A payment gateway: What is it and why is it important?
If you've already launched your online store, this is certainly not the first time you've heard about payment gateways. Yet, understanding what they are exactly and how crucial their role is for your online store is not necessarily easy. In this article, we will demystify this technical term and clearly explain the principle of a payment gateway. How it works and especially why a reliable payment solution is an essential condition for any ecommerce site that aspires to success.
What is a payment gateway?
A payment gateway is a service that authorizes credit card payments for ecommerce but also for traditional retailers. Whether we are talking about a platform, gateway, or payment solution, these modules act as an intermediary between the seller (your online store) and financial institutions (banks or credit card companies such as Visa or Mastercard).
When your customers make a purchase from your online store, the payment gateway is responsible for transferring payment information in a secure way. Its function is to ensure that funds are available before authorizing or denying the transaction. This process is not limited to this aspect and also includes verifying the validity of the card and authenticating the transaction details.
How does a payment gateway work?
Although many payment platforms exist, they way they operate can still be broken down into some key steps:
- Entering payment information: The customer enters their credit card information in the secure payment form to place an order on your ecommerce site.
- Data encryption: The payment gateway encrypts this sensitive information in order to protect it from fraudulent interception.
- Data transmission: The encrypted information is first transmitted to your online store's bank which then sends an authorization request to the bank issuing the credit card.
- Verification and authorization: The issuing bank verifies the transaction details, ensures that funds are available, and returns a response (authorization or refusal) to the payment gateway.
- Transaction confirmation: The response from the issuing bank is finally transmitted via the payment gateway to your ecommerce site and the customer. If the transaction is authorized, the payment is processed and the funds are transferred to your company's account.
Why is a payment gateway important?
Transaction security
Transaction security is undoubtedly the main reason why a payment gateway is essential. These platforms use advanced technologies that encrypt credit card information to protect your customers from data theft and fraud.
A reliable payment platform is compliant with payment card industry security standards (PCI-DSS) and thus ensures that all transactions are carried out in a secure manner.
Customer trust
Customers are paying more and more attention to the payment platforms chosen by online stores. Using a reputable payment gateway is essential for your customers to feel confident and make purchases on your site.
Trust is a key factor in online commerce, and a reliable payment gateway can significantly improve your conversion rate.
Simplified payment management
Payment gateways make it easier for merchants to manage payments. These platforms automate many aspects of payment processing and thus reduce human error and simplify transaction reconciliation.
The efficiency and simplicity of these payment solutions also allow you to focus on other aspects of your online store such as marketing and inventory management.
Compatibility and integration
Payment gateways are designed to integrate easily with major ecommerce platforms (including PrestaShop of course). Prestashop payment modules make it easy to add a payment platform to your online store, all without having to invest a lot of time or effort to achieve it.
The main players in payment gateways
Numerous payment gateways exist on the market, each offering different features and rates. Here are some of the best-known platforms:
- PayPal: One of the most well-known online payment services. In addition to its easy integration, its reputation is well established among customers.
- Stripe: Very popular for its flexibility and advanced features, an ideal module for technological online stores.
- Square: Known for its simple and accessible payment solutions, Square is highly appreciated by small businesses and physical retailers.
- Mollie: Popular especially in Europe, Mollie is renowned for its ease of use and transparent rates.
Conclusion
Payment gateways are a crucial part of online commerce. No wonder given their first feature that guarantees your customers that their personal and banking data is processed securely. Beyond increased security, payment gateways also provide a better user experience that typically increases conversion rates. Whatever your ecommerce site, integrating a reliable payment gateway is a wise investment that can greatly contribute to the growth of your online store.
Payment solutions tailored for all needs
Our payment partners, whose modules are available on the PrestaShop Marketplace:
