Last Updated: May 03, 2024
Payment Gateway Integration
Published On: May 03, 2024

Summary: Today’s blog extensively details payment gateway integration, including its importance for businesses, different types, and how it works.

It also explains how to integrate a payment gateway and entails information about popular payment gateways. Finally, it explains how to choose a company for custom development and integration.

eCommerce owners and businesses wanting to expand their online presence are looking for easy-to-use payment systems for their customers. The payment solution should satisfy the requirements of customers and your business. A payment method that’s secure, easy to use, convenient, and compatible with your website/application.

Merchants use payment gateways to receive online payments and process them with debit or credit cards. Opting for the right payment gateway integration service allows you to offer various benefits effectively. For example, it is quicker, provides a wider range of payment methods, and has minimal transaction fees.

More than 23% of shoppers abandon carts because of a complicated checkout process or lengthy payment data requirements. These stats confirm that its significant to choose a reliable payment gateway provider.
However, before choosing a payment gateway, let’s first understand the overview of payment gateways and how they work.

Payment Gateways: A Quick Overview

Payment gateways act as legitimate mediators between online merchants and customers to authorize and process transactions.

They provide robust security as they utilize different authorization mechanisms to authenticate and pass customer transaction information. They literally work like a shield to protect sensitive data against cyber threats, infusing trust in merchants and customers.

The customer enters transaction details into the website or eCommerce application, which are then transmitted to the merchant bank for verification. If the bank approves the funds to be transferred, the transaction is completed.

Payment gateways can work with virtual terminals or point-of-sale (POS) terminals. Companies can seamlessly receive funds through various sources, such as debit cards, digital wallets, and credit cards.

Importance of Online Payment Gateway Integration

If you have an online business, it is impossible to accept payments directly from your website. There are many reasons why merchants must integrate payment gateways into their web or mobile apps.

  • Payment gateways securely encrypt sensitive information to ensure safety for customers as well as merchants.
  • Customers and business owners can easily use payment gateways. From setting up to integrating into the website, business owners can seamlessly utilize them. In addition, they offer customers an effortless checkout process.
  • Payment gateways can benefit online businesses, as customers can make payments 24/7. Additionally, the automated system allows you to receive payments without having to chase the client, unlike manual invoicing.
  • Payment gateways offer plans to fit any business type. They are scalable and comply with needs and budgets.
  • A payment gateway simplifies receiving your payments, allowing you to fulfill orders quicker than ever.

Why do Businesses Require Payment Gateway Integration?

Businesses in today’s digital era can only increase their success ratio by integrating payment gateways. The reason is the demand for user-friendly and secure payment. With the payment gateway integration, merchants can build a secure bridge between their online businesses and customers.

Thus, it facilitates smoother transactions and builds trust. Let’s explore six key reasons why businesses of all sizes should prioritize payment gateway integration:

  • Secure and Convenient Payment Processing

Customers’ sensitive financial data are encrypted in a payment gateway, ensuring a breach-free online transaction. Thus, your business can be protected from fraudulent activities and adhere to industry law compliance.

A study indicates that 13% of cart and checkout abandonments are due to a need for payment methods. Payment gateways solve this by offering different payment methods like digital wallets, debit and credit cards.

Therefore, customers can select from their preferred payment options. This would make customers’ checkout experience quicker and more convenient and reduce cart abandonment rates.

  • Global Market Access

With the payment gateway solution, merchants can seamlessly receive funds from customers worldwide. The only prerequisite is that the integrated payment gateways support multiple currencies and international payment networks.

With global market access, you can reach new customer segments and boost revenue potential. This is significantly advantageous for eCommerce companies looking to tap into international markets.

  • Integration with eCommerce Platforms

Modern eCommerce platforms like Magento, Shopify, and WooCommerce help online businesses with a smooth payment gateway integration. This eliminates the requirement of complex coding and smoothens customers’ checkout experience.

