A Payment Gateway is the code that connects your shopping cart to a credit card company. Put simply, it’s what facilitates the processing of credit cards and gets you paid. To say it’s an important part of your sites infrastructure is an understatement.
Examples of popular payment gateways are Stripe, PayPal, Moneris, Amazon Payments, Google Wallet, Apple Pay and the list goes on.
In this article we’re going to go over 7 things you need to consider before you choose a payment gateway for a WordPress eCommerce site.
- What is the gateway’s Discount Rate?The Discount Rate is the percentage the gateway takes off the top to process a transaction. The are sometimes referred to as “Merchant Fees”. For example, PayPal charges a 2.9% Discount Rate on all Credit Card Transactions plus a $0.30 per transaction fee. That amount is taken off the top before the money is settled into your bank account.ProTip: You CAN negotiate! If you go with a gateway like Stripe for example, give them a call or send an email asking if they can do any better than their posted rate. Have your expected sales numbers ready because they use those to determine your value as a customer.Most gateways turnaround and pay the credit card companies about 1.8% (aka the Wholesale Rate) so consider that your floor. Anything above that is fair game.
- What are the Gateway’s Security & Fraud Policies?Make yourself aware of what types of merchants a gateway allows. If you are selling particularly high risk or high fraud items like adult materials, casino games and even hosting, make sure your payment gateway makes allowances for your business type.Also, educate yourself on how they handle chargebacks. Is there a fee and will they freeze your account like some (cough cough PayPal)?This is where I warn you against using PayPal as your primary payment gateway. Specifically because their policies allow them to freeze and hold your funds for as long as they like, for any reason they like.But it’s not just PayPal. (Most) Payment gateways aren’t banks and they do not have to adhere to the strict rules that a bank does. They are out to protect themselves and they are more often than not answerable to the credit card companies themselves and they WILL pass the buck.
- How often do they settle funds into your bank account?This is a big one because it determines how often you get paid.Any good gateway will withdraw directly to your bank account. (Make sure your country’s banks are accepted) Stripe, for example, settles on a 48 hour roll which means two days after a transaction is cleared, it is sent to your bank account.That does NOT mean that the funds appear in your account within 48 hours. Usually it’s another 24 to 48 hours depending on your bank, before the funds show up. Take this all into account. Especially if you are bootstrapped or working with value products.
Some gateways can take up to a week to withdraw funds and some require you to do it manually every time. Know the policies before you get into bed with them.
- Does the eCommerce solution you want to use come built-in or offer a WordPress Plugin for the gateway and at what cost?
That’s right. Cost. Most eCommerce solutions come with a few standard options like PayPal Standard and COD but they charge for adding in the gateway of your choice. Check out the WooCommerce Gateway Page for some food for thought.Making sure the gateway you want not only easily integrates with your eCommerce solution (ideally as a WordPress Plugin) but also isn’t cost prohibitive, is key. Don’t skip this step.
- How does the gateway handle chargebacks? (and how to avoid them)I mentioned it briefly in #2 but it bears repeating and an explanation. A Chargeback is initiated by the credit card holder when they don’t recognize a charge on their statement. These can be costly. Not only will the funds be withdrawn from your bank account or frozen in your gateway BEFORE you can reply to the investigation, but your gateway usually charges a fee (up to $75) and all the onus is on you to prove it was a legit charge.Multiple chargebacks can result in suspension of your account and freezing of all funds. Know your gateway’s policies! ProTip – Avoiding Chargeback: To arm yourself against chargebacks, the best thing to do is to try to avoid them ever happening in the first place. You can do this by making sure the name that appears on the buyer’s credit card statement is something they will recognize. Most gateways offer the option to customize this.
You should also enable CVV (or CVC) verification AND Postal/Zip verification.
- Can you easily view all transactions including refunds, pending payments and settlements?
Gateways like Stripe, offer fantastic portals with some great analytics and easily accessible customer data. Make sure your gateway provides what you need before throwing them your business.
- Is there an API and is there a cost to use it?
An API is basically a data endpoint (or multiple endpoints) that allow other systems that you authorize to come in a grab your transaction data. This is incredibly useful if you want to use 3rd party dashboard systems like Baremertrics or Zapier.
- BONUS: Do they support the country or countries that you’d like to sell to?I know. DUH! Right?! Wrong! Two things. First, make sure you can withdraw funds to banks in your country (ideally, your bank) and second, make sure they accept credit cards from the countries you plan to sell to.
Did I miss anything? Let me know below.