What’s the key to a superior checkout experience? A secure, convenient, and cost-effective payment gateway! Ecommerce payment gateways enable merchants to safely conduct financial transactions and ensure positive customer experience offering seamless payments.
But with a variety of payment gateway providers, the choice can get tough. You obviously want to play it safe and offer your customers a reliable payment method that will cater to their preferences. And PayPal is currently leading in this category on a global scale.
But what if you’re looking for the options beyond PayPal? At Elogic we have integrated quite a few payment gateways, including solutions for clients like Carbon38 and Varietal Cafe. And we can assure you there’s plenty of fish in the sea (or rather payment gateways in the market).
How a payment gateway works, what are some top Magento payment options, and how do you choose one for your ecommerce website — find these and more insights in this article.
Many merchants use the terms payment method, payment gateway, and payment processor interchangeably, while in reality they all mean different things. In fact, they all depend on one another as an ecommerce transaction follows the pattern payment method → payment gateway → payment processor → merchant account.
Before we go any further, let’s dig into the basic definitions of these terms and how they relate to a Magento store.
A payment method is a way that a customer chooses to pay for a purchase. These methods can be internal or external and include cash, credit/debit card payments, eWallets, bitcoin transactions, etc. And yes, you’ve seen it right: cash transactions also apply in ecommerce although are less popular than other payment methods.
A Magento merchant can configure the following payment methods: payment via check/money order, bank transfer, cash on delivery, purchase delivery, and zero subtotal checkout. The methods can be installed from an admin panel following the path: Admin → Stores → Configuration → Sales → Payment Methods.
Your Magento store can use a payment method only during a checkout as in the Saved Credit Card method. This option is not recommended for use with customers, though, as a risk of data leak and insecure transaction is high. We recommend using the Saved Credit Card method. only for testing the checkout process during website development.
An ecommerce payment gateway is a third-party service that approves credit card payments within your ecommerce software and basically bridges the transactions between your ecommerce store and a bank.
Think of it as a physical POS (point of sale) terminal in a supermarket or cafe. Just like a cash register, a payment gateway is provided and supported by a third party for your use and convenience. It accepts the credit card details of your customers, validates and encrypts them. Thus, sensitive financial information is securely transferred from a customer to the merchant and then between the merchant and the bank.
Magento implements three payment gateways out-of-the-box: PayPal, Braintree, and Authorize.net. A merchant can also make use of other payment gateway providers, which will be discussed later in the article.
Lastly, a payment processor is a link that connects your bank with your customer’s bank. It processes the query from the payment gateway, validates and executes the info about the transaction, takes the money from the customer, and then sends the funds into the merchant account. Once this has taken place, it informs the payment gateway if the financial transaction was successful.
In short, payment processors are financial institutions that operate in the background to provide payment processing services to online sellers and keep the process secure.
A merchant account is a bank account where the funds get deposited after a successful financial transaction. A merchant account enables your retail company to accept credit and debit card payments that are submitted by a payment processor.
The key role of the payment gateway is to decline or approve each financial operation, while a merchant account is in charge of receiving payments from credit and debit cards. In brief, a merchant account is a contract between an owner of an online store and a credit card processing company. Merchant accounts aren’t obligatory, so you don’t need to have one as a retail owner.
As an intermediary between a merchant and a bank, an ecommerce payment gateway preserves customer’s privacy and minimizes monetary hassles for a merchant. But how does it actually work? Let’s break this process down.
How a payment gateway works. Image credit: Propaysolution
Even though the image above may seem a tangle of multiple payment operations, a payment gateway (and specifically Magento payment processing) takes the following four steps:
The beauty of it? This whole process takes 2-3 seconds max! The last step to settle the funds may take a few days, but you can be sure that with the right payment gateway your customer will check out in the blink of an eye.
The main purpose of a payment gateway is to make the financial transactions fast and secure. To fulfill its purpose, payment gateway providers must fall under the following criteria:
Luckily for Magento store owners, the platform easily integrates with many ecommerce payment gateways. And you probably shouldn’t limit yourself to only one solution: multiple payment gateways with both cater to your customers preferences payment and give you a fail safe in case one gateway crashes.
Here’s a list of our seven favorite payment gateways that ensure smooth and fast Magento payment processing.
PayPal is one of the most popular solutions both with customers and among online store owners. It has over 218 million consumer accounts and is used by more than 17 million of merchants, which makes it the biggest player on the market.
PayPal Payments Pro is a business version of a payment gateway provider. It accepts payments from American Express, Visa, Mastercard, Venmo, and PayPal Credit in 26 leading currencies. In addition to credit cards, it offers phone-based credit card payments, online invoicing, and in-person payments and is available to use on over 200 markets..
A gateway subscription is $30 per month. The fees per transaction are also quite decent: 2.90% + a fixed fee depending on the currency ($0.30 for the US or 0.35 EUR for Europe) for domestic transactions. Additional percentage-based fee of 1.5% applies for international commercial transactions.
In Magento 2, PayPal checkout can be configured out-of-the-box. Just follow the path Stores → Configuration → Sales → Payment methods → PayPal Checkout. A complete guide can be found on the provider’s official website.
Another payment solution powered by PayPal, Braintree, is suitable for businesses of all sizes, from small shops to large enterprises. It is a full-stack ecommerce payment platform that operates in 44 countries and features 130+ currencies.
Braintree is best known for its smooth checkout experience and ease of use, which provides a high level of safety and encourages repeat orders. This simplicity is the exact reason why Big businesses like Airbnb and LivingSocial use this payment gateway provider.
Just like its parent company, Braintree accepts major credit cards, eWallets, and PayPal in 130+ currencies. But it offers more extra features, like recurring billing, data encryption and fraud prevention tools. Braintree is also a great option for marketplaces: it even has a separate solution called Braintree Marketplace that scales along with your business and can be customized with the right software development team (like Elogic!).