Additionally, transactions flow seamlessly between your online store and the payment gateway, reducing errors and ensuring a smooth buying process.

  • Fraud Prevention Measures

When businesses integrate payment gateways, they encompass fraud detection tools to protect them from fraudulent transactions. These tools utilize techniques like card verification value (CVV) inspection, address verification, and velocity detection to block suspicious activity.

Hence, you not only safeguard your business from financial losses but also build customer trust in your brand.

  • Streamlined Billing and Invoicing Processes

With an integrated payment gateway, businesses can automate many aspects of the billing and invoicing process. It allows invoices to be generated online, sent to customers via email, and even handled recurring payments.

With this automation, companies can focus on critical operations by saving their valuable time and resources. Additionally, electronic invoices are more secure and eco-friendly than conventional invoices.

  • Customer Trust and Confidence

Payment gateway integration fosters trust among your customers. It offers a convenient payment experience with the utmost security. Customers experience a sense of fulfillment as they know their bank data is secure. This trust translates into increased customer satisfaction, customer retention, and positive brand loyalty.

Struggling to Offer a Smooth Checkout Experience with Limited Payment Options?

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Top 3 Types of Payment Gateways

The payment gateway plays the role of a secure bridge between merchants and customers during digital payments. They handle the flow of sensitive financial information and ensure smooth processing.
However, it varies how the payment gateways integrate with your business. Below, we’ve categorized the 3 main types:

Hosted Payment Gateways

It is a type of online payment processing service provided by third-party providers. Transactions take place on your website in other gateways.

Meanwhile, in a hosted payment gateway, customers are required to enter their billing information into the provider’s secure payment page. After the payment process is completed, the customer returns to your site to finalize the purchase.

A widely recognized example of a hosted payment gateway is PayPal. When making a purchase online using PayPal, you’re redirected to a secure PayPal page to confirm the payment. Once you’ve done so, the PayPal payment gateway sends you back to the merchant’s website to finalize the order.

Self-hosted Payment Gateways

Next, these are merchant-hosted payment gateways that allow merchants to control the checkout process. Unlike hosted gateways, customers can enter payment information directly on the merchant’s site.

Then, you can encrypt it and send it for authorization to payment processors. Hence, this type of payment gateway offers more flexibility. Moreover, the merchants can modify the user interface to match their brand identity and optimize for a smooth user experience.

With a self-hosted gateway, customers enter their credit card data directly on your website during the checkout process. Afterward, your site securely transmits the encrypted data to the payment processor (like Visa or Mastercard) for authorization. Once approved, the transaction will be completed without ever leaving your website.

API-based Payment Gateways

In an API-hosted payment gateway, customers make a purchase and enter payment information on your platform during checkout. Here, the payment details are securely transmitted to the gateway using the Application Programming Interface (API).

Afterward, the information is verified with the customer’s bank account or payment network. If everything is authenticated, the payment gateway transfers the money to the merchant account.

Later, once your platform confirms payment with the gateway, the customer’s order can be fulfilled. Stripe is a popular API-based payment gateway known for its developer-friendly features.

How Does Payment Gateway Work?

Now that we have an overview of payment gateways, let’s examine their internal processes. This includes the time from when the customer clicks the “order now” button until the money gets into the merchant’s bank account.

  • Customer Checkout

The customer places an order and enters their payment information on your website’s checkout page. This typically includes their card number, name, expiration date, and CVV code.

  • Encryption & Security

Afterward, payment gateways encrypt this sensitive financial data to safeguard it from theft. Some gateways might also perform preliminary fraud checks at this stage.

  • Sending to Acquiring Bank

Next, the encrypted data is sent to the acquiring bank, which is the bank that allows you to accept card payments.

  • Authorization Request

The acquirer communicates with the card network (like Visa or Mastercard) and forwards the request to the customer’s issuing bank (the bank that issued the customer’s credit card).

  • Bank Approval

After that, the issuing bank verifies customer information, checks for available funds, and provides the transaction status – whether approved or declined.

