Selecting a payment gateway can be a difficult decision. Merchants too often overlook many gateway features, whether it is the payment methods offered, easy integration, long-term costs, notifications, recurring billing, refunds, reporting functionality, FX fee, and so forth. With so many factors in the mix, how can merchants make sure they are making the correct assessment?
While merchants investigate solutions, the online payments landscape continues to change. Their benchmarking studies are already lagging in the constantly evolving online payments space. Neglecting this point is a risk that may lead to revenue loss and higher costs that could be easily avoided.
The dictionary defines ‘risk’ as a situation involving exposure to danger. What might be the dangers of selecting only one payment gateway? What if a more suitable option arises? Can you easily add a new payment gateway offering varied payment types for your customers? What about your customers’ payment details? Can they be used against other gateways? To what extent are you truly free to choose at any point in time?
At some point, merchants have to stack payment gateways. They may be looking to provide new payment methods (dozens of new payment methods are created every year), optimise transaction costs, expand overseas, have more adapted features, and so forth. Merchants who decide to use new payment solutions often stumble across a million issues related to the portability of customers’ data. Routeing their customer’s payment details from one provider to another is a lengthy and costly process. Some merchants even find it easier to require all their customers to re-enter their payment details. How many customers do they lose in the process?
So, why don’t merchants stick with only one payment gateway? Payment gateways are great when they become part of an intelligent structure. As merchants scale up, using one payment gateway hinders their ability to reach out to their market in its entirety. They may miss out on payment methods that online consumers demand, and these consumers are only a click away from the merchants’ competitors. Failing to provide a preferred payment method might cost merchants up to 30% of their market. The merchants’ flexibility with payment gateways highly contributes to online businesses’ success or failure.
In many cases, merchants find that having a single payment gateway may compromise their ability to save costs. For international businesses, it is wiser to select niche, local and more specific payment gateways for they are the most cost effective in the long run. They let merchants expand while not killing their margins. Keeping transaction costs low is essential to stay competitive. Global businesses often find that using local gateways that accept payments in local currencies reduces their transaction costs. This way, they can avoid foreign currency exchange fees and design their online payments structure in a way that truly benefits their organisation.
Is there an ideal solution? Using only one holistic payment gateway is fantastic because of a single entry integration point. However, experienced investors often advise diversifying portfolios to minimise risk. The same applies to payment gateways. Relying on a single payment gateway might be a risk, as it doesn’t give merchants the ability to optimise their costs. On the other hand, although multiple payment gateways allow merchants to create cost friendly payment infrastructures, integration costs increase significantly as multiple entry integration points are required. Each of those points has to be connected to their entire ecosystem (i.e. CRM, accounting system, etc.).
Can merchants have it all? The ideal online payments infrastructure lets merchants optimise both transaction and integration costs. This architecture should have a single entry point of integration that connects all the payment gateways to their entire ecosystem. All businesses that take online payments are longing for this ultimate online payments structure
by Justin Hubert
Payments Advisor, PayDock