The pricing is similar to that of PayPal: they charge a flat-rate fee of 2.9% + $0.30 per transaction. Except that no monthly subscription fee is charged.
Braintree can be configured directly in the admin panel of a Magento store. For a full description of an integration method, see Magento documentation.
Authorize.Net has won the trust of 430,000+ merchants from small and medium-sized companies by providing them an affordable and secure payment service. Its main advantages are the straightforward interface and ease of use, which differentiates Authorize.net from its competitors of PayPal and Stripe.
The payment gateway provider processes payments in all shapes and sizes: credit and debit cards of Visa, MasterCard, Discover, and American Express, among others; Apple Pay and Google Pay; e-checks. It can set you up with a merchant account in case you need one and offers a virtual point-of-sale (POS) system.
A monthly fee is $25. In an all-in-one payment option with a merchant account, Authorize.Net will charge you 2.9% + $0.30 per transaction. In a gateway-only option without a merchant account, you’ll pay only $0.10 per transaction + a $0.10 daily batch fee.
Being the last but not least out-of-the-box Magento payment option, Authorize.Net is configured just like PayPal and Braintree in the admin panel. See more on how to set up the solution in the Magento DevOps documentation.
Available in 25 countries, Stripe delivers great payment services. If you’re looking to bill customers on a recurring basis, set up a marketplace, or simply accept payments, Stripe can do it all as a fully integrated, global payments platform.
The main strength of Stripe is its customizability and scalability. Its developer-driven approach allows merchants (and their software engineers) to twist and turn the code and customize the gateway features based on the business size and needs. They can even create subscriptions to charge the customers on a recurring basis, so think about it if you’re selling healthcare kits like our Umovis Lab client. Stripe supports 100+ currencies and has such features as mobile payments, one-click checkout, and even 24/7 tech support.
Stripe has no setup or monthly fees but does charge 2.9% + $0.30 per transaction.
Integrating this payment gateway with Magento requires some knowledge of programming. You can try downloading a ready-made extension from a marketplace, but make sure it is compatible with your store.
Amazon Payments was launched back in 2007 and allows your customers to make all their а financial transactions on-site for a more streamlined checkout experience by using just one account. The payment solution also operates in several languages and supports all leading currencies.
Amazon Payments allows customers to use one familiar login to identify themselves and make transactions on your ecommerce website. The payment gateway is also flexible and secure. Amazon offers two services for businesses: Checkout by Amazon (CBA) and Amazon Simple Pay (ASP). CBA is an ecommerce solution that enables merchants to accept Amazon account information and use Amazon for payment processing. ASP sends the customers to Amazon’s secure payment website to enter their payment info.
Amazon Payments charges no setup or monthly fees, but has the same pricing as Stripe: 2.9% + $0.30 per transaction.
To activate that “Pay with Amazon” button into your Magento store, go to your admin panel → Stores → Configuration → Sales → Payment Method → Configure Amazon Pay. Follow the instructions specified on the official Amazon Pay website.
2Checkout is one of the greatest payment gateway providers for international retailers. It supports 87 currencies and 15 languages and accepts major payment methods like credit cards, debit cards, and PayPal.
There are three customizable checkout options to choose from, and the service integrates with 100+ shopping carts. The system can also automatically bill customers a monthly subscription, compile payment history reports, and sell both physical and digital products.
2Checkout has no setup or monthly fees. However, its fees per transaction are a bit higher than those of PayPal or Stripe: 3.5% + $0.35 per transaction.
Magento 2Checkout integration is implemented via API. You can download a ready-made connectors from GitHub and upload it to your store’s instance (see the 2Checkout website for more info). In case the integration is too complicated for you, hire a Magento development agency to do all the work for you.
An ecommerce payment platform built for ACH (Automated Clearing House) transfers, Dwolla is a scalable payment tool that operates with all US-based banks. As an open-source software, Dwolla enables developers to smoothly integrate bank transfers into native tools using its flexible ACH API.
Seamless API integration allows merchants to oversee the financial activity, validate bank details, search transaction information, and manage payments within the dashboard in a way that truly yields results. These functionalities and scalable infrastructure among other factors make it a perfect fit for B2B businesses and marketplaces.
Dwolla offers three pricing packages for different business sizes: Pay-As-You-Go at no monthly cost for startups, Scale for $2,000 for mid-size and large businesses, and Custom for a negotiable price depending on a merchant’s needs. Besides, extra 0.5% may be charged per transaction (min. 5¢, max. $5).
Integrating Dwolla with a Magento store may not be easy for non-techy merchants since the process requires quite a bit of coding. Yet, with partners like Elogic, you may see your customers paying via Dwolla in a matter of days!
Once you have decided which payment gateway you will use for your online store it’s time to integrate it. Check out our quick guide to figure out how to do it yourself.
There is an existing solution from Magento to help you with the development of new payment integration. It is called Payment sample module and it contains all the required infrastructure so you can use it as a starting point.
To add a new payment method, follow these steps:
Keep in mind that the payment method you configure can be edited from the Admin panel, storefront, or even both. There might be different configuration settings for each of them. A description of how to configure where the method can be seen in the Configure payment method by area.
If only the word Magento integration scares you, we’re here to help! At Elogic, we have a vast expertise integrating third-party systems in e-stores across different industries.
Choosing the most suitable ecommerce payment gateway is crucial to the success of your retail business. By doing it sensibly, you can improve your customer’s experience, boost your brand’s affinity and increase revenue. All you should do is consider the above-discussed factors and draw a comparison between the ecommerce payment gateways before selecting and implementing the right payment solution for you. Check them all out and go with the one that will be most beneficial to your company, keeping your requirements in mind.