Financial Software

Payment Gateway Integration – Everything Worth Knowing





Financial Software


Payment Gateway Integration – Everything Worth Knowing

Published: 2022/11/30

Updated 16/08/2023

6 min read

When setting up payments for your business, you can choose between traditional payment processors and a payment gateway. A gateway is similar to a conventional payment processor because it allows you to take payments online, but it has some additional features that make it well-suited for businesses. This means customers should choose their payment gateway wisely. 

In today’s digital world, having an integrated payment gateway enables you to receive many different types of payments. A custom payment gateway integration enables companies to accept customers’ credit cards and electronic check payments easily. But what integration method works best? 

This blog will review the best methods for incorporating a payment gateway into your business. 

How do payment integrations work?

Payment gateways can either be hosted or non-hosted. 

Hosted payment gateway

A hosted gateway is an external checkout process that takes customers to the payment service provider’s website to complete the payment process before being redirected back to complete the checkout. The benefit of using hosted gateways is that it reduces the risk associated with storing sensitive data on your own website. However, sending your customers to another website lengthens the payment process by adding a step. 

Non-hosted payment gateways

Non-hosted gateways allow users to purchase something by entering their debit or credit card details on the store owner’s checkout page. An online payment gateway provider can make payment gateway integrations work by incorporating technology to take customer payments for goods or services. These types of gateways allow customers to avoid lengthy processes and transaction issues. 

A hosted gateway provider delivers a lot of benefits. They allow businesses to reach a global market, lower costs and increase security. However, businesses with high transaction volumes prefer to link their stores to non-hosted payment gateways. 

What is the process of creating a payment gateway?

Payment gateways allow businesses to accept payments. Payment processing involves encrypting sensitive information, such as credit card numbers, so third parties cannot intercept it. Then the data is passed on to a bank or payment processor, which debits the customer’s account and credits it to the merchant. 

Online payment gateway integration typically encrypts sensitive information, such as credit card numbers, to ensure that malicious individuals do not intercept it. They also facilitate the authorization of payments and fund transfers between merchants and customers. 

There are many different types of gateways, but most follow a similar process: 

  • A customer enters their information on a merchant’s website 
  • The gateway encrypts the payment and credit card information 
  • The gateway sends the encrypted data to the acquirer 
  • The acquirer verifies the customer’s information and approves the transaction 
  • The acquirer sends an approval message to the gateway 
  • The gateway decrypts the approval message and passes it to the merchant’s website 

Why do you need a payment gateway?

Any business that wishes to process internet and credit card payments must have a payment gateway. The technology moves money from a customer to a merchant by distributing financial data to the required parties for payment authorization. 

Consider a payment gateway as the keeper of the financial information of your customers. To reduce security risks, it encrypts data when it transmits information from you to the acquiring bank and the issuer. You can control chargebacks and fraud with the aid of your payment gateway. Additionally, it can shield you against canceled accounts, exceeding credit limits, insufficient funds, and expired cards.

Read also: What is Open Banking API

A hosted payment gateway is a service that allows businesses to support more types of payments. It acts as a middleman between the merchant and the customer’s bank. This is helpful if you’re an online retailer who wants to offer your customers the option of paying with a credit or debit card. In any situation where you need to bill your customers, you’ll need a payment processor at some point. 

Carefully consider what types of payments you want to accept

Receiving payments online can seem like a daunting task. To overcome any misgivings, it is best to research a particular vendor and learn everything you can about their payment processing ecosystem and the intricacies of their features, so you can make an informed choice. 

Start by making sure the gateway is compatible with your shopping cart software. If not, you’ll need to find a workaround or switch entirely to a different e-commerce platform. Some gateways only support certain cards (e.g., Visa, Mastercard, American Express). 

If you want to accept other types of payments (e.g., Discover, Diner’s Club), ensure the gateway can accommodate them. Lastly, find out what fees the payment processor charges per transaction. These can vary widely, so it’s essential to compare several options before deciding. 

What to consider when choosing a gateway 

  1. Ease of Use: Consider how easy the gateway is to use. Set up and manage your account and look for a gateway with an intuitive interface and robust documentation. 
  1. Fees: Make sure you understand all the costs involved, so there are no surprises. Look for a gateway with transparent pricing and no hidden charges. 
  1. Security: Ensure the gateway you choose uses industry-standard security measures to protect your customers’ data. Look for features like data encryption and fraud detection tools. 
  1. Customer service: Most businesses with established payment gateways see thousands of dollars pass through their accounts on a daily basis. Such a corporation might sustain significant harm even from a single hour of outage, let alone from a lengthy period. 
  1. Recurring billing: Software-as-a-service (SaaS) organizations are one of the most frequent users of payment gateways today. The SaaS business model is effective, but depends on recurring billing, a significant component of transactions. 

Benefits of using a payment gateway

When you use a gateway, you can take advantage of several benefits. Customers can stay on your site throughout the purchase process, thus reducing shopping cart abandonment and increasing conversion rates. 

In addition, online payment gateway integration can improve your security. Keeping your customer’s information on a secure server can help protect their information and reduce the risk of fraud. 

Finally, a payment gateway can also help streamline your checkout process. Having all the necessary information in one place makes it easier and faster for your customers to complete their purchases. 

Drawbacks of using payment gateways

A gateway is a service that allows businesses to accept digital payments (via credit and debit cards) and transact online payments. It’s a great way to streamline your payment processing, but there are also potential drawbacks to this payment solution. 

For instance, most payment gateway providers charge monthly and per-transaction fees. This can add up quickly, especially for businesses that process many transactions. Others require you to set up a merchant account with them, which  can also be complex to set up. If you’re not comfortable with technology or need someone on staff who is, then working with a gateway can be challenging. 

Since payment gateways handle sensitive payment information, they are subject to strict regulations. This means that multiple layers of security often need to be in place, which can add to the complexity of using payment gateways. Remember, no system is perfect. There is always the possibility that someone will find a way to exploit any weakness in your system, so it’s essential to keep it safe. 

Implementing payment gateway integration – first steps

Your business needs, client expectations, and significant security concerns should be considered when selecting the payment gateway for your online store. The best payment gateway is a product of experience, technology, alignment, security and innovation, among other factors. Your business’s longevity will improve if you pick an acceptable payment option for your website. Integrating hosted payment gateways into your website delivers many benefits. The first step is to build a software team to host your payment gateway. Not only will it make it easier for customers to make an online payment, but it will also help increase sales and boost customer satisfaction. Exploring integration methods and integrating a payment gateway makes sense if you’re looking for a way to expand your business.

If you want to learn more about payment getaways, or financial software development, use this contact form – Software Mind’s experts are eager to share their knowledge and help you find the best possible solution. 

About the authorSoftware Mind

Software Mind provides companies with autonomous development teams who manage software life cycles from ideation to release and beyond. For over 20 years we’ve been enriching organizations with the talent they need to boost scalability, drive dynamic growth and bring disruptive ideas to life. Our top-notch engineering teams combine ownership with leading technologies, including cloud, AI, data science and embedded software to accelerate digital transformations and boost software delivery. A culture that embraces openness, craves more and acts with respect enables our bold and passionate people to create evolutive solutions that support scale-ups, unicorns and enterprise-level companies around the world. 

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