Advantages And Disadvantages Of Ecommerce Payment Gateways

eCommerce Payment Gateways

A huge share of time and expense is invested by ecommerce merchants in getting their website’s design and functionality straight and due to this they often overshadow the prominent streams of their businesses like managing customer orders , online payments and etc. eCommerce gateways helps businesses achieve this by enabling them to authenticate transactions and/or transfer payments from the customer's to the merchant's bank account or vice-versa , in an easy and efficient manner.

eCommerce Gateways, or online Payment Gateways, can be compared to a physical POS (Point–of–Sale) of a traditional retail stores , where credit / debit card is swiped at billing desk or payment is made in cash , in online retail

He or she will key in his or her credit card number together with other important information required for billing, and will then be sent to the eCommerce Payment Gateway page to finalize the payment .

The eCommerce Payment Gateway collects all the information and transmits it to the acquiring bank of the merchant, which will send these details to the customer’s bank for verification. During this stage, the credit card company that collaborates with the customer’s bank will also send a reply code to either approve or reject a customer’s credit card transaction.

The merchant’s bank will transmit all these information online to the eCommerce Payment Gateway and the money will be transferred into the online merchant's bank account from the consumer's one , if the credit card is approved .

At the same time, the eCommerce Payment Gateway will deliver the transaction details to the customer, and it will be shown on his or her monitor whether consumer's credit card transaction was accepted or denied by the bank.

The entire payment process typically takes about 3 seconds, despite its seeming complexity.

Each step in the process incurs costs for the merchant / seller.

Here is a sample breakdown of a $400.00 purchase by a

The percentage fees is also quite reasonable in most services.

The disadvantage is that the hosted eCommerce Gateways controls the checkout page and website appearance. It may also restrict a seller from processing certain types of transactions, like memberships and subscriptions. Additionally, it can confuse customers especially when transaction problems occur, since they have more than one party to deal with when giving their complaints.

Shared Payment Gateways allow the customers to directly pay in seller’s website, with post forms used after the customer clicks the payment / purchase button or link. This is solely maintained by an eCommerce Gateway, which will require the customer to fill in details, such as credit card information and other personal details. Once the details are filled in, the customer will be redirected to the main website .

The advantage of this kind of Payment Gateway is that the seller has control over everything from start to finish. It is also more secure, as no one else’s brand goes anywhere to the online store unless it is allowed to do