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What features should I look for in an online payment gateway?

When processing an ecommerce gateway payment, your online payment gateway performs in the background, so the critical factors may be easily overlooked. First, make sure it is compatible with the online shopping cart software you have chosen. You should also make sure it offers the ability to verify billing addresses of the credit cards used for online payment processing. This helps reduce fraud and may in fact lower the discount rate, the rate the bank charges you for processing credit cards, since it helps reduce their risk as well. See if they have any special anti-fraud options available, although these may cost you a premium. But for high value items, it may be worthwhile to you. In general, make sure you understand all the charges you will be responsible for, as they can add up and be substantial.

Your internet payment gateway

An internet payment gateway sits between your online shopping cart and the various financial institutions, such as your merchant account and the customer's credit card account. It handles the online payment processing. As part of the online payment processing process, it encrypts and decrypts the financial data on its way to and from your shopping cart. This is all transparent to your customer, who only interacts with the shopping cart software itself. Your shopping cart probably has various plug-ins that let it interact with several different internet payment gateways.

Online payment gateway

If you want to manually enter your credit card transactions, then you don't. But if you want online instantaneous purchasing by your visitors, then you need an online payment gateway. The credit card payment gateway communicates with the banking institutions, securely communicating the purchase and credit card info to the bank. The bank sends approval (or denial back to the online payment gateway. Funds are then debited against the credit card and deposited into your merchant account. If you do it manually, you can manually enter your credit card transactions and process them like you would if you had a brick and mortar store.

How does this whole online buying thing work?

When a customer buys something from you online, they select an item from your web site and typically add it to your shopping cart software. In turn, the shopping cart software communicates with an online payment gateway, which encrypts the data and communicates with the credit card bank. It typically verifies that the billing address entered by the customer is the same as what's on file, to help prevent fraud in online payment processing. If it's approved, an ecommerce gateway payment is issued to your merchant account and the charge is debited against the customer's credit card account.

Credit card payment gateways and online shopping

No, each shopping cart module needs a plug-in to work with a particular credit card payment gateway. If you've already selected shopping cart software, sign up for a credit card payment gateway that it supports. If you want to use one that is not listed, contact the shopping cart vendor and see if they will add a plug-in for you. It is typically to their advantage to support online payment processing as fully as possible. When selecting either a shopping cart vendor or an online payment gateway, compare your total price. If one is very cheap but supports only more expensive partners, that may not be the best solution for your online payment processing.

Paypal Still a Reasonable Payment Alternative

If you accept credit cards through your online shopping cart program, why not offer payment alternatives like Paypal? Paypal is a hugely successful service and it offers a payment alternative to anyone who has a Paypal account and doesn't want to use a credit card. It's not going to hurt you to add another payment alternative to your online shopping cart program, so why not drop it on there and see how many people use it?