Payment Gateway Integration Guide: Examples, Benefits, and Challenges
Doing business online today is nearly impossible without payment gateway integration. Whether selling products through an eCommerce website or delivering digital business services like fintech, logistics, or catering, companies want customers to pay, and the latter want an easy way to do it.
Yet, in our experience, mobile payment gateway integration considerations are sometimes way down the list of priorities for our client companies. In fact, a good understanding of how to integrate a payment gateway and the options available can make all the difference when businesses are discussing development with a vendor.
At Django Stars, we’ve been following and implementing payment gateway technologies since 2008. And we’ve been doing it well, as our logistics and other projects show. One of them is Azyan — a Jordanian food delivery service with a 20-minute delivery time that allows paying in cash on delivery or with Visa/Mastercard cards via a web app.
In this article, we use our experience to explain the different types of payment gateway available and how to use the payment gateway within an app, platform, or website, using examples from Django Stars projects. We also provide a step-by-step guide for enabling Stripe payment processing or PayPal integration and discuss the challenges businesses can meet along the way.
Payment Gateway Integration: The Basics
The main goal of payment gateway integration for a product is to enable payment processing through channels (like PayPal and Stripe) and credit card networks (such as Visa, MasterCard, AmEx, etc.). The benefits of payment gateway integration in mobile applications include faster and smoother billing, secure payments, and regulatory compliance.
When a business decides to add a payment gateway in the app, the flow is simple:
- The customer selects their preferred means of payment.
- They enter their credit card or PayPal details.
- They confirm and finalize the purchase.
However, much more goes under the integrated payment processing hood:
- The customer proceeds to checkout and provides their payment details on the website or in the app.
- The merchant website transmits the transaction data to the payment gateway via an API.
- The payment gateway transmits the data to the payment processor in an encrypted form.
- The payment processor sends the encrypted data to the card network for verification and validation.
- The credit card network contacts the issuer bank with a request for payment which can be approved (if there are enough funds in the account) or denied (due to lack of funds or other reasons).
- If the payment goes through, the customer gets notified, and the sum is transferred to the company’s bank account. If the payment is canceled, both parties are notified of the failed payment attempt.
Still, no payment processors are universal — for example, Alipay and WeChat are only popular in China, and PayPal is not available in all countries worldwide. As a result, combining several processors to meet all customer needs is a sound business strategy. For more on this, see our post on how to choose a payment gateway.
It’s time to take a closer look at how to integrate a payment gateway to enable online payments.
Steps to Integrating a Payment Gateway in a Product, Website, or App
Payment gateway integration isn’t just for startups. At Django, we’ve also helped established companies with payment gateway integration in eCommerce, fintech, logistics, home loans, and other industries. Sometimes clients need a website or product revamp after a merger or acquisition; at other times, we’ve reworked a checkout process to increase conversion rates. After all, with 68% of customers abandoning carts due to poor checkout experience, an updated payment gateway can significantly improve customer experience and boost sales.
Here’s a model step-by-step payment gateway integration process, with the challenges and solutions businesses can face at each step.
1. Forming requirements
Payment gateway requirements will be influenced by factors such as the company’s business model, target audience, and existing IT infrastructure.
More specifically, requirements will take these things into consideration:
- The most popular customer payment methods. Integrating an excessive number of payment options along with cryptocurrency will cost a fortune in monthly subscription fees, so only the most essential payment methods should be covered.
- Customer segmentation by location. Some payment options are more popular within specific customer groups: WeChat, UnionPay, and Alipay in China; iDEAL or Maestro in the Netherlands; AmEx in the US, etc.
- Continuity of the checkout flow. Some payment options are integrated with a website, while others (such as PayPal) will take clients to an external page. We’ll talk more about the types of payment gateway below.
- Data security requirements. Some payment gateways store customer data in encrypted form, some store only hash data, and some store nothing. Hackers can launch man-in-the-middle attacks to capture customer card details during checkout, so ensuring secure data transfer (or delegating the task to a trusted payment processor) is essential.
- Required transaction volume. There’s a big difference in transaction processing costs for 150 or 25,000 transactions daily. The right payment gateway should offer appropriate pricing for the anticipated transaction volume.
- Transaction processing speed. Low checkout speed is among the biggest reasons for cart abandonment, so fast transaction processing is a must.
- Regulatory compliance. Transactions involving financial details and transferring funds will need to comply with security regulations such as PCI DSS, PSD2, and the GDPR.
All of these considerations help shape the requirements for payment gateway integration in eCommerce, logistics, and any other domain. Once these details are clarified, it’s time to plan the integration.
2. Planning the integration
The findings from the first phase are used to determine the roadmap and budget of a payment gateway integration in a mobile application or website. Since requirements vary, no two payment provider integration projects are the same.
For example, the Azyan solution needed to support both English (a left-to-right interface) and Arabic (right-to-left). It also had to integrate with McDonald’s and Carrefour platforms; provide smooth access for admins, drivers, and clients in both languages; and enable customers to pay with cash on delivery or online with a credit/debit card.
The Azyan delivery platform is highly scalable and supports easy onboarding of new restaurants due to clean APIs, as well as highly accurate delivery with Google Maps coordinates. All of this is possible thanks to in-depth feature and integration planning, including payment service provider integration.
3. Selecting the tech stack
Supporting multiple payment methods is a wise decision, but some underlying tools and frameworks might not be able to work with a product from the get-go. The solution is to build integration software to connect disparate software tools into a cohesive system — which is where vendor expertise pays off.
4. Designing the customer journey
Inconsistent customer experience, bad checkout process design, and slow order processing time all affect conversion.
Therefore, it makes sense to reduce the number of steps and clicks a customer must perform to place an order. Research shows that reducing the number of actions and form fields in the checkout flow from 24 to 12 ensured a 35% increase in conversion rate.
5. Implementing and testing the payment gateway
The final stages are implementing the design and beta-testing the payment gateway integration for a product or mobile app before release. Focus groups can help pinpoint possible flaws and minimize the risk of customers being disappointed with the checkout process.
There are several types of payment gateway integration.
Redirection (hosted gateway)
A checkout page might redirect to the payment processor’s page, where the customer submits the payment details and finalizes the purchase. This is the PayPal approach, and it’s also used by many smaller market players.
The benefit here is that the responsibility for secure transaction handling lies with the payment service provider (or PSP). The downside is that it adds another step to the checkout process and might be confusing for some customers.
API access (integrated gateway)
This method gives a business maximum control over customer data in terms of performance analytics, personalization, and product improvement. However, the business also has to ensure watertight cybersecurity measures to protect themselves from man-in-the-middle attacks and schemes such as carding, phishing, new account fraud, and card-not-present fraud.
Built-in (iFrame) checkout
This payment gateway integration method uses an inline frame, so the checkout form is generated as an HTML element on the checkout page.
A built-in checkout ensures branding and styling consistency and gives a good degree of control over the checkout process. The downside is the significant effort required to prevent cross-site scripting attacks and other fraudulent activities, as the merchant is held liable for any data breach that occurs with this payment processing approach.
Selecting the most appropriate payment integration method maximizes the benefits it brings to a business. However, any solution will have its limitations.
Payment Gateway Limitations
There are inherent limitations for all types of payment gateway integration, including the following:
- No payment service provider will cover all payment options. It’s prudent to integrate with large credit card networks like Visa, Mastercard, Amex or Maestro, and a digital PSP like PayPal or Stripe. Surveys can provide insight into payment options customers would like to have.
- Some international customers may have no payment options at all. A logical consequence of coverage limitations is that some customers may not be able to access any of a site’s payment options. While these might be borderline cases, they still have to be addressed.
- Cybersecurity concerns. Handling customer payment details requires strict payment security measures to avoid liability in case of a data breach.
Given these realities, an API-based integrated payment gateway can often be the best choice, as it shifts responsibility to the payment service provider while giving peace of mind to both the company and its customers. It’s no wonder API integrations are among the top 15 fintech trends in 2023 and will remain important in the years to come.
Popular Payment Gateway Providers
Having mentioned payment gateway service providers a lot, it is worth listing the most popular options available.
- PayPal. With over two decades of expertise under its belt and availability in 202 countries worldwide, PayPal dominates the payments market. However, as both the seller and the buyer must have PayPal accounts to perform transactions, this limits the range of opportunities. As a result, PayPal should never be the primary or only payment gateway on a website.
- Stripe. First built for the US and Canada, this PSP has since expanded worldwide and built a robust kit of solutions enabling merchants to integrate checkout with their websites quickly.
Outside these giants and popular options like Amazon Pay and 2Checkout, there are a huge number of smaller PSPs around the globe.
Adding or removing a payment gateway on the fly is a possible but complex task. It’s best to hire developers able to switch from one system to another and enable payment gateway integration in mobile applications or websites correctly.
Payment gateway integration is an essential part of building a successful product. Choosing the most appropriate payment processing solution and integrating it correctly is a challenge that requires in-depth business analysis and technical expertise. However, it’s a necessary step for any business that serves customers online.
Django Stars is here to help. Contact us to discuss the challenges of web or mobile payment processing and learn how we can help achieve your business goals.
- Why should I implement a payment gateway for my product?
- A gateway is essential for enabling online payment for products and services.
- How do payment gateway integrations work?
- Payment gateways act as storefronts for payment processors, who verify customer-provided details, contact the issuer bank, and transfer funds to a merchant account.
- What’s the best payment gateway for my product?
- The best gateway is the one preferred by the majority of your company’s clients. For example, in the US, it could be Stripe; in China, WeChat or Alipay; and in the Netherlands, iDEAL. In terms of integration, API access is the most secure option for a merchant.
- Why choose Django Stars for secure payment integration?
- We have 15+ years of experience developing software and payment gateway solutions for both startups and leading companies.