  • Payment Confirmation

Once approved, the customer’s bank (issuer) transfers the money to the merchant’s bank (acquirer). The payment gateway receives the confirmation and relays this success message back to your website.

  • Settlement

Finally, after a set timeframe (usually a few business days), the acquirer bank settles the transaction by depositing the funds into your merchant account.

How to Integrate a Payment Gateway into Your Website?

With payment gateway integration, you can securely accept payments. Let’s examine the steps involved in integrating your payment gateway.

  • Select from the Gateway Providers

Research different payment gateways considering determinants such as transaction fees, supported payment methods, and seamless integration. Popular options include Stripe, PayPal, Authorize.net, etc.

  • Set Up a Merchant Account

Some gateways require a merchant account to receive payments. The application process involves business verification and providing bank account details.

  • Obtain API Keys

Once your account is set up, obtain API credentials (unique keys). It is used to connect your website to the payment processing system for secure communication.

  • Integrate Payment Gateway

This involves incorporating the gateway’s unique functionality into your website. The method can vary depending on your website and the chosen gateway. Here are two common approaches:

  • API Integration: This method involves using the gateway’s API (Application Programming Interface) to build the payment processing functionality into your website. Developers well-versed in coding utilize this approach.
  • Payment Buttons/Forms: Some gateways offer pre-built buttons or forms that you can embed in your website’s checkout page. These buttons handle basic payment processing and often involve copying and pasting provided code snippets.
  • Test the Payment Gateway

Before going live, thoroughly test the payment gateway with various scenarios (successful transactions, failed transactions, etc.) to ensure everything functions smoothly.

  • Go Live

Once testing is complete and you’re confident about the integration, activate the payment gateway on your website to start accepting customer payments.

6 Popular Payment Gateway Providers

for doing business digitally, it is crucial to choose the right payment gateway provider from a diverse range of options. Frictionless and secure payments mean less frustration for customers and peace of mind for merchants. Let us now move to the top contenders, who are trendsetters for secure payment integration in the digital era.

  • PayPal

PayPal is a well-known online payment processor. It has been a leader in the industry since its launch in 1998. Additionally, it allows customers to pay without disclosing financial data to the acquirer. Customers can simply log in to their PayPal account to make payments. PayPal payments offer a variety of functionalities to merchants, including:

  • Accepting payments from customers around the world
  • Sending and receiving invoices
  • Managing subscriptions
  • Creating custom buttons for your website

Business owners can easily integrate PayPal with various eCommerce platforms. Moreover, it also provides purchase protection programs for safe transactions.

  • Stripe

Stripe is a popular white-label payment gateway that was officially launched in 2011. It is known for its ease of use and powerful developer tools, making it a powerful platform for online payment processing.

Moreover, it allows businesses to accept payments using different options like ACH payments credit, and debit cards. The Stripe payment gateway provider also offers a variety of features for businesses, including:

  • Supports recurring billing
  • Fraud prevention
  • Encryption and tokenization
  • Invoicing
  • Subscription management

In addition, it guarantees advanced security to protect sensitive payment information. The Stripe payment gateway provider also allows businesses to track transaction data seamlessly through its real-time reporting and analytics feature.

  • Authorize.Net

Founded in 1996, Authorize.Net is a payment gateway that is popular with businesses of all sizes. The Authorize.Net payment gateway provider is PCI compliant and provides high-tech security to guarantee risk-free transactions. In addition, it has a variety of features, including:

  • Accepting credit card, debit card, and electronic check payments
  • Recurring billing
  • Seamless checkout
  • Fraud prevention
  • Reporting

Moreover, merchants need to have a separate Authorize.net account, which charges a one-time fee during the setup process.

  • Square

Square is a payment processor which is also prominent for its POS systems. It also offers a payment gateway that enables merchants to accept payments digitally. Here are some of the most common features of the Square payment gateway provider:

  • Contactless cards and devices
  • Manually keyed-in cards
  • Flexible for all businesses
  • Digital invoices
  • Accept payments on the website, app, or existing software.

