Payment Gateway Service Providers - An Ultimate Guide

Summary

Payment gateways do not merely operate as transaction enablers. They are fundamental to safe online payments. Working between a merchant, a payment processor, and financial institutions, they guarantee customers’ data protection from display to possible manipulation and subsequent accurate conversion.

Safe, effective, and seamless payment processing has never been more important with your customers shopping online. Payment gateways protect your online sales outlet by ensuring consumers’ payment information is processed securely and accurately. Selecting an appropriate payment gateway adds value to the perceived customer experience and enhances the probability of conversion, leading to better business performance and profitability. However, with the many available payment gateway choices, choosing the right one for your business may involve time and research.

Read our blog to learn about high-risk payment gateway service providers for eCommerce.

What are Payment Gateway Service Providers?

A payment gateway is an interface merchants employ to provide payment options and process credit card payments and other electronic transactions. Its primary role is to ensure that data obtained from the merchant’s website/POS and entered by the customer is safe and secure to transfer to the payment processor and the merchant’s bank account or vice versa. This makes the transaction very secure and keeps the data free from corruption.

What Is The Difference Between A Payment Gateway And A Payment Processor?

A payment processor is an agent who forwards payment details between the customer’s and merchant’s banks. It also involves authorization, settlement, and funding, meaning the merchant receives the money from the buyer’s account.

On the other hand, the request to open a payment gateway is required when starting the transaction. It executes the first duty of acquiring the customer’s payment details and passing them on to the payment gateway integrator. It also ensures that the WAF flows smoothly under the hood between the vendor’s website/point of sale UI and the payment processor on the back end of the transaction.

How Payment Gateways Work:

A Step-by-Step Guide to Seamless Transactions

Using payment gateways helps businesses accept credit cards safely. Here's a closer look at the typical steps involved in processing online payments:

Customer Places an Order

Customer demand leads them to purchase products on a merchant’s website, place them in a virtual shopping cart, and then check out. Finally, they enter basic payment information like credit or debit card details and billing or delivery addresses during checkout.

Protection Of Transmitted Data And Its Encryption

Once customers provide their credit card details, the payment gateway encodes the data, thus preventing unauthorized access. This encrypted data is transmitted to the payment processor for further processing while the transaction remains safe and secure.

The Approval by the Issuing Bank

The payment processor relays the encrypted payment details to the customer’s issuing bank for an okay. The bank, for instance, looks at the account balance, confirms its authenticity, and conducts some fraud checks. There is a confirmation from the issuing bank if everything is in order and a return to the processor.

Merchant Receives Confirmation

The entire process is summarized in the merchant's message, indicating its ranking based on the search criteria. The payment processor relays the issuing bank’s approval message to the payment gateway, thus passing the transaction results to the merchant. On confirmation, the customer receives a message informing him/her that the payment has been successful, which makes the buying process an enjoyable experience.

Funds Are Transferred

After that, the amount of money involved is directed from the customer’s bank account to the merchant’s bank account through the settlement process by the payment processor. The transfer is usually done within the shortest time, usually in not more than three to five business days, to ensure that the merchant bank is paid with some processing fees charged.

The Journey Behind Every Swipe

The customer browses your website

Payment gateway encrypts customer data

The Bank's Thumbs Up

Payment Successful

Fund From Customer’s Account to Merchants Account

What Are the Different Types of Payment Gateways?

The three main types of payment gateways include:

Hosted Payment Gateways

They are some of the easiest to manage because all you have to do is host them. Customers are then led to a safe payment page controlled by the PSP, where they enter and pay their details. However, such gateways are quite simple to integrate and maintain, while the redirection can interfere with the actual checkout process. Additionally, businesses require more influence on the design of the payment page.

Self-Hosted Payment Gateways

Merchants can utilize these gateways to integrate the payment process into the business's webpage. Customers remain on the e-commerce site for key entry details such as credit card information, thus designing a branded check-out. This gateway type allows greater manipulation and personalization but entails installing and managing the gateway with due technological prowess. Also, one must pay particular attention to compliant and secure payment systems.

Redirect Payment Gateways

Like both hosted and self-hosted gateways, redirect gateways have some combined characteristics. A customer enters the merchant's website for checkout but is then guided to a payment page offered by the gateway. This method is flexible but allows the merchant some control over the kinds of checkouts customers will encounter while gaining the security of outsourcing the process to a gateway provider.

Advantages of Payment Gateways

Payment gateways offer numerous benefits to businesses, enhancing transaction security, customer satisfaction, and operational efficiency. Key advantages include:

Convenience

Payment gateways provide an easy and user-friendly method for customers to purchase online. By supporting various payment options—such as credit cards, debit cards, and digital wallets—gateways cater to customer preferences. This convenience reduces cart abandonment, encouraging more completed transactions and boosting sales.

Security

Modern payment gateways safeguard payment data using advanced encryption and adhere to rigorous security standards, such as the Payment Card Industry Data Security Standard (PCI DSS). These measures help prevent fraud and protect customer information throughout the transaction process, fostering trust and reliability.

