Module Five

Understanding Payment Gateways

 

Welcome to the next stage of building your eCommerce business. If you are reading this chapter, you might know the basics of eCommerce. However, you can always proceed to the previous modules to know the finer details of running an eCommerce business in India. Now in this module, we are going to learn about payment gateways in detail.

Here, in this particular chapter, we will talk about the basics of payment gateways. What are payment gateways and what are some of the most popular payment gateways? 

We are going to learn all about it in detail here. So, let’s proceed and find out about it here. 

What is a Payment Gateway?

A payment gateway is like a digital cashier that helps online stores accept payments from their customers. Imagine you go to a supermarket and hand your card to the cashier when you’re ready to pay. The cashier then swipes your card and confirms whether the payment went through.

 

Similarly, in an online store, a payment gateway works in the background to ensure the money from your card or digital wallet goes to the store safely. It checks if you have enough money, confirms the payment with your bank, and tells the online store, “Payment successful!” This all happens in just a few seconds.

 

Here are some simple steps to showcase how this works: 

 

• Customer places an order: They choose the product and proceed to payment.
• Payment gateway encrypts the data: This means it scrambles the information, like your card number, to keep it safe from hackers.
• Bank approval: The payment gateway sends this data to your bank to check if everything is okay.
• Transaction confirmation: Once approved, the payment gateway lets the online store know that the payment is done, and the store prepares your order.

 

So basically, you can think of the payment gateway as the invisible bridge that makes sure the money travels safely between you and the store.

 

Criteria for Selecting a Payment Gateway

 

Now that you know what payment gateways are and how they work, it is time for us to understand the criteria for selecting the right payment gateway. 

 

Here are some of the most important aspects to consider when you are choosing a payment gateway:

 

Security

One of the most important criteria that you need to keep in consideration when selecting a payment gateway is security. Remember how you protect your belongings at home by keeping them in a safe place? 

 

In the same manner, you need to protect your customer’s payment details. The gateway should have features like encryption and fraud detection to keep aspects like customer’s card details safe. 

 

Ease of Use

The next thing that you need to consider when choosing a payment gateway is the ease of use. How easy it is for the customers to complete their transactions will play a role in deciding whether they are going to purchase from your eCommerce store. 

 

Remember how a vending machine works? If there are too many buttons on the machine and using the machine is complicated, people will not be able to use it anymore. Right? In the same manner, you have to think about payment gateways. 

 

Cost

Take your example for a while. There are two ATMs, one where the transaction fees are too high and the other where it is not. Which ATM would you choose? The second one, right?

 

Thus, make sure that the payment gateway that you are choosing does not have a high transaction fee. Also, you should understand that you should not be paying too much to the platform for maintenance fees. 

 

Supported Payment Methods

Customers like options. Some people prefer using credit cards, while others might like digital wallets like Google Pay or Paytm. 

 

Choosing a gateway that supports multiple payment methods is like having different flavors of ice cream in a shop – it attracts more customers!

 

Speed

No one likes waiting! Just like you prefer fast food over slow service, customers appreciate a payment gateway that processes transactions quickly. 

 

A slow payment gateway might frustrate them, leading to fewer completed sales.

 

Customer Support

If something goes wrong with a payment, businesses need to fix it quickly. 

 

It is like having a help desk in a store, if your card is not working, you need someone to assist right away. A payment gateway with 24/7 support ensures businesses do not lose money due to technical problems.

 

By keeping these points in mind, eCommerce businesses can choose a payment gateway that helps them serve customers efficiently and securely.

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