Moreover, it provides integrated payment solutions to merchants through eCommerce payment processing and mobile car readers. In addition, it’s a good option for businesses requiring an easy-to-use payment solution and transparent pricing.

  • Braintree

Braintree is another payment gateway that is owned by PayPal. Additionally, it’s an excellent choice for businesses requiring a payment gateway that is integrated with PayPal. Braintree offers a variety of features, including:

  • Fraud detection tools
  • Safeguard customer information.
  • Recurring billing
  • Digital wallets, debit cards, and credit card payments
  • Reporting and analytics
  • easy payout of funds worldwide.

Moreover, Braintree operates in over 40 countries and supports 130 currencies. Hence, businesses can expand their reach and sell to customers globally.

  • 2Checkout (now Verifone)

2Checkout was officially launched in 2006. Later on, in 2020, Verifone acquired it and is a secure payment gateway. This payment gateway provider is popular with businesses that sell digital products. It provides a multitude of functionalities, including:

  • Supporting multiple currencies
  • Fraud prevention
  • Accepting payments from customers globally
  • Reporting
  • Subscription billing

Furthermore, it offers global payments from 200+ countries and territories, using over 45 different payment methods and 100 currencies.

Why Choose Moon Technolabs for Custom Payment Gateway Development & Integration

Moon Technolabs is your trustworthy partner for building a robust and successful custom payment gateway. Our experts emphasize understanding your business requirements and project scope before development.

We have experience developing fintech applications using the latest tools & technologies and seamlessly handling complex payment gateway integrations. Last but not least, we focus on user-friendly and secure solutions that guarantee a smooth payment experience for your customers.

Looking for a Reliable Payment Gateway Integration Company?

Our experts can securely integrate payment gateway for worry-free transactions.
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Conclusion

Payment integration solutions are the lifeblood of online businesses today. We’ve already discussed their importance, but it’s worth reiterating: flawless and secure payment processing isn’t an advantage; it’s essential for thriving in the competitive market.

Furthermore, a payment gateway integration builds trust, loyalty, and repeat customers. It offers a frictionless checkout and safeguards customers’ sensitive information.

Now that you have complete knowledge about payment gateways, it is important to find a custom payment gateway integration company.

With the payment integration service by Moon Technolabs, your business can be protected from fraudulent actions. It will also considerably improve your client satisfaction and support multiple payment methods.

FAQs

The best programming languages for payment gateway integration are: -Java (for Android applications) -Swift (for iOS applications) -C# (for Windows applications) We’ve chosen these programming languages because they are more stable and have cultivated powerful communities. In addition, the payment gateway works well if built with these technologies.

Yes, you can definitely use a single payment gateway for more than one website. This simplifies things by allowing you to manage all your payments from one place. It also saves time on setup and fees since you only need one merchant account. Many payment processors offer this functionality, so you can choose the one that best suits your business needs.

Yes, payment gateways can be considered a type of middleware. They act as an intermediary, facilitating communication between your online store and various payment processors (like Visa or Mastercard). This frees you from integrating with each processor individually. Payment gateways often provide additional features like fraud detection and encryption, making them more than just a simple bridge. In short, while all payment gateways are middleware, not all middleware is solely focused on payments.

The cost to develop a payment gateway ranges anywhere from $150,000 to $300,000 or more. This is just an estimate for a basic version (MVP). The final cost depends on the functionalities, complexity, and regulations. Expect to pay more for advanced security, multiple payment options, and integrations.
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Jayanti Katariya

Jayanti Katariya is the CEO of Moon Technolabs, a fast-growing IT solutions provider, with 18+ years of experience in the industry. Passionate about developing creative apps from a young age, he pursued an engineering degree to further this interest. Under his leadership, Moon Technolabs has helped numerous brands establish their online presence and he has also launched an invoicing software that assists businesses to streamline their financial operations.

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