Despite the competition, there will never be a universal solution that meets all needs (unless all businesses suddenly agree to follow a single business model). And it\u2019s not simply about \u2018Well, I just like this, and she just likes that.\u2019 No, it is a deeper matter. So, to get a full grasp of the factors that might influence an entrepreneur’s choice of one payment solution or another, I will start this article by defining which payment gateways are on the market, their types, and which ones are best for certain types of businesses. The focus will be on startups, though, since early-stage companies tend to pursue their MVP so single-mindedly that they often neglect to consider some of the pitfalls of online payment gateways. Below, I’ll share some of what I have discovered over the years working at the fintech software development company Django Stars on projects<\/a> in such industries as fintech, proptech, booking, or e-commerce, or providing travel software development services. \n Your chance to enter the market faster <\/p>\n <\/h3>\n\t\t Also, let\u2019s be clear: we are not discussing digital goods sold through various mobile platforms (like an App Store) which take a significant cut of your revenue, up to 30% in many cases. In this post, we will be covering how you can accept payments on your website.<\/p>\n Two parties participate in online payments when customers click \u2018Buy Now\u2019 \u2013 a payment gateway system and a payment processor.<\/p>\n A payment gateway is a piece of software that allows an online store or a paid service to request payments from customers. A payment gateway is the part of the checkout page that collects the customer\u2019s billing information and sends it to the payment processor. The processor is a company that verifies the transaction and connects the transaction data between the issuing bank (i.e., the customer\u2019s) and the acquiring bank (yours). The processor secures and approves the transaction.<\/p>\n Companies like PayPal and Stripe are both payment gateways and payment processors. The difference is that only the gateways are visible to customers.<\/p>\n For customers, it is only a \u2018thing to use to pay for goods and services\u2019. For businesses, though, a payment gateway plays a much bigger role. First \u2013 it gets you paid. But before money gets transferred to your account, lots of processes take place, and some of them are quite complex. It is actually the complexity of the financial industry that gave rise to payment gateways as a separate branch.<\/p>\n Here\u2019s what payment services do before you get paid:<\/p>\n This brings us to the next part \u2014 things to consider when choosing a payment gateway.<\/p>\n Just like with other decisions regarding the future of your startup, at the fintech app development stage you can\u2019t just pick a payment gateway randomly. There\u2019s a definite list of factors that you should account for before choosing the gateway that will fully cover all your business needs.<\/p>\n I\u2019m going to discuss the types of payment gateways, security and design features, as well as pricing and acceptable payment methods.<\/p>\n A payment aggregator is a service provider that facilitates payments between startups (merchants) and consumers using various payment methods, like bank transfers and credit\/debit cards. The main advantage of aggregators is that they take care of the startup\u2019s operational burdens, which is awesome for those who constantly forget to fill in reports and tax forms. Aggregators are so called because they draw funds directly from your customers\u2019 accounts, then validate them, and finally deposit them into your account. Most of them use per-transaction fees, so unless somebody uses your service (i.e., makes a transaction) you\u2019re not charged anything.<\/p>\n On the other hand, there are merchant accounts. To use one, you\u2019ll need to apply for it at a bank. It\u2019s a special type of account you use to facilitate transactions from your customers to yourself. Unlike aggregators, it\u2019s actually you<\/i> (or your accountant) who should do all the operational stuff and manage regulatory compliance. That\u2019s why most startups go for aggregators \u2013 because it allows them to focus on business development and not worry about legal matters. One benefit of merchant accounts is that they usually charge a monthly fee, which might be the right decision for big sales volumes. Nowadays, only physical businesses work with merchant accounts.<\/p>\n Companies like PayPal and Stripe combine the functionality of a merchant account and a gateway in one, so opting for a modern solution excludes the need for a merchant account. The funds are deposited directly to your bank account.<\/p>\n Speaking of business development \u2013 technically, organizing payments for a startup can happen through an integrated payment gateway or a hosted off-site payment gateway that redirects users to the payment gateway website, as PayPal does.<\/p>\n An integrated<\/strong> payment gateway operates directly on your website via the gateway\u2019s API. This option allows designers to work on the user journey from the start because many such payment gateway APIs are white-labeled (i.e., can be branded). So, on the one hand, you can have a pleasing UX.<\/p>\n When it comes to fintech design tips, incorporating an integrated payment gateway with a customizable interface can enhance the overall user experience and brand consistency. \n Create a stunning interface of your product. <\/p>\n <\/h3>\n\t\t Whenever you\u2019re redirected to the payment provider\u2019s website to proceed with a payment, you\u2019re using a hosted off-site payment gateway. As I said in the previous section, PayPal is the most popular among this type of gateway. The downside of opting for off-sites is that they might not be available in some countries. To tackle this issue, startups study their audience and its geography and take it into account before making a final decision.<\/p>\n From the software developer’s perspective, the best payment gateway for a startup is the one with the clearest API integration docs. After all, it’s our job to write flexible code that allows us to change providers or to make any other modifications with a minimal level of effort.<\/p>\n – Gleb Pushkov<\/strong>, Senior Python Developer at Django Stars<\/i><\/p>\n<\/blockquote>\n It\u2019s not, however, an either-or situation. Any website can feature multiple gateways, both hosted and integrated. You need to account for two things: first \u2013 what is the most appealing payment gateway for your customers? and second \u2013 how much are you willing to pay to have more than a single option? More on pricing below. \n Get an experienced technical partner. <\/p>\n <\/h3>\n\t\t When talking about security, we can distinguish two different things: (1) the customer\u2019s feeling that they are making a secure transaction, so their data won\u2019t be lost or stolen and (2) actually making a secure transaction on a technical level.<\/p>\n When choosing a payment gateway system for your startup, you must ensure it has certain security features (like anti-fraud protection) so that your customers can feel familiar with your new (unfamiliar) service. According to Vouchercloud<\/a>, 80% of customers feel safer when they see trustworthy card logos prominently displayed on the checkout page. Some payment gateways, like Stripe, allow white-labeled payment processing (i.e, the ability to customize the checkout to include your company\u2019s brand identity).<\/p>\n PCI compliance is a must-have for all payment gateways. This refers to a set of regulations defined by the Payment Card Industry Security Standards Council that identifies the most critical aspects of securing online transactions. Most gateways are compliant with these regulations, but there are three other features I suggest you look at when choosing the best payment gateway for the startup:<\/p>\n Your customers can make a transaction only if your gateway features their preferred payment method. I\u2019m not saying the more, the better here. I\u2019m saying, \u2018Know your audience, and take their payment habits into account.\u2019 If you lay out a variety of payment methods before the checkout begins, you increase your chances of pleasing your users with a service they trust. You might also find that your customers don\u2019t use only credit cards or online accounts, but also apps like Alipay and WeChat, or even cryptocurrencies. I suggest that you integrate them only if your primary market is China.<\/p>\n That brings up another point: one challenge of customer development is to not always do what your customers ask for. Even if one or two of them say they\u2019d love to have Alipay, remember that a startup\u2019s success doesn\u2019t boil down to having every possible payment method. The same applies to cryptocurrencies \u2013 they are a lot of hassle. Although they are touted as a way to \u2018revolutionize\u2019 the payment industry, cryptocurrencies are still mostly used by hype-makers who don\u2019t want to accept old-school but perfectly serviceable credit cards. But the numbers of such users can be counted in tens.<\/p>\n Bottom line: go for a payment gateway for cryptocurrencies and transaction chats only after validating the positive ROI of implementing them.