What is a payment gateway

As e-commerce grows and more consumers make purchases on the internet, payment gateways are becoming essential for all online businesses. In terms of sales growth, customer loyalty and market expansion on an international scale, the benefits of payment gateways are innumerable for businesses of all stripes.

The internet is an open frontier where any seller, large or small, can reach an infinite and long-distance customer base. Among sellers new to e-commerce, the most frequently asked question is, “Can payment gateways benefit my business?” They certainly can, but a payment gateway explanation is necessary to fully understand the potential at hand.

What Are Payment Gateways?

A payment gateway is an online intermediary that makes payment transactions safe for both parties in a transaction. So how do payment gateways help? When a customer places an order on your website, the payment gateway processes and encrypts the credit card data to authorize the purchase. This way, each sale can be processed instantly with the funds deposited to your account. From there, you can package the order and send it to the customer.

how can payment gateways help

With a payment gateway, the payment info is fully protected, giving your customers the peace of mind that their credit card info is fully protected and will not be leaked to a third party. At the same time, your operations get secured against breaches that could otherwise leave your business vulnerable to damaging complaints and customer lawsuits.

In a world where data breaches occur frequently, you must enact every possible layer of security to protect your customers online. For the sake of your own business, you must also have layers of protection that will safeguard your database against online hackers.

Payment gateways keep your business compliant with PCI Data Security Standards by encrypting the card data of each customer who purchases items from your online store. With a payment gateway, both sides of each transaction are fully protected from cyber thieves.

If your online store has a payment gateway, it will give customers the confidence to purchase items from your site. The presence of a payment gateway acts as a guarantee of security for customers near or far, assuring everyone that purchases are always safe when processed through your site.

Payment gateways make it easier to complete orders and process payments from people who live far away from your place of operation. With a payment gateway, you can effectively maximize online commerce for its full potential. The purpose of doing business online is to operate with less overhead and reach a larger market than you otherwise would from a physical storefront. For customers who live out-of-state or across the country, payment gateways make it possible to process their payments. Without a payment gateway, many of the orders to your business would take weeks to process via snail mail.

Payment gateways also make it possible to accept orders and payments from customers who live overseas. As such, payment gateways allow you to operate your business worldwide, as opposed to locally or within your state or national borders. Most importantly, payment gateways make it possible to process payments from customers who live in countries without the stiff exchange rate fees imposed by other means.

Security aside, the best thing about payment gateways is that they make the payment process quick and easy. As soon as the customer enters their payment information, the gateway encrypts the numbers and processes the payment through the handling bank for instant verification. The funds are then deposited to your account with full assurance that the customer and card are genuine and that the funds do, in fact, exist. With payment gateways, there is no risk that any order you fulfill will be purchased on fraudulent bank numbers.

How Can Payment Gateways Benefit Your Business?

A payment gateway could help your business grow exponentially on an international scale in the coming years. While most American e-tailers are aware of the thriving market for online retail in the U.S., the situation is also rapidly rising in Europe, where the vast majority of people use computing devices daily.

With a payment gateway, you can process orders from customers in countries that use different currencies, all within an instant. For the overseas customers, placing an order on your site would be the same as for any domestic customer. Today’s payment gateways are designed to work with a range of platforms, allowing you to connect your website to the gateway of your choice and begin accepting orders from global customers.

The advantages of payment gateways are numerous, but they all translate to increased business and customer loyalty from a larger range of shoppers from around the world.

Improve Customer Experience Using Payment Gateways

For customers, the presence of a payment gateway on an online retail website provides a buying experience with utmost security. On the buyer’s end, this translates to confidence in knowing that the digits they enter into the system will be encrypted and processed by the authorized party. Once that transaction completes, the digits will no longer exist in the system, thereby providing no point of entry or window of opportunity for online hackers.

customer experience with payment gatewaysThe experience also translates to satisfaction for online customers because payment gateways facilitate instant order fulfillment. When customers purchase items online with a credit card or bank routing number, the order can be processed virtually on the spot. Once the transaction is processed and the customer receives a confirmation email, that customer knows that the wheels are now in motion and that the item will arrive in a matter of days.

The ability to process orders instantly stands in marked contrast to the older methods of placing orders, which typically involved checks or money orders sent via snail mail. Orders handled that way could take days or weeks to arrive in the mail on the seller’s end, causing shipments to take weeks or months to arrive on the customer’s doorstep. With payment gateways, the arrival wait-time is just a fraction of what it typically would have been 20 years ago.

Payment gateways also facilitate incredible ease of purchasing for customers. Before the existence of the online payment gateways, online and long-distance customers generally had to send checks through the mail or print out and send off order forms containing sensitive credit card data. Such methods generally involved trips to the bank and then the post office, making the whole ritual of purchasing long-distance into a multi-step task. In some cases, customers could fax an order to the seller, but this would also entail prolonged wait times and risky transfers of sensitive data.

