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How to Select a Payment Gateway for My Online Store

payment gateway for online store

The process of setting up an eCommerce store can be a hair-pulling affair for most people looking to venture into online business.

As with most things, it looks easy on paper. Choose and register domain (assuming the business website is not in place yet). Develop website. Address the web hosting thingy. Set up the store. Next thing you know…


Cue pilot announcement voice: “Folks, thank you for shopping with us. We hope you enjoyed giving us the business as much as we enjoyed transacting with you.”

What can be so hard about that, right?

It’s not until you get down to the real stuff that you realize it’s not a job for the left hand.

“Why didn’t anyone tell me about this?!”

Truth be told, setting up an online store can be a drawn-out task. There is just so much to contend with.

Then again, this is not fiction; it is a real business we are talking about. A business where people will be making online purchases. Without these electronic sales, your business will not be able to thrive. In fact, without these sales, all your efforts would be for nil.

Luckily, we live in an era where *fully hosted shopping carts have taken many of the manual tasks involved in setting up an online store out of our hands. For those of us who avoid dealing with technology at every possible turn, this has to be the best news in the history of eCommerce.


On the face of it, handing back-end control of your store to a third party might not seem like a good idea, but turns out this is one of the best decisions you could make.


Eliminating the hassle of setting up a store from scratch notwithstanding, you never have to worry about your store getting hacked. Neither do you need to worry about server downtime. Or losing valuable customer data.

Anyway, whether you opt for a fully hosted or self-hosted eCommerce platform (also known as integrated), one of the things you need to carefully think about is how payments will be processed.

Payment gateways, step forward.

*Just so we’re reading from the same script, fully hosted platforms refers to shopping cart software such as Shopify, WooCommerce, Magento, BigCommerce and Wix – just to mention but a few of the most popular platforms.

Understanding Payment Gateways

Today, there are a myriad payment service providers you could use to collect payment for goods and services from anywhere in the world.

Before we proceed, it’s good to first clarify what we mean by a payment gateway.

A payment gateway is just that: a doorway. A doorway to making sales on your online store. It is a service that allows you to securely charge your customer’s credit or debit card when they purchase from your store. It is the brick-and-mortar equivalent of a cash register. Or point-of-sale system.

PayPal is a payment gateway. 2CheckOut is a payment gateway. is a payment gateway. So is Stripe, Skrill, TransFirst and FuturePay. ACH Payments. WePay. Dwolla. Amazon Pay. Google Wallet. GoCoin accepts bitcoin payments. BitPay too.

We could go on and on.

These payment gateways are popularly referred to simply as payment solutions by most people. Or payment systems. Or even payment service providers (PSPs).

Which is fine because most of these platforms have grown from mere payment gateways to full services that serve as a combination of payment gateway (what we just defined), merchant accounts (a little of this shortly), credit card processors and mobile payment processors – all rolled into one nice, well-branded, little package represented by a small logo on your checkout page.

Merchant Accounts vs. Payment Gateways

Merchant accounts are often confused with payment gateways, but technically, they are not one and the same. You see, in order to accept payments on your eCommerce store, you need both a payment gateway and a merchant account.

The role of a payment gateway is to simply approve or decline a transaction.

A merchant account, on the other hand, is where funds are held before they are deposited into your bank account. Often called a merchant ID or MID, it is a type of bank account that authorizes merchants (you, the seller) to accept credit card or debit card payments online.

If you want to use a payment gateway to process virtual sales on your website, you require a merchant account. But it’s not like you need to open a separate account because, as mentioned, some payment gateways these days encompass many services, merchant accounts being one of them.

When a service combines a payment gateway with a merchant account like this, it is referred to as a payment service provider (PSP).

Perhaps a few actual examples would be in order to better illustrate this point.

The likes of TrustCommerce,, and PaymentExpress are all good examples of a simple payment gateway.

PayPal, Stripe, and Adyen, on the other hand, are full-service payment service providers (PSPs). And yes, Square too.

Braintree is a payment gateway, but the partnership struck with PayPal (as mentioned on the Braintree homepage) essentially makes this a PSP as well.

However, we will stick to referring to them all as payment gateways, as it is the all-encompassing term.

The thing with payment gateways is that there are literally dozens of them. Dozens. Apart from the most popular ones known to everyone, there are many others supported only in a few countries.

For instance, customers in Japan can make payments through KOMOJU. Those in Brazil can do so through PagSeguro. Or Mercado Pago. The Nordic countries have the option of Mondido.

In a world of so many options, how do you know which one is right for you? The one most convenient for your customers? Do you just go with the most popular, the option everyone seems to have on their website?

Before we answer the question of how to choose the right payment gateway for your online store, it is probably nice to know why you should be making use of a payment gateway in the first place.

The Benefits of using a Payment Gateway

A payment gateway is not mandatory for operating an online business, in case you hear everyone waxing poetic about it.

However (there is always an however) the security that a payment gateway provides should be enough reason to have one on your online store. This is a hundredfold more so bearing in mind customers are more likely to buy from you when they see that your payment system is trustworthy.