Enhanced Customer Experience

Payment gateways improve the shopping experience by offering a smooth, hassle-free checkout process and multiple payment options. Catering to diverse customer preferences increases satisfaction, promotes loyalty, and encourages repeat purchases, creating a positive engagement cycle.

Global Reach

Payment gateways empower businesses to operate globally by supporting multiple currencies and international payment methods. This capability allows companies to accept customer payments worldwide, unlocking new growth opportunities and revenue streams.

Popular Payment Gateway Providers

The market offers many payment gateway providers, giving businesses plenty of choices to meet their needs. The table explains some of the most commonly used and trusted payment gateways:

Provider	Years in Operation	Number of Clients	Customer Segments	Industry Focus	Customization	Coverage Scope	Pricing Structure	Customer Support	Integration	Additional Benefits
Stripe	14	Millions	Startups, SMEs, Large Enterprises	Technology, Retail, SaaS	High	Global	2.9% + $0.30/transaction	24/7 chat & email	Extensive APIs	Advanced fraud detection, 135+ currencies
PayPal	25	400M+ active accounts	Individuals, SMEs, Large Enterprises	Retail, Services, Nonprofits	Moderate	Global	2.9% + $0.30/transaction	24/7 phone & message	Easy integration	Buyer & seller protection
Square	14	Millions	SMEs, Retailers, Food Services	Retail, Food & Beverage	Moderate	US, Canada, Australia, Japan, UK	2.6% + $0.10/transaction	Phone support (business hours)	Integrated POS	Real-time analytics, no monthly fees
Authorize.net	28	440,000+	SMEs, Large Enterprises	Retail, Services	High	US, Canada, UK, Europe, Australia	$25/month + 2.9% + $0.30/transaction	24/7 phone & email	Extensive APIs	Advanced fraud detection
Adyen	18	5,000+	Large Enterprises, High-Growth Companies	Retail, Digital Goods, Travel	High	Global	Varies by payment method & country	24/7 phone & email	Unified platform	Supports 250+ payment methods
Braintree	16	Thousands	Startups, SMEs, Large Enterprises	Retail, SaaS, Mobile Apps	High	Global	2.9% + $0.30/transaction	Email & Phone (premium)	Developer-friendly APIs	Supports PayPal integration
Amazon Pay	15	Hundreds of thousands	SMEs, Large Enterprises	Retail, Digital Goods	Moderate	US, Europe, Japan, India	2.9% + $0.30/transaction	Email & phone (business hours)	Easy integration for Amazon merchants	Leverages Amazon’s trusted brand
2Checkout (Verifone)	23	17,000+	SMEs, Digital Goods Providers	Digital Goods, SaaS, Retail	High	Global	3.5% + $0.35/transaction	24/7 phone & email	Flexible APIs	Supports 45+ payment methods
Worldpay	40	400,000+	SMEs, Large Enterprises	Retail, Travel, Gaming	High	Global	Custom pricing	24/7 phone & email	Comprehensive APIs	Advanced data analytics
BlueSnap	21	Thousands	SMEs, SaaS, Marketplaces	SaaS, Retail, Marketplaces	High	Global	2.9% + $0.30/transaction	24/7 phone & email	Robust APIs	All-in-one payment platform
Klarna	19	250,000+ merchants	Retailers, eCommerce	Retail, Fashion, Electronics	Moderate	Europe, US, Australia	Merchant-specific pricing	24/7 chat & email	Easy integration	‘Buy Now, Pay Later’ options
WePay	15	Thousands	Crowdfunding, Marketplaces, SMBs	Nonprofits, Crowdfunding	High	US	2.9% + $0.30/transaction	Email support	APIs tailored for platforms	Seamless integration
Skrill	23	Millions	Individuals, SMEs, High-Risk Industries	Gaming, Forex, eCommerce	Moderate	Global	1.9% + $0.29/transaction	24/7 chat & email	Easy integration	Digital wallet support
Payoneer	18	5 million+	Freelancers, SMEs, Marketplaces	Freelancing, eCommerce	Moderate	Global	1% per ACH transaction, custom rates	24/7 phone & email	APIs for mass payouts	Multi-currency accounts
Alipay	20	1.3 billion active users	Businesses targeting Chinese customers	Retail, Digital Goods	Moderate	China, Global	1% to 2% per transaction	24/7 chat & email	APIs for integration	Trusted in China, supports QR code payments

Here's an overview of some leading payment gateway providers, detailing their key offerings, pricing, and unique features.

Stripe

Stripe is a popular online payment solution that is well-suited for high-tech companies that need the possibility to configure the payment process in a way that is convenient for them. Since Stripe started in 2010, it has had over a decade of operations and millions of clients, making it serve up enhanced APIs and security measures. Due to the many APIs it supports and the plethora of developer tools, it may be ideal for sectors such as technology, retail, and SaaS. Pricing for Stripe is 2.9% and $0.30 per transaction; customer support is available anytime through chat and email. More features include better fraud prevention, 135+ currencies, and extensive developers' resources.

