Do you want to begin selling products online? As a consumer, you've probably bought products online before. You know that few people buy products online expecting to send checks for payment. People who buy physical products online may not expect instant gratification, but they do want their products as quickly as possible. When people buy products online, they expect to pay with credit cards. To receive a significant volume of business selling online, you need an online payment gateway.
What Is an Online Payment Gateway?
An online payment gateway interfaces with your website's shopping cart software. Your shopping cart software calculates the total amount of the transaction and records the customer's details such as their name, billing address and credit card number. The shopping cart software forwards all of the transaction information to the online payment gateway.
An online payment gateway essentially provides a link to the customer's issuing bank as well as that bank's credit card association -- such as Mastercard. The payment gateway validates the transaction through the issuing bank and credit card association by confirming that the buyer has the required funds and that the transaction has no obvious signs of fraud.
Depending on the services that the online payment processing company offers, the company will either collect the customer's funds on your behalf of pass the transaction approval to a third-party merchant services company so it can retrieve the funds.
Once the online payment gateway validates the transaction, it passes the relevant information along to you and notifies you that you can ship the purchased product.
Do I Need an Online Payment Gateway?
Unequivocally, you need an online payment gateway to sell products on the Internet. Customers pay for approximately 90 percent of online purchases electronically using credit cards, debit cards or PayPal. In other words, if you can't accept credit card payments online, you may lose as much as 90 percent of your potential business. Thankfully, setting up an online payment gateway is one of the easiest parts of starting an e-commerce website. Most payment processing companies provide simple instructions for integrating their services with all of the most popular online shopping cart packages. You'll simply need to make the appropriate configurations, and then you can go back to the more important work of uploading product photos and writing descriptions.
Online Payment Gateway Alternatives
If you don't want to set up an account with an online payment processor, you may not need to. There are some alternatives that you may find simpler. If you only need the capacity to accept payments online occasionally because most of your sales take place offline, you can accept payments through PayPal. PayPal charges 2.9 percent of the transaction value -- plus $.30 per transaction -- to accept credit card payments online. The customer doesn't need a PayPal account. If you want to sell products online -- but don't want to build a website -- several popular online marketplaces such as Etsy and Amazon can handle payment processing for you.