If your software development team build e-commerce apps or any kind of apps for business purposes, the mobile app payment gateway is an important part that needs to invest carefully. So what payment gateway is and how we choose the right one for yours.
What is a payment gateway?
A payment gateway is a merchant service developed by e-commerce application service providers to support websites or apps in connecting banks. Payment gateway handles online payment to help the transaction between sellers and customers become more convenient.
Generally, when you add a product into a cart linking to a payment gateway provider, check out and pay, the gateway sends a request to the customer’s bank and this bank sends back approval code (OTP, etc.).
How to choose mobile app payment gateway
A merchant account is your bank account used to facilitate transactions from customers to your business by accepting payments in multiple ways including debit and credit cards. There are two types of merchant accounts: dedicated account and aggregate account.
- A dedicated account is an account tied to one merchant. This type of account allows you to control operations in your financial system, provides you with faster transfers (within 3 days, compares to 2-7 days for other account types). Also, this account requests more Know Your Customer (KYC) documentation than the aggregate account. When you use a dedicated account, you need to wait a couple of days for approval. The dedicated account’s fee depends on the payment gateway provider.
- An aggregate account is a cheaper option. It offers one payment solution to multiple merchants. You just wait only 24 hours to be approved. However, this type of account limits your control over your finances. Some financial services providers offer aggregate accounts are PayPal, Braintree, and Stripe.
Integrated and hosted gateways
An integrated payment gateway operates directly on your website through the gateway’s API. However, you must take responsibility for storing customers’ data, the security of credit card data and complying with legal regulations. Also, you need some coding to build the system.
Furthermore, a payment gateway API generally hand back a token from the server’s secure authenticated environment to submit card data and execute actual transactions. However, some payment gateways don’t support an authenticated tokenization process – a requirement needed to accept payments from a mobile app. Thus, you have to handle yourself if your gateway API doesn’t provide the tokenization feature.
On the other hand, you can use off-site gateway if your app has its website. In cases of off-site hosted gateways, the payment provider takes responsibility for protecting customers’ data and complying with legal regulations. Thus, this gateway is trustworthy. However, off-sites are not available in some countries so you need to research your audience and their location first.
To be concluded, your gateway must include two conditions: the most attractive gateway for your customer and the maximum price you are willing to pay for each option.
You should add more features such as anti-fraud protection or let customers see trustworthy card logos on the checkout page. Furthermore, you can consider some conditions before choosing gateway payment such as SSL encryption, digital signature, and dynamic IPs.
The more you know your audience, the better the payment method you choose. You need to research your customer’s payment habits and their trusted payment gateway before making a decision. Also, you have to choose the trusted software development team to build up this. For example, PayPal is one of the most popular ones but Alipay and WeChat are the real kings in China. However, it doesn’t mean you have to do everything as they ask. Your chosen payment method should reach some fundamental demands, especially security.
There is various payment gateway to choose, each of them has different costs and relevant services. Most of the payment gateways can ask for a setup fee, monthly fee, per-transaction fee, currency conversion fee, specific payment method fee, and chargeback fee. A payment gateway provider can free some options depending on its policy. The more transactions you have, the more special pricing you will pay.
List of popular payment gateways
Stripe is known as a developer-friendly payment gateway since it gives developers full control of the UI. They can use subscription tools such as Billing or Atlas to control fraud management. Stripe is an API integration gateway so it can store cards, enable subscriptions and direct payment to a bank account. Moreover, Stripe supports multiple programming languages on the backend which deploy easily. This payment gateway now accepts instant payment in more than 135 countries with an exchange fee of 2.9%.
Braintree is a PayPal company so it can integrate with PayPal’s digital wallet easily. Also, this payment gateway provides its SDKs (Software Development Kit) as a comprehensive guide to simplify the integration process of Braintree on any platform. To compete with Stripe, Braintree collaborated with Samsung Pay in 2018 to add an advanced set of tools that prevent fraud transactions. It’s obvious to see how Braintree tries to increase customer loyalty. This brand introduced Braintree Extend to support partnership relations among users by securely sharing payment information between partners. The exchange charge of Braintree is 3.9%.
While Stripe and Braintree support cards, PayPal can accept mobile payment at the POS system which works well on local markets and stores. PayPal provides an aggregate account with many useful features such as splitting purchase transactions, reporting tools, simple invoicing and payment procedures. This payment gateway is available in 200 countries and accepts 25 currencies. The exchange fee is 2.9% plus $0.3 per transaction.
To be concluded, the key thing is not which payment gateway is better than the others, is which payment gateway suits your customer best. Thus, if you understand your customers, you will find the right one and choose the trusted developers team one.