Payment Providers

Choosing an Online Payments Provider

What is a payment gateway?

In the digital age, businesses of all kinds are getting online. Whether you have a fully operational online shop or you just want to maintain a decent online presence, you’ll need a good online payments system. The good news is that there is a growing number of online payment providers out there; the bad news is that not all of them will be right for you. Here’s a quick guide to what online payment systems are and what factors you should consider when making your choice.

What is a payment gateway?

First, let’s understand the one thing you’ll need to take payments: an online payment gateway. This service allows you to accept credit and debit card payments by authorising and processing payments. Security protocols and encryption processes allow it to securely transfer payment data from the web, app or mobile device on which the payment was made to payment processors and back.


One of the most important questions you’ll have to answer is the way in which it will be integrated into your site?

The simplest approach will be for a hosted gateway in which it’s hosted on a third-party site and requires your customers to leave your website and go to the payment provider. Integration is quick and simple and basically involves a piece of code which allows you to place a button on your website allowing them to buy.

This is possibly the simplest way to do it, as the provider takes care of all the processing requirements. You will also not need to purchase any of the infrastructure to manage it. However, using a third party reduces your control over the process and can leave you vulnerable to any problems with the system. If they have a problem, or their system is compromised, you could suffer.

Aside from that taking customers away from your website dilutes your branding and creates an additional barrier between the customer and the purchase. Almost 70% of shopping carts are abandoned mid-way through. The more complicated the process is, the more likely it is that a customer will bail before making a transaction.

Alternatively, you can opt for a non-hosted option in which the gateway is integrated onto your site. This keeps the customer firmly with you and gives you full control over the process. It maintains your branding and increases a sense of trust between you and the customer.

However, this is more complicated and means you’ll have to maintain all the infrastructure required to make the transaction. In order to host a payment gateway, you’ll have to be PCI compliant to permit the storage of customer data on your server.

Choosing an online payment provider

Once you know how you want to integrate this, you need to choose a payment provider. There are many to choose from including names you’ll probably already know such as PayPal, Apple and Android Pay, and Venmo as well as a host of others who my be less familiar.

As with many other providers, this will be a balancing act of measuring features and performance against pricing. For ecommerce you’ll have the added consideration of security thrown in for good measure.

For many the first question to ask will be how much will it cost? Processing payments can be complicated and may involve multiple parties, tools and processes. Each party involved in the process will charge a fee for their services.

Depending on your payment provider, you may find yourself paying a number of expenses including monthly payment gateway fees, merchant account set up and a fee for each individual transaction. Not all of these fees are displayed clearly in marketing material so you should study the small print to make sure you’re not missing any important fees.

Payment methods

A crucial issue will be whether they can accept the payment methods and sell to the territories you need. As ecommerce tightens its grip, people are being presented with a rapidly growing range of options when it comes to making payments.

According to research from Statista, Credit cards remain the most popular method of payment (42%) followed by electronic payment such as PayPal and Debit cards. However, other options such as mobile payments and even bitcoin are becoming more popular.

According to research from Statista, Credit cards remain the most popular method of payment (42%) followed by electronic payment such as PayPal and Debit cards. However, other options such as mobile payments and even bitcoin are becoming more popular.

Likewise, firms are selling in more and more territories, with even relatively small firms capitalising on online payments to branch out around the world. If you’re operating in multiple territories, you will need to feel certain that your payment provider can process payments from all the markets you work in and that it can cater to all the payment methods your customers want to use.

Equally, you’ll need to make sure your product type is supported by the payment provider. For example, providers may restrict themselves to either physical products which you can send out or digital products which you can deliver online.


A much overlooked, but vital, issue is security. In the digital age, companies are becoming increasingly reliant on third party vendors. However, alongside all that functionality, as a recent report from Deloitte demonstrated, comes additional risk.

The increased mobility of data creates an enormous opportunity for cyber criminals and third parties represent a weakness they are looking to exploit. While you as a business may go out of your way to ensure your systems are secure and encrypted, all that good work might be compromised by a third party.

Thanks to recent updates to data protection regulation, such as GDPR, that can create an enormous headache because you retain responsibility for any of your customers’ data which is lost, even if the breach occurs as a result of a problem with a third party. In essence, you surrender control of that data but you keep the liability.

Third party due diligence must be a core part of your cyber security operation, but it’s surprising how many companies forget this entirely. Before signing on the dotted line, therefore, you should ask any provider about their security provisions and make sure you have a plan in place to ensure business continuity and the safety of your customers’ data if something does go wrong.

Going it alone

There is another alternative. If you’re a large enough company, you may consider investing time, effort and resources into creating your own payment gateway. This will eventually save you money on transaction fees and may even enable you to use that payment capability as a product to sell to other companies, but it is an enormous undertaking and will require considerable investment in infrastructure and developing extensive relationships with banks and other financial institutions.

For most companies, though, an online payments provider will provide a fast, affordable and effective way to manage your payments online. As a buyer you’ll be looking to assess the market, understand the costs and choose the provider which offers the best solution for you and your business.

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