Payment Gateway Comparison: A Comprehensive Guide [2019 Edition]
Payment Gateway Comparison 2019: Everything You Need to Know about Payment Gateways
There’s a lot to consider when making the decision to add a payment gateway to your store. You have to factor in your needs, your customers’ expectations, and what the fees are for each payment gateway.
We have experience with different types of ecommerce payment gateway integrations, and in this article we’ll show you a payment gateway comparison so you know what to look for. If you’re still unsure after reading this article, our ecommerce experts can help you out.
Ecommerce payment gateways can be tricky to understand because they all seem alike at first. We researched this subject and have distilled it down to a few key points.
Let’s start with some things you may not know about payment gateways.
Top 5 things you need to ask yourself when choosing an ecommerce payment gateway
Before going any further, if you’re confused about the difference between a payment gateway and a payment processor, check out our article on the Top 7 ecommerce payment gateways and how to integrate them into Magento. It includes an overview of the top payment gateways as well as a description of how they work with Magento.
Now, here are the factors that are commonly overlooked when selecting a payment gateway:
1) Is it a hosted or non-hosted gateway?
A hosted or third-party gateway means your customers are redirected from your website to a secure page where they can enter their credentials (for example: PayPal). Once the payment is processed, the customer is redirected back to confirm the order and continue with checkout.
A non-hosted or platform-native gateway lets your customer pays for their order directly on your site. This generally requires an SSL certificate, which is the standard encryption method to ensure the customer’s data is secure.
A hosted gateway is easier to integrate because the gateway is fully responsible for security. On the other hand, with a non-hosted gateway you have more control. You keep your branding and customers don’t have to navigate away from your site.
2) Is it a reputable payment gateway?
Reputation is everything. This is an important consideration because if you choose a payment gateway users aren’t familiar with or decide to skip the SSL certificate, you’ll have abandoned carts left and right.
Ecommerce shops that grossly neglect security and endanger user privacy and data. For more on this, check out this article from Servertastic on the myth of not needing an SSL certificate if you use PayPal.
Low customer confidence in your store reflects in the conversion rate. Bottom line.
3) Does the payment gateway come bundled with a merchant account?
This is an important consideration for smaller businesses because it is often easier and cheaper to set up bundled accounts. With bundled accounts, you generally have lower monthly fees. However, depending on the gateway there may be hidden fees, so you need to read the fine print. If your business already has a merchant account and you want to connect it to your gateway of choice, we recommend that you make sure your current merchant account is compatible with the gateway.
4) Does the gateway have monthly fees, transaction fees, or both?
A very important consideration is cost. Since you incur most of the fees, your choice of payment gateway should heavily depend on the fee structure. Generally, fees can be divided into two parts: monthly and per-transaction fees. Monthly fees are based on the cost of subscription, and transaction fees can be either fixed or variable.
Some payment gateways like PayPal Pro and Authorize.Net charge a small monthly fee (<$30) in addition to a per-transaction fee, which can add up if you extrapolate over the course of a fiscal year.
Additionally, you should look into volume discounts if your business handles a high volume of sales/orders. More often than not, payment gateway providers do not explicitly state what these discounts are, so you may need to give them a call to find out.
5) Is the gateway supported by Magento?
Magento recommends PayPal Express Checkout and Braintree along with other PayPal solutions like PayPal Payments Standard and Payments Pro. We will show you the difference between all of these a bit later. The good news is that Magento and PayPal provide solutions for merchants who are just starting out as well as established businesses. Like Magento says, “As your business grows, you can combine these with additional PayPal payment solutions.”
In addition to PayPal and Braintree, Magento also supports the following payment gateways:
- Amazon Pay
- Authorize.Net Direct Post (Deprecated)
Don’t worry if the payment gateway you’re interested in isn’t on the list. You can integrate with any major payment gateway through an API (or a Magento Extension). Using an API is easier if you’re tech-savvy or have a development team.
Installing an extension is much easier; however, not all gateways have their own Magento extensions, which means you become dependent on a third party. So whether the gateway has a good extension can be the deciding factor. Not to mention that some third-party extensions cost upwards of $450 (such as the Stripe gateway extension by Mageplaza).
With this information in hand, let’s compare payment gateway services.
How to choose a payment gateway: The showdown of the top dogs
Pricing and plans depend on what you require, so we would recommend either sifting through each gateway’s pricing and feature pages or consulting experts.
At a glance, all of these gateways look very similar but they differ in their applications.
|Payment Gateway||Bundled Merchant Account||Transaction Fee||Monthly Fee||Chargeback Fee||Currencies||Countries||Requires SSL|
|PayPal Standard||Yes||2.9% + $0.30 per transaction||$0||$20||25||202||No|
|PayPal Pro||Yes||2.9% + $0.30 per transaction||$30||$20||25||202||Yes|
|Authorize.Net||No||2.9% + $0.30 per transaction||$49 setup fee + $25/month||$25||11||5||Yes|
|2Checkout||Yes||3.5% + $0.35 per transaction||$0||$20||87||200||No|
|Stripe||Yes||2.9% + $0.30 per transaction||$0||$15||100+||25||Yes|
|Braintree||Yes/No (depending on plan)||2.9% + $0.30 per transaction||$0||$15||130+||44||Yes|
|WePay||No||2.9% + $0.30 per transaction||$0||$15||1||USA||Yes|
|Dwolla||No||0.5% per transaction, with a minimum fee of $0.01, and maximum fee of $5.00||$0||$15-25||1||USA||No|
|Square||No||2.9% + $0.30 per transaction.||$0||$0||1||USA||Yes|
PayPal offers five different payment solutions (including Braintree, a PayPal company). It can be confusing to understand what the pros and cons are. Thankfully, PayPal provides an easy-to-understand table.
Battle of the PayPals
PayPal is the most popular payment gateway on the market. Its name is synonymous with excellent customer service, quick transfers, and the highest conversion rates when compared to other payment types. You can read the full study on conversion analysis here (sