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What are Payment Integration and Payment Gateways?

Posted May 28, 2020 by EasyFinance.com to Finance 1 0

So, you’re setting up an online business. Nice!

You’ve got the stock in place, handled all the supply chain logistics involved, and are ready to start selling… almost.

Because, before you can start actually making money by selling through your website, you’re going to need some way of taking the payments. Moreover, you’ll need a payments process that’s secure, seamless, and as smooth as silk – particularly when 23% of customers are liable to abandon an online purchase due to a checkout process that’s too complex.

Unfortunately, though, accepting online payments means getting to grips with some of ecommerce’s more mind-boggling terminology – specifically payment integration, and (gulp!) payment gateways, too. 

Don’t sweat it, though – we’re cutting through the fluff, and breaking down the payment industry’s most perplexing parlance. The goal? To empower you to accept credit and debit card payments, and launch the successful online business you’ve always dreamed of. 

Let’s get started.



What is a payment gateway?


A payment gateway is a software solution that sits on your website, encrypting and securing cardholder data in online transactions


Essentially, it’s one of the components that allows you to accept credit and debit cards online (and, in many cases, mobile wallets and even cryptocurrency, too), all while maintaining the requisite levels of information security.

Ever seen a PayPal-branded window pop up when you’re making a purchase online? Perhaps a message on your screen from Stripe, Braintree, or Amazon Pay, telling you to “please wait, while we authenticate this transaction”...?

That’s the glory of a payment gateway at work.

Payment gateways serve as the conduits that link the customer and the merchant. But they also act as the go-between that connects merchants with the network of behind-the-scenes payment processors and ‘acquiring’ banks responsible for making the transaction happen.

A payment gateway is important at both the level of merchant and consumer – particularly when it comes to security. By encrypting your customers’ card information via SSL (Secure Sockets Layer) technology, it doesn’t only cover your own back, but sends a powerful trust signal to your site’s users.

Think back to the last time you bought something online, for instance. Would you have felt confident following through with a purchase if you thought your card details could be stolen by hackers as soon as you hit ‘Buy Now’? 

Not likely.

Plus, payment gateways are vital from a business standpoint – particularly when it comes to PCI DSS compliance.

PCI DSS stands for Payments Card Industry Data Security Standards, and it’s just that – a series of strict guidelines designed to safeguard cardholder data. Whether a tiny market trader, a huge supermarket chain, or your average ecommerce business, all merchants that accept card payments need to comply.

Ensuring you’re compliant can be a lot of work – that’s the bad news.

But there’s good news, too.

Because the right payment gateway will ease the burden of PCI compliance, making sure you’re square not only with your customers, but with all of credit card processing’s rules and regulations, too.

Alright, so they’re important… but how do they work with your website?

That’s where payment integration comes in.



What is payment integration?


Payment integration refers to the way in which your website connects to the software that allows you to accept online credit and debit card payments. 


Payment integration is also about making your credit card processing solution work in harmony with the rest of your business’ existing software and processes. 

Do you use a content management system (CMS) such as WordPress or Drupal, for instance? If so, you’ll need to make sure your payment gateway is compatible with it. Likewise, your payment gateway has to work in tandem with your site’s shopping cart – whether that’s Magento, WooCommerce, BigCommerce, or an alternative.

Remember, the payment gateway is what helps facilitate the transaction. But without the ability to successfully integrate it into your website, it won’t help you one bit. So what does that integration look like, exactly?

Let’s take a look at your options.

Hosted payment gateway


Hosted gateways are housed not on your site, but on the domain of a third-party payment gateway provider. 

Instead of staying on your site, a hosted solution will often require your customer to be redirected to a payment form on a separate website to pay. This form is situated on the site of the gateway provider, though some providers allow you to embed a hosted form into your own site. 

As you can imagine, a hosted payment gateway has its pros and cons.

On the upside, hosted payment gateways are great for staying PCI compliant. That’s because you won’t actually be storing or dealing with any sensitive cardholder data directly through your site. They’re also a pretty low-effort option, with minimal implementation required to get things set up on your side.

However, your customer won’t be completing the purchase on your site. That means it’s not great for the customer’s overall user experience, and could even impact on your conversion rate. Hosted gateways also afford you less control over the payments process, and offer minimal (if any!) customizability.


So what’s the alternative?

Integrated (non-hosted) payment gateway


An integrated gateway, that’s what.

This option involves a payment gateway that sits within your site, thanks to the wonders of API (Application Programming Interface) integration. If you’re a dab hand at coding, you can customize a payment form to reflect your brand’s logo and colors, too, and match the look and feel of your site.

All of this makes an integrated payment gateway a fluid, highly flexible approach to accepting card payments.

Yet, despite its developer-friendliness, it’s not user-friendly, and thus not ideal for merchants who are just starting out. You’ll need some coding experience, and will also be responsible for remaining PCI compliant – a laborious process involving a multitude of self-assessment forms and external scans of your security practices.

Hence, we’d recommend this type of integration only to merchants with a larger team (and a fatter wallet) at their disposal.



So, to recap. 


A payment gateway (noun) is the software (or the service) that verifies and authenticates any card payments you accept online. 

Payment integration (verb), however, is more like a process. It connects the gateway – or any other software that facilitates credit card processing – to your website, allowing it to slot in alongside your existing tools and processes.

Sure, getting your head around the terms is a little tricky, but don’t let it stress you out. These days, payment gateway providers offer some of the best customer service around. 

They’ll be able to talk you through what a payment gateway will look like on your site, and how your solution will work together with the rest of the software tools your business uses on a daily basis. 

All that’ll be left for you to do is start selling. Good luck!

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