The web has become the Wild West. Things have turned hostile out there, with hackers lurking on every corner. The logo of a payment gateway is like the Sheriff’s badge. It alerts everyone sauntering around town that security is observed around that particular outpost. It gives the residents and visitors alike a sense of security.

Without it, it’s every man for himself, and every dog on its own. You really don’t expect customers to transact with you in such an environment, let alone step anywhere near the saloon’s swing doors, do you?

And so it is with payment gateways in an online store.

A KPMG report released late 2016 revealed that 55% of consumers opted against making a purchase online due to security concerns.

With online shoppers visiting an average of three online stores before committing to buying, what you want is to stack up well against the competition by having the payment security aspect in check – in addition to price and quality of offering – when potential buyers come knocking.

Choosing the Right Payment Gateway for your Online Store

As the merchant, a payment gateway that guarantees both security and user-friendliness should be top of your mind when it gets down to evaluating your options.

What you also don’t want is to eat too much into your margins by choosing a solution that charges an exorbitant amount of fees.

Basically, there are four main factors you need to consider when looking for an ideal payment gateway for your store. These are:

  • Security

We have talked about this so let’s skip to the others.

  • eCommerce platform compatibility

Platform compatibility revolves around two key things.

First and foremost, your payment gateway of choice needs to integrate into your current system. Second, the gateway needs to match your user interface, and we are going to assume what you’re offering your customers is a simple, smooth shopping experience.

The upside is that most major payment gateways these days come with pre-built integration modules for the most popular eCommerce platforms – think WooCommerce, Magento, Shopify and so on.

While you are at it, it’s also nice to provide your customers with multiple payment options. Don’t be rigid by sticking with PayPal for better or for worse, a practice I often see with some store owners. Options have never been a bad thing in life, and this extends to your payment gateways.

People like having control, and the butterfly effect is that it decreases cart abandonment, in turn increasing your likelihood of making sales.

  • Fees

Payment gateways differ in the percentage of fees levied. By fees, we mean the amount you pay per transaction, and this is likely to be a percentage of the sale – and probably a small transaction fee.

Factor in both the domestic and international fees, as well as multi-currency fees which are often higher.

  • Target market

If yours is a global eCommerce store, consider the potential barriers to purchase when dealing with customers from different countries.

Often, you find that cross-border transactions suffer a significant decline compared to domestic for the simple reason that banks have trouble communicating with each other across borders. That is just about enough reason for the customers to abandon their cart altogether, never to turn back again.

Multi-currency support is not an option when dealing with international clients; it is a must. It provides a seamless experience for global customers as their order amount will reflect in their local currency on their credit card statements, tallying with the exact pricing on your website.

As well, this is helpful for lowering your own rates.

Other Considerations

In addition to what we have discussed, here are some questions that should go some way in helping you select a good gateway for your store.

  • How soon do you need to start accepting payments?

It takes about three to four weeks to set up a merchant account and payment gateway. Gateway providers like PayPal and Stripe, however, allow you to register and get started right away without the need for a merchant account.

Normally, obtaining a merchant account can be a lengthy process, especially for small businesses doing it for the first time.

  • What is your budget for the payment gateway?

Do not commit to any gateway provider without properly understanding their fee structure. Focus on the total cost involved – this should comprise the setup costs, transaction costs and admin costs.

If your online payments are relatively low, it’s good to avoid a high setup cost and monthly fees. In such a case, perhaps a full service provider such as Stripe might make better sense because it is quick and easy to set up. You might also want to opt for Direct Debit as it not as costly as card payments.

  • How soon do you need to receive funds from your sales?

Online payments are approved straight away, but it might not be until a few days later that a payment will be settled. Different providers offer different payment timings, so it’s something you need to keep in mind.

There are those who hold onto funds (or a portion of it) for up to 30 days which is nothing short of unreasonable. Others settle your payments within the next day. There are also those who pay out on set days. Ideally, you want a provider who pays out every day.

  • What cards does the payment gateway accept?

A good payment gateway should be able to accept multiple cards, whether local or international.

Some popular examples include VISA, Mastercard, Discover, Amex, American Express, JCB and Diners Club.

  • What kind of support is offered?

You cannot underestimate the significance of support. Customer experience is one of those things you really need to get right in this day and age. For this reason, you need a payment gateway that offers support when you need it and in a manner you can get it.

Consider things such as responsiveness, their hours of operation, if email support is offered and whether you are required to pay extra for support. Customer reviews can help you form a fairly good judgment, and what you can also do is make initial contact to see how fast they respond.

Last Word

The world of payment gateways can be a difficult one to navigate for anyone who hasn’t walked this road before. But it is nothing like fixing rockets, so you should be alright. All it needs is a little bit of research into and understanding of the subject and you should be home and dry.

There is a lot to cover, no doubt, but we designed this guide with the aim of condensing it all for you, and serving it in a way that makes it easy to chew.

When it comes down to it, having a payment gateway that matches your user-friendly interface, and is easy to navigate, and doesn’t fail repeatedly will ultimately increase sales and revenue.