<\/p>\n It\u2019s crucial that you calculate all the expenses prior to signing up for a gateway because, for a startup, every dollar counts. There are several kinds of fees that a payment provider can charge:<\/p>\n For example, Stripe doesn\u2019t have a setup fee or monthly fee. They charge you $0.30 per transaction, plus 2.9% of each transaction amount. So, if you sell something for $100, you will be paid:<\/p>\n 100-(100*2.9%)-0.30 = $96.80<\/strong><\/i><\/p>\n Factor in the payout fee percentage to your business account (this will vary based on payout currency and country) and you will get the net amount.<\/p>\n You should know that if your business grows and the number of transactions increases dramatically, some payment providers offer special pricing for high-volume enterprises.<\/p>\n If you\u2019re a subscription-based startup (SaaS), your payment gateway system must offer services for recurring payments. The basic kit should provide recurring billing, and allow customers to cancel and restore subscriptions, change their billing information (like surname or address) and to switch to a different type of subscription (from standard to premium). Take all of the above into consideration and give it a try. Most payment services come with trial periods \u2014 a perfect chance to test your startup development strategies<\/a> while unlocking the full potential of their features.<\/p>\n Of course, there are many other minor factors I didn\u2019t explore in this post, but what\u2019s here should be enough for you to understand the main steps of setting up a payment gateway for a startup.<\/p>\n Since some payment gateways can be integrated into the UI design flow, it\u2019s smart to start exploring your options before the development phase so that the design team can prevent any bad experiences that might occur because of unexpected technical limitations imposed by the selected payment gateway. If you look for qualified custom software development for startups<\/a> to take care of such matters, request a consultation<\/a> with Django Stars. Get an expert help in choosing a technology stack<\/p>\n\n \n <\/p>
\n![\"logo\"](\"https:\/\/djangostars.com\/blog\/wp-content\/themes\/ds-new-blog\/assets\/img\/ds-logo-white.svg\"){kind=logo}
\n \n\t\t\tPython & Django<\/u> development\t\t\t
\nWe\u2019ll assume you also have a fairly transparent business without a lot of customer refund requests because for certain businesses the chargeback fee can be a significant cost source, and chargeback fee management is an entirely new area worthy of its own discussion in a separate post.<\/p>\nPayment Gateways 101<\/h2>\n
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![\"Simple-payment-gateway-process-for-a-startup-flow\"](\"https:\/\/djangostars.com\/blog\/wp-content\/uploads\/2019\/05\/Simple-payment-gateway-process-flow.png\")
\nYour payments provider might have an outsized impact on your business. That\u2019s why the more factors you take into consideration, the less likely it is that you\u2019ll have to change the gateway later.<\/p>\nHow to Choose a Payment Gateway<\/h2>\n
Payment aggregators & merchant accounts<\/h3>\n
Integrated & hosted gateways<\/h3>\n
\n\n \n\t\t\tUX\/UI<\/u> development\t\t\t
\nThe challenges of using an integrated gateway are that (1) you need to do some coding to build it into your system and (2) you assume full responsibility for storing the customer\u2019s data and complying with legal regulations. The most complex thing here is security, because if it is neglected it may threaten the entire enterprise. So you must assume more responsibility for what you do.<\/p>\n
\n![\"Online-store-paypal-redirect-payment-gateway](\"https:\/\/djangostars.com\/blog\/wp-content\/uploads\/2019\/05\/Online-store-paypal-redirect.gif\")
\nWhat attracts many companies to this solution is that the payment provider is responsible for securing the customer\u2019s personal information and complying with legal regulations. Off-site payments are also trustworthy because, for customers, they appear to be separate financial institutions.<\/p>\n
\n\n \n\t\t\tBoost your web development.<\/u>\t\t\t
Security & regulatory requirements<\/h3>\n
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Payment Gateway Methods<\/h2>\n
\n![\"Payment-gateway-methods-example-web\"](\"https:\/\/djangostars.com\/blog\/wp-content\/uploads\/2019\/05\/Payment-methods-example-web.png\")
\nLater, you can use Google Analytics or an alternative to observe the behavior of your customers and stop offering methods they rarely use, and do customer research to learn more about other payment options they would love to have.<\/p>\nPricing, Subscriptions, and Limits<\/h2>\n
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\n![\"Top-payment-gateways-pricing-features-comparison\"](\"https:\/\/djangostars.com\/blog\/wp-content\/uploads\/2019\/05\/Top-payment-gateways-pricing-features-comparison.png\")
<\/p>\nConclusion<\/h2>\n
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