A payment gateway is a separate service and acts as an intermediary between the merchants' shopping cart and all the financial networks involved with the transaction, including the customers' credit card issuer and your merchant account. This is a seamless process and your customer does not directly interact with the gateway; as data is forwarded to the gateway via your shopping cart and a secure (SSL) connection. The shopping cart is configured via plugins to send information in a format that is acceptable to the particular gateway.
The proper choice of payment gateway is another vital element which will contribute to your success or failure as an online business.
Payment gateway issues
As with any other e-commerce element, shop around, compare prices and read the fine print. Here are some of the major points to consider when selecting a payment gateway service.
Gateway compatibility
If you have already purchased a shopping cart package, ensure that the payment gateway service is compatible. If a service is not listed, contact the shopping cart vendor for clarification. Most shopping cart companies are happy to support other payment gateway services if there is a demand for it, and usually at no extra cost.
If you haven't yet selected a shopping cart, get a list of supported applications from the payment gateway service provider. A payment gateway may offer great pricing, but if the range of shopping carts or storefront software it supports is limited, the whole process of setting up for taking online payments may cost a lot more than you think. I've noticed some gateways only support horribly expensive and restrictive shopping cart software packages and services.
AVS protection
Ensure the gateway at least offers AVS protection. The Address Verification System (AVS) AVS decreases the incidence of accepting fraudulent transactions by verifying the cardholder's billing address with the card issuer. Using AVS on your transactions may also benefit you by a reduction in fees charged by your Merchant Bank.Check to see what other types of transaction protection are offered to you as a merchant. These will probably be 'premium' services, the charges added to the basic servicing fees, but dependent on your products may be absolutely necessary. If you are engaged in the sale of anything that is youth or technology oriented, it's probably a wise move to pay for the extra service as chargeback rates on fraudulent transactions can cost you around US$30-$60 per incident!
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