A high conversion and retention rate is the mark of seamless shopping experience and customer satisfaction. A minimal cart abandonment rate speaks volumes about the credibility of online businesses.
The online cart abandonment rate in India presently lies at 51%. Few notable reasons for cart abandonment are lack of convenience in the payment gateway, perceived risk in the transaction and the need to signup or login. Fortunately, these issues are controllable with the right payment gateway.
Getting customers to the finish line, aka the checkout page, is an achievement that deserves a pat on the back. This is why online stores need a reliable setup that doesn’t bog down the checkout and payment process.
Payment gateway platforms offer a host of solutions in this realm. Online stores can create payment links to share with customers and request payment or explore integrated payment systems to streamline shopping.
What is a Payment Gateway?
A payment gateway is an online channel through which customers transfer funds to the merchant’s account to complete a purchase. Customers can choose a payment mode from various options, including internet banking, credit/debit cards, UPI, eWallet and more. Users can rest assured that the data they enter on payment platforms is encrypted and completely secure.
Within a few seconds, payment gateways streamline payments and processes across multiple channels. This results in customers enjoying an automated, secure, and seamless shopping experience wherever they are! This is where integrated payment systems can help businesses attract loyal customers.
Here is how payment platforms authorize and carry out payment flows when a customer purchases from the merchant site –
- The customer places an order on the website by clicking on the “Checkout/Proceed to pay” button.
- The customer is directed to a payment gateway, where they enter the payment details and choose the payment mode of their choice.
- The browser raises the payment request with the respective bank or card network via SSL encryption.
- The bank or card issuing authority verifies the request concerning customer data, availability of funds, etc., and approves or rejects the request.
- The merchant website gets a confirmation via the payment gateway when the funds have been received. Consequently, an order is placed, and the funds are successfully transferred from the buyer’s account to the seller’s account.
- If the payment is rejected, the customer receives an error message on the seller’s site.
Summing it up, the payment gateway provider performs three main functions – authorization, settling funds, and confirming the payment.
Let’s review the two ways to integrate payment solutions into an online business.
A hosted gateway directs the customer away from the merchant site to a third-party payment platform where the transaction takes place. In this scenario, the payment gateway has a separate dedicated webpage outside the merchant’s site. The webpage is secure, processes the transaction, and redirects the customer to the merchant website after the transaction is complete.
When selecting a hosted payment gateway, merchants must look for a trusted payment gateway provider that the customers are familiar with.
Benefits of using a Hosted Gateway
- Easy integration that requires less time and resources.
- Minimal effort by the merchant.
- The service provider processes the payment and stores user data securely. Therefore, the merchant doesn’t need additional security measures.
Downsides of using a Hosted Gateway
- Redirecting to a different webpage hinders the user experience.
- Users may not be familiar with a third-party platform or consider it unreliable and leave the payment page.
Installing a Hosted Gateway
Merchants just need to connect the their site to a payment gateway and get an SSL certification to integrate with a hosted solution. The gateway’s credentials and a merchant ID with a secret passkey would also need to be configured.
Business Use Case
Small businesses and entrepreneurs that do not want to deal with the hassle of storing and processing secure payments would benefit significantly from a hosted gateway. With easy installation, online stores can begin accepting secure payments in just a few days.
A non-hosted gateway is linked to the merchant’s site using an application programming interface (API). Payments are made on the merchant’s own website, directly on the checkout page. The user data and payment information are entered only on the brand’s website, and buyers enjoy an immersive experience.
However, as the seller processes payout on their own page, they have an added responsibility of complying with specific security protocols.
Benefits of using non-hosted payment gateways
- The process can be customized as per the business needs and target audience.
- Merchants have complete control over transactions and user data.
The downside of using non-hosted payment gateways
- Integrating the gateway requires configuration and can be time-consuming.
- The website should be PCI security compliant and protected from fraud.
- Merchant bears all additional costs of maintaining the payment system.
Installing a non-hosted gateway
A development team would be needed to connect the business website to the payment gateway via an API. Major payment gateway providers that offer non-hosting solutions have documentation or developer support to guide merchants through the process.
Business Use Case
Non-hosted solutions are suitable for medium-sized or large-scale businesses that can bear the cost of developing and maintaining a secure payment system on their servers. Companies that want to offer customers a unified brand experience can make the most of such solutions.
Regardless of the type of integration, a payment gateway will boost the brand website’s overall user experience and security. Merchant’s just need to analyze the eCommerce platform they use and pick the payment gateway that is compatible with their business needs.