What is a Payment Gateway and Why Do I Need One?

When you start an ecommerce website, there are many things to consider. 1) You must choose the best ecommerce web host out there, with support for multiple shopping carts, SSL installation, and Dedicated IPs. 2) You need to choose the best shopping cart software for your needs. And 3) you need to find a payment gateway.

What is a Payment Gateway?

A payment gateway is simply a service which authorizes payments taken from a merchant’s website and processes those payments through a bank or processor. Payment gateways are an important part of a successful ecommerce website, as they allow you to fully-encrypt all credit card transactions and payments that come through your site. More or less, a payment gateway facilitates a secure transaction between your site and the customer’s payment.

What features should I look for when choosing a Payment Gateway?

If cost is a major concern in getting your business website running, it should also be the first thing you look for in your comparisons. You will need to compare setup fees (generally non-refundable), monthly charges, transaction fees, and any additional feature charges that may apply.

Fraud prevention tools are an important part of payment gateways, especially since you will be taking credit card payments on a daily basis. This is sensitive information that needs to be protected against fraudulent orders. Basic fraud prevention tools you want to look for are address verification or AVS and possibly the addition of requiring the CVV2 or 3-digit security number found on the back of most major credit cards (or the 4-digit number on the front of American Express cards). Both of these tools can assist you and your company, so that fewer chargebacks (customers requesting refunds from their credit card companies any time after the transaction has already occurred) will have to be processed.

Recurring billing cycles and alternative payment options are also very important, especially for businesses that require monthly, annual, or bi-annual charges and for companies that do business outside of the US. In some countries, credit cards are not readily available, so having the option to pay by eCheck, PayPal, or other methods can be very helpful.

Do I need any additional features to work with a payment gateway?

Yes. If you are going to be accepting credit cards on your site, payment gateways require you have both a Dedicated IP Address and an SSL Certificate. At Lunarpages, you can add a Dedicated IP to any website hosting plan purchase or you can go with the Business Hosting Plan and get one for free. Your SSL Certificate installation is free with any plan. The SSL Certificate itself can be purchased through Lunarpages for $99-119/year (depending on the type of certificate you choose) or from any other SSL vendor. These two features together help protect your site and your customers.

Which Payment Gateway should I choose?

There are tons of payment gateways out there, so finding a good one is definitely a process for first-time webmasters. Normally, web hosting companies like Lunarpages often partner with one of the major payment gateways so they can offer discounts to their customers. In our case, Lunarpages partnered with Authorize.Net, known as the premier payment gateways in the world. They offer excellent fraud protection and various additional features at an affordable price. Once you login with Lunarpages to your cPanel, you will see a message offering the latest deal or discount for Authorize.Net accounts.

Some other popular choices include FastCharge, Protx, and WorldPay. It’s up to you to do your research and find out which has the best rates and features for the price you’ll pay. And if you’re not ready to take credit card payments, you may want to look into a simpler service like Google Checkout or PayPal.