Have you ever abandoned an online purchase because the checkout process was too complicated? According to Baymard Institute, the average online shopping cart abandonment rate is 70.19%.
The culprit? Complicated payment gateways with tech glitches, confusing steps, and limited options. However, with well-designed payment integration and optimal solutions, you can provide a great user experience and boost conversion rates.
In this comprehensive guide, we talk about what is the importance of payment gateway integration, which API is used for payment gateway, and much more.
What is a Payment Gateway?
Think of a payment gateway as a digital intermediary ensuring smooth and secure online transactions. It acts as a translator for various payment methods, prioritizing security and compliance with regulations.
Here's how it works:
- It acts as a go-between for the seller (merchant) and the payment network. It makes sure that when you buy something, the money is transferred from your account to the seller's account.
- Whether you're using a credit card, eWallet, or other online payment methods, the payment gateway handles it all.
- The gateway takes extra precautions to keep your payment information safe. It uses special codes and encryption to protect your details from being seen or used by anyone who shouldn't have access.
- Lastly, it makes sure that all the transactions follow the regulations and standards set for online payments.
Now, let's talk about a popular payment gateway - Stripe. Stripe goes beyond just handling payments. It gives sellers extra tools to help them run their businesses better, like preventing fraud, managing subscriptions, and providing analytics.
As per reports, Stripe receives nearly 13,000 payment requests every second and is used by e-commerce giants such as Amazon and Salesforce.
Payment Gateway Vs. Payment Processor
Even though people sometimes use the terms interchangeably, payment gateways and processors have different roles. Here’s a breakdown:
| Classification | Payment Gateway | Payment Processor |
|---|---|---|
| How it works | Collects, encrypts, and verifies credit card information. | Communicates between the cardholder, merchant, acquiring bank, and issuing bank. |
| Definition | Approves or declines transactions between the website and the customer. | Responsible for fund transfer by communicating between the merchant, the issuing bank, and the acquiring bank. |
| Use | Acts as a terminal for card validation and fraud prevention. | Acts as a mediator between merchants and financial institutions to facilitate credit card transactions.needs. |
| Best suited for | E-commerce stores and card-not-present (CNP) transactions. | Point-of-sale (POS) and in-person transactions. |
What is the Importance of Payment Gateway Integration?
Integrating payment gateways seamlessly brings a range of valuable benefits:
Improved user experience
Imagine a smooth online checkout where you can securely pay with your preferred methods in just a few clicks. Payment gateway integration makes this possible, providing a hassle-free experience.
Higher conversion rates
You can increase your conversion rates by supporting various payment options and creating user-friendly payment processes. When customers find it easy and intuitive to make a purchase, they're more likely to complete the transaction.
PayPal's Express Checkout reduces the number of steps required for a transaction, leading to higher conversion rates. Users can complete purchases quickly without the need to enter extensive payment details.
As of the Q2 of 2023, PayPal had 433 million active users.
Improved security
Certified payment gateways prioritize security. They comply with regulations and implement measures to protect sensitive data. This not only safeguards customer information but also builds trust - an important element in any online transaction.
Global audience reach
With integrated payment gateways, you can accept payments from customers around the world. This opens up access to larger markets and a more diverse audience, making it easier to grow and expand globally.
Shopify Payments allows businesses to accept payments from customers worldwide. This allows Shopify merchants to expand their customer base beyond borders, reaching a global audience. There are over 4.12 million active websites on Shopify as of 2023.
Valuable analytics
Payment gateways provide you with insightful metrics. These analytics help in understanding user behavior, identifying patterns, and recognizing opportunities for improvement. Analyzing this data lets you make informed decisions to improve your services and offerings.
Reasons to Switch to an Integrated Payment Solution
Switching to an integrated payment solution offers many benefits. Here's a breakdown of the key reasons why switching to an integrated payment solution is the smarter choice:
End-to-end encryption
Integrated payment solutions prioritize the security of your transactions. They employ end-to-end encryption, ensuring that sensitive card details are immediately encrypted as soon as they are captured.
Apple Pay employs end-to-end encryption to secure transactions. When a user adds a credit card to Apple Pay, the card information is encrypted and stored securely on the device. This ensures that sensitive information is protected throughout the payment process.
Omnichannel payments
The modern consumer expects a seamless payment experience across various channels. Integrated payment gateways excel in supporting omnichannel payments, allowing businesses to process transactions effortlessly across different touchpoints. This includes accommodating mobile wallets and providing customers with flexibility and convenience.
3D secure authentication
Security is a top priority in online transactions. Integrated payment gateways provide an additional layer of protection through 3D secure authentication. This authentication method adds identification layers, reducing the likelihood of fraudulent activities and making online transactions more secure for both businesses and consumers.
Mastercard SecureCode is an example of 3D secure authentication. It adds an extra layer of security by requiring users to enter a one-time code or password during the online transaction process, reducing the risk of unauthorized access.
Subscription management tools
For businesses dealing with recurring payments and subscriptions, integrated gateways offer robust subscription management tools. These tools simplify the handling of recurring payments, making the process intuitive for both businesses and customers.
What are the Steps for Payment Gateway Integration?
Follow these best practices when incorporating payment gateways:
Find the right partner
- Look for a payment gateway that fits your needs.
- Check their capabilities, credibility, developer resources, and pricing models.
- Ensure the chosen gateway aligns with your business requirements.
Design intuitive payment flows
- Map out user journeys to create smooth payment experiences.
- Minimize the number of steps required for a transaction.
- Allow users to save payment methods for convenience.
- Offer a guest checkout option for first-time users.
Handle APIs via server-side-code
- Keep API secrets secure by avoiding direct exposure to client-side code.
- Use secure server-side languages to handle and authorize API requests.
- Prioritize the security of sensitive information during transactions.
Adopt recommended tech stacks
- Leverage integration libraries, plugins, and extensions that align with your technology.
- Explore tools and technologies recommended by the payment gateway for efficient integration.
- Choose tech stacks that accelerate the integration process and ensure compatibility.
Validate PCI DSS compliance
- Confirm that the payment gateway and your system adhere to PCI DSS (Payment Card Industry Data Security Standard) compliance.
- Ensure the vendor's solutions meet data protection standards to avoid legal penalties.
- Prioritize the security of customer payment data throughout the integration process.
In the fast-evolving digital payment landscape, seamless, user-focused interactions are essential. By prioritizing security, compliance, and user experience during payment integration, you can not only ensure secure transactions but also leverage insights, boost conversion rates, and expand globally.
As digital transactions continue to surge, reimagining payments as a core element of exceptional user experiences is important. Now is the time to adopt integrated solutions and make payments a core part of a stellar user journey.