Perhaps the most important decision you’ll ever need to make when setting up an online business is which online payment system you should choose. Your business is designed to make a profit, and without the ability to accept payments via a digital payment gateway, you’ll have a difficult time making money.
There are huge opportunities to sell online: ecommerce is growing 23% per year, and 80% of Americans have made an online purchase in the last month alone. Online shopping is even bigger in the UK, which ranked highest in the world for online spending in 2015 with an average of $5,900 (£4,611) per household, and 16.9% of total retail sales in 2017.
Whatever your industry, be it entertainment, retail, or financial services, there are multiple options when it comes to online payment systems, and there will certainly be one that perfectly suits your business. But how do you begin to sift through the multiple offerings to find the right one? Today we will shine the light on a variety of payment gateways with the essential information to help you figure out which one is right for your ecommerce website.
Payment System Options For Your Business:
Pros: Well known, global
Cons: Fees can get a bit steep
Fees: 2.9% + $0.30 per US transaction with varying additional fees for international payments (more info here)
PayPal is one of the biggest online payment gateways, if not the biggest. It’s also been around for a long time, so it’s a brand that customers recognize and trust when submitting a payment. Depending on how much of a presence you’d like PayPal to have, it can either be integrated directly into your website, or positioned as a payment page separate from the ecommerce site itself. Embedding the payment system directly onto your site means that customers do not have to leave your site to pay, increasing the likelihood of further sales. However, they have a varying fee scale for international payments which could make it harder for customers in other countries to purchase. And with transaction fees at almost 3%, large purchases could quickly become expensive to facilitate.
Pros: Developer friendly, growing quickly
Cons: Can be tough to set up if you’re not familiar with code
Fees: 2.9% + $0.30 per successful card charge to credit and debit cards for pay as you go, with enterprise pricing available; add 1% for international cards
Stripe is a US company that has recently expanded overseas, and it is quickly becoming one of the best-known online payment gateways in the space. Its primary users are in the US and the UK so it will be best suited to digital businesses in these countries, although there are plenty of other countries that also use it if you’d like to be a Stripe pioneer. One of the biggest benefits that Stripe offers is that it is very developer friendly, so with its array of APIs and company ethos that “payments is a problem rooted in code, not finance,” there will be lots of fun, sleek ways to integrate Stripe into your ecommerce site. However, you must have a good developer team to do this properly and effectively. Their pricing is the same as PayPal in the US, but they beat out PayPal when it comes to international payments by charging a flat 1%.
Pros: Multiple configuration options for payment services, both online and in person
Cons: Confusing and hard-to-find pricing structure
Fees: Depend on the solution
Worldpay is another online payment system that has a fairly wide reach, with extremely well-respected organizations such as government institutions using Worldpay to facilitate their online payments. However, Worldpay is not only for the solid: they also offer payment gateways for a variety of businesses like social and dating, content and media, software and services, and video games. They’ve made an effort to be versatile so they could be the right fit for many types of businesses. However, their website does not provide much information about pricing; leaving you to get in touch to find out, making it likely that you will have to speak to a sales team. Worldpay also has a huge presence in brick-and-mortar locations, so if you have physical stores in addition to your digital ecommerce site then bulk discounts could apply.
Pros: Recognized brand, fraud protection, easy mobile integration
Fees: 2.9% + $0.30 for domestic US transactions, 3.9% cross-border fee.
Although Amazon Pay hasn’t experienced as much market penetration as some of the big online payment gateways like Worldpay or PayPal, it has another strong weapon in its arsenal: the Amazon name. Amazon’s brand reputation is up there with the likes of Google and Facebook, and as such is a trusted name online. Customers will feel comfortable submitting payments with Amazon Pay – however, you are paying for the name. Amazon Pay’s fees are higher than most, so you may feel the sting a bit more. However, it comes with fraud protection at no extra cost, and Amazon Pay integrates easily into mobile-optimized sites.
Pros: Low fees
Cons: May be difficult to scale, direct debit only, UK centric
Fees: Start at 1% or £2, whichever is lower, with a minimum of 20p; additional packages available for a monthly fee
This UK-based company has a straightforward, uncomplicated approach to online direct debit transactions. GoCardless offers integrations into many of the most popular accounting software, like Sage and QuickBooks. They also have an impressive portfolio of UK clients, which includes HM Government, TripAdvisor, Thomas Cook, and Virgin. However, they only facilitate direct debit transactions, so if you need to be credit-card friendly then you are best off going with another solution. They’re also optimized for the UK, which is great if your business is located there; however, they won’t be the ideal solution if you do any business outside of the UK.
Pros: Cross-border friendly
Cons: Not as well known as other online payment gateways
Fees: Use this transparent fee calculator to find out exactly how much you’d pay
You may have heard of Transferwise as a company that facilitates transferring money internationally, but they also have an ecommerce payment system that can be used with credit cards, debit cards, Apple Pay, bank transfers, or iOS and Android apps, which makes them a great solution if you do a lot of cross-border business and need to give your customers plenty of options to pay. Credit and debit cards come with an extra fee, but that’s charged by the card company or bank, and the flexibility in payment methods that Transferwise offers justifies the fees. They also charge more the higher the cost of the transaction, which is par for the course, and fees vary depending on the country you’re sending to and from.
Pros: No fees, recognized name, great for sole proprietors
Cons: Not available to anyone but sole proprietors
Like Amazon Pay, you’re going to get great brand recognition by using Google Wallet, even if it’s not the most popular online payment system on the market today. It has a simple and clean interface, allowing users to send money to someone using just an email address or a phone number, and it links to users’ bank accounts so that the money is transferred directly. However, Google Wallet is not currently available to registered companies (Limited or LLC entity) so it’s only going to be useful if you’re a sole proprietor. If you fall into that category, then it’s great news: there are no fees so you won’t be charged money to get paid by your customers. In the world of self-employment and entrepreneurship, no fee is exactly the right price.
Pros: Social media marketplace friendly, easy integration with the Shopify platform
Cons: Monthly fee in addition to credit card transaction cost
Fees: Start at $29 per month, credit card transactions charged at 2.9% + $0.30
If you already use the Shopify ecommerce platform then Shopify Payments is the easiest way to accept payments online. It also integrates with third-party online marketplaces like Facebook Shop, Twitter, and Pinterest, so if your business is heavy in social media then Shopify Payments could be an ideal solution to accept payments through social media platforms. There are no third-party accounts required to get started. They also have a physical card reader available that can work from a mobile device, meaning you can accept payments on the go, and these come with competitive credit card rates.
With more and more businesses turning to online marketplaces, there is a far greater need for online payment gateways to meet a variety of needs. Some businesses need a solution that they can use in physical stores as well as online; others require an online payment system with easy integration into a specific set of online platforms, like social media, due to the specificities of their business model and the market they’re in. Thankfully, there is a great selection of companies that offer many different types of online payment gateways, most of which are at competitive price points so accepting payments won’t be a hindrance to making a profit. This list is a great starting point, but if you can’t find the one that fits your business then there are more boutique options available as well.