What is a website payment gateway?
If your bricks-and-mortar business is adding an online presence, you’ll need to be able to accept payments through your website. It’s also important if you’re just starting out and you plan to be an online business from the get-go.
That’s where a payment gateway comes in. It’s the platform that facilitates online transactions, in much the same way a countertop terminal does for card payments in-store. It makes sure that payment information is passed back and forth securely between your website and the different parties involved in completing a transaction.
A payment gateway reduces the risk of security breaches and improves customer confidence when buying from you.
How does it work?
When a customer places an order on your website and makes a payment, the card information is encrypted as it is submitted to your webserver. That means that if the transaction is somehow intercepted, the hacker won’t be able to decode the customer’s card information. After your webserver has collected the encrypted payment details, they are sent to your payment gateway.
Your payment gateway converts the encrypted information in a language that your bank can understand. It then sends it on to the appropriate card association - Visa, Mastercard, American Express etc. - for further verification.
If everything checks out and the payment is validated, the card association sends the transaction to the merchant’s issuing bank. They then authorise the release of funds.
Whether the payment is approved or not, the message is sent to your payments processor, who then forwards it to your website through your payment gateway.
Your gateway then relays the message that the payment has been accepted or declined to the customer on the next screen in their web browser. Although there are many steps, the entire process typically takes less than five seconds.
What do I need to think about when choosing a payment gateway?
There are many different payment gateway providers to choose from. The right one for you will depend on the size of your business and which value-added features you prefer.
You’ll need a gateway suited to the volume of transactions your business handles each month - and make sure you have room to grow. Most providers offer different packages based on number of transactions per month so you can choose the one that best fits your circumstances.
Value-added features vary from provider to provider. Many offer advanced security tools to give you and your customers even more peace of mind. Some may offer additional services that enhance the customer experience, allowing you to add everything from loyalty schemes to prepaid gift cards to your website.
Sage offers a range of flexible payment gateway solutions that can grow to meet your business’s needs. You can also integrate your payment gateway with your Sage accounting software to share data and access payment analytics. Not only can you streamline your bookkeeping processes, but also you’ll get actionable insights to help you make important business decisions.