PayPal

PayPal is a popular payment gateway that has been in the market for 25 years and has over 400 million active users. It is easy to set up and fully equipped with every measure against fraud to cater to hazardous industries. PayPal charges 2.9% + $0.30 per transaction and offers phone and message support anytime. Other advantages are buyer and seller protection, global acknowledgment, and compatibility with significant systems.

Square

Square is a payment processing platform for small to medium-sized businesses in retail and the food industry. It has been in business for 14 years and has millions of clients. Services include freelance POS systems, online/in-person solutions, and real-time analytics. Square costs $0.026 + $0.10 per transaction and offers phone support during business hours only. Other advantages of Square include the absence of monthly fees for the services and the free opportunity to have an online shop.

Adyen

Adyen offers a single payment processing solution for international markets that is suited for large businesses and fast-growing organizations. Since 2006, after completing more than 5,000 transactions, Adyen has offered 250+ payment solutions and generated reports in real-time. The solution is based on the payment method and the user's location; the company provides round-the-clock support through phone and email. Adyen has some extra layers: the company specializes in combating fraud and offers solutions for online and offline payments.

Braintree

Braintree is an ideal payment gateway for software as a service and mobile application businesses and developers. Launched in 2007 with thousands of customers, Braintree enables integration with PayPal and multiple currency transactions and features abundant APIs. It costs $0.029/transaction + 0.3%, and premium users can enjoy email and phone support.

Amazon Pay

However, Amazon Pay relies on Amazon's trusted marketplace, and as we have seen, it is easy for Amazon sellers to integrate. It has existed for 15 years and has served hundreds of thousands of clients, including retail and digital goods businesses. Its fee schedule is $0.029 + $0.3 per transaction, and it offers customer service by email and phone within business hours. Further features are compatibility with Alexa for voice commerce.

2Checkout (Verifone)

High-risk digital goods and SaaS merchants find payments with 2Checkout since it offers payment methods worldwide. 2Checkout has been in business for 23 years and serves more than 17,000 clients. Flexible API options, multiple platform compatibility, and phone and email support are available 24/7. It costs $0.35 plus 3.5% of each transaction, while other features include payment processing for more than 45 types of payments and 100+ currencies.

Worldpay

Worldpay offers specific payment solutions for high-risk industries. It boasts 40 years of experience and has served more than 400,000 clients. Worldpay has rich and complex data analytics, strong fraud prevention measures and solutions, and full APIs. The pricing model is made to order, and client support is offered 24/7 by phone and electronic mail.

BlueSnap

BlueSnap is an all-in-one payment solution designed for SaaS and marketplace companies. It has been in business for 21 years and has helped thousands of clients process 100+ currencies, generate real-time reports, and create effective APIs. It charges 2.9% plus $0.30 per transaction and supports customers through phone and email around the clock.

Klarna

Here, Klarna has concentrated mainly on 'Buy Now, Pay Later' facilities, which can improve conversion for the retail stores. Klarna has operated for 19 years and has over 250,000 merchants they work with in supporting the retail, fashion, and electronics industries. Its pricing is also very flexible and depends on the merchant, and it offers customers customer support through chat and email at all times.

WePay

WePay focuses on two services: crowdfunding and marketplace businesses. It provides self-served APIs and sound protection against fraud. After 15 years of work and serving thousands of clients, WePay is distinguished by a pricing system of 2.9 % + $0.30 per transaction and email support.

Skrill

Skrill is a digital wallet payment portal suitable for high-risk gaming, forex, and e-commerce merchants. Skrill has been in operation for 23 years with over 23 million clients; they have low fees, it is easy to integrate payment forms, and it supports digital wallets. It has a 1.9% + $0.29 pricing per transaction and supports users via online chat and mail anytime. Skrill offers more features, such as worldwide availability, multiple currency accounts, and a simple design.

Payoneer

Payoneer is an online payment solution company targeting independent workers, small businesses, and marketplaces with international clients. Japan-based Payoneer has existed for 18 years and serves over 5 million clients. It provides multiple currency accounts, low cross-border fees, and APIs for mass payouts. Its pricing schedule is 1% per ACH transaction with other negotiated prices. Payoneer has around-the-clock phone and email support, which will benefit global operations.

Alipay

Alipay is a well-known payment gateway in the PRC; it is necessary to say that every overseas business needs Chinese customers to have an Alipay account. Having been in the market for 20 years and having 1.3 billion active users, Alipay accepts payments through QR codes and provides APIs for connection to various e-shops; besides, if any customer issues arise, Alipay has free online chat and emails for constant assistance. Alipay's services are negotiable and will cost between 1% and 2% of the transaction. For the benefits, it will offer the aspect of a trusted brand in China and integration with the local systems.

Final Thoughts

Selecting the right payment gateway is a strategic decision that affects every aspect of a business, from customer satisfaction to operational efficiency and revenue growth. Businesses must carefully consider their unique requirements, such as industry focus, security needs, customization options, and global reach, to make an informed choice.