Another one of the greatest benefits of payment gateways for customers is the ability to buy anything from the comfort of a stationary or mobile computing device. Now that millions of consumers around the world are surfing the internet on smartphones and tablets, it only makes sense for e-commerce sites to provide a means through which customers can purchase items remotely, from any location, with just a few simple clicks. For customers who have their data stored on their smartphones, all it takes is a few field-entry prompts to finalize a purchase from a living room, restaurant, park, airplane or bus.

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For people with limited amounts of disposable income, payment gateways make it possible to take advantage of affordable deals on computing products that might otherwise be out of buying range. For example, many of today’s college-age youth have little money to spend on smartphones and laptops but need these products to connect with friends and complete assignments. By shopping online, they can purchase fancy items that are simply priced too high at the nearest department stores. Payment gateways also make it easier for people in this age bracket to find affordable deals on fashionable apparel and footwear.

Increase Sales

For the seller, payment gateways make it easier to amplify sales and expand the business into far-reaching territories in just a short span of time. Additionally, the cost to run a business is drastically reduced because you no longer have to operate from a physical storefront. You can reach far more customers than you ever would from that storefront because the internet is worldwide, allowing you to penetrate territories that you might never even visit in person.

Payment gateways also allow for easy record keeping, which is crucial if you operate a business on as large a scale as the global marketplace. Each transaction produces a signed digital receipt for both the customer and the seller, allowing you to digitally archive all of your sales on a daily, weekly and monthly basis. You can track the progress of your business quarterly and annually, distinguish your most popular items and mark the best times of year to emphasize promotions.

Payment gateways also remove the clutter and confusion from order tracking, rendering the process a seamless and simple affair. The moment a transaction has been approved by the system, you are notified of the sale, complete with a digital receipt containing the buyer’s shipping information. From there, you simply package the order or delegate that task to the in-house team or third party that handles shipping. The product should be in the customer’s hands in a matter of days, depending on how long it takes for packages to travel to their location.

Payment gateways have effectively helped drive an e-commerce surge that has brought more consumers online, where shoppers can search and compare prices on everyday products and luxury items. Thanks to this wide pool of options, customers can find bargain deals on expensive products and compare different brands and sellers to find the best options. By saving money on everyday household items, consumers have more money for further luxury purchases, thereby fueling the online marketplace.

Provide Security and Peace of Mind to Merchants

Thanks to payment gateways, customers can fully enjoy shopping in the online age and embrace all the variety and options that the internet brings to the public. The online marketplace continues to expand as more sellers take their businesses online and buyers follow suit. When you consider the increased confidence among consumers toward online retailers, the impact of payment gateways cannot be understated.

secure payment gateways

The function of the payment gateway makes it easier for sellers to set up shop online from millions of locations around the world. For customers, this translates to a much wider range of product options since customers can find things online that are not available locally or domestically in any catalog or storefront. A product manufactured in one country and generally not exported internationally or overseas can easily be purchased by someone halfway around the world.

With payment gateways, there is never any question about the authenticity of a payment. A sale is only authorized once the credit card number has gone through and the funds have transferred from the customer’s account to yours. Therefore, you never get confused about the payment information of a given sale. Each time you package an order and send it off to the customer, you do so completely assured that the funds have entered into your account.

Payment gateways also make bookkeeping into a much easier task. When the time comes to file your taxes, you can easily tabulate your annual earnings. No more confusing paperwork, time-consuming inventory, fuzzy math or any other troubles that could arouse the suspicion of auditors. Furthermore, digital records are easily organized, making these tasks easy to understand and complete in good time.

With payment gateways, you can provide your customers with the assurance that shopping on your site is safe, secure and easy. In doing so, you are helping to promote a positive trend that is driving the growth of e-commerce around the world. As increasing numbers of everyday web users are compelled to make more purchases online, they will recommend the activity to their friends and family, effectively spurring the trend even further.

Online Payment Processing From Velocity Merchant Services

In the decades since the internet first became a mainstream medium, it has never been easier to open up an online storefront and process payments from customers around the world. Whether your site is large and established or small and growing, a payment gateway could expand your business. Even if you operate a long-running storefront or restaurant, payment gateways make it possible to quickly process payments from customers on smartphones. In doing so, you can eliminate some of the labor of running checkout lines and the waste of printing paper receipts.

For online payment processing and mobile payment solutions, Velocity Merchant Services offers solutions for today’s forward thinking businesses. Contact us today to learn more about our payment processing solutions.

 

Have questions?  Talk to one of our Small Business Specialists.

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