Understanding Payment Gateways for eCommerce

If your online shop accepts credit or debit cards, you need a payment gateway. This service handles card transactions and ensures they are fast, safe, and reliable. It’s essential for any UK business that sells online and wants to give customers a smooth checkout experience.

What is a Payment Gateway?

A payment gateway is a system that processes card payments for both online and physical shops. It checks that each payment is valid, while keeping customer data secure. Services such as PayPal, Stripe, and Square are examples of payment gateways that many businesses use.

For those who sell only online, the service works entirely on the internet. There’s no physical terminal involved, which makes it a good fit for ecommerce sites of all sizes.

How Does a Payment Gateway Work?

A payment gateway acts like a virtual till. It helps customers pay quickly and securely by carrying out these steps:

• Encryption: Sensitive information is scrambled so that only the customer and the business can read it.

• Authorisation: The gateway checks the transaction with a payment processor, which contacts the card issuer. Extra steps like two step verification may be used.

• Completion: After approval, the gateway confirms the payment and transfers the funds.

Payment Gateway vs Payment Processor

Although people often treat these terms as the same thing, there is a difference. A payment processor relays transaction details to the issuing bank and checks the account. A payment gateway does that, but also authorises the transfer of money once the card details have been confirmed.

Types of Payment Gateway

Payment gateways come in a few different forms, and the best option often depends on your business setup and customers’ preferences.

1. Redirect

Here, customers leave your website to pay on a separate page. PayPal is a familiar example. This can sometimes surprise shoppers, which may lead them to abandon their purchase. However, if they recognise and trust the service, they are more likely to feel comfortable.

2. Checkout On Your Site, but Pay Off Site

Customers enter card details on your website, though the actual payment processing happens elsewhere. Stripe works this way. This keeps buyers on your site during checkout, so the experience feels consistent. However, final processing still depends on another provider.

3. On Site Payments

In this setup, everything happens on your domain. Customers enter their details on your website and the payment is processed there as well. This approach gives your business complete control over the checkout. It also increases your responsibility for security and compliance. Many businesses offer more than one gateway, so customers can choose the option they trust most.

Final Thoughts

A secure and user-friendly payment gateway is a must for any online shop in the UK. It protects customers, reduces basket abandonment and helps your business run smoothly. By choosing the right type of gateway, you can build trust and loyalty among shoppers while expanding your reach in the competitive ecommerce market.

How we can help

26M has decades of experience in payments and ecommerce. Contact us now for free impartial advice and we can help you find the right payment solutions catered towards your businesses requirements. Contact Us Now