose a payment gateway provider that offers various payment methods. This includes credit and debit cards, electronic bank transfers, etc. 

Mobile payments have also become a prevalent payment method with the rise of digital wallets like Apple Pay, Google Pay, and so on. Mobile payments enable users to carry out transactions through their mobile phones using an app or a mobile-optimized site. 

Providing diverse payment methods is also a crucial factor if you have customers located in diverse countries. You want to ensure your payment gateway provider offers popular payment methods accepted in countries where your business operates. 

Check payout schedule 

Cash flow is crucial to smooth business operations and payment gateway providers offer different payout schedules. Some have flexible payout schedules and others have a more rigid schedule. Depending on the size and needs of your business, you want to compare and choose a payout schedule that best suits your business. For example, if you run a small business, you may want a payout schedule that is more rigid to help you keep track of sales. 

24/7 customer support 

Customer support can impact the overall shopping experience for your customers and your business. When choosing a payment gateway provider, it is important to go for one with accessible and reliable customer support. If your business operates internationally, you want to ensure their customer support operates in different time zones and languages. 

Your payment gateway provider should have 24/7 customer support to ensure that any issues arising are resolved as quickly and effectively as possible. 


Apart from easily integrating with various ecommerce platforms, your payment gateway provider should be able to handle increased transaction volume as your business scales. 

As your business grows, traffic and sales increase on your website. This can impact the overall shopping experience. Your payment gateway provider should provide the support and tools needed to accommodate business growth. 

Data analytics 

Insights on how payment processes impact customer behavior can greatly impact customer experience. You may want to consider payment gateway providers that provide tools to help businesses track transaction data. They should offer data analytics and reporting to help you improve payment processing, make more informed business decisions and improve your customer’s shopping experience. 

Compliance with laws and regulations 

To ensure that your customer’s data is safe, you want to ensure your payment gateway provider is compliant with relevant laws and regulations like General Data Protection Regulation (GDPR). Encryption, secure storage of payment data, and other security measures are essential to ensure customer data is safe. Your payment gateway provider should be compliant with relevant laws and regulations to help build trust between customers and businesses. 

Final thoughts 

Choosing the right ecommerce payment gateway provider for your business is crucial to creating a seamless payment process that improves customer experience and increases sales. You want to consider factors like security, fee structures, scalability, customer support, and other factors as outlined in this article when choosing the best payment gateway provider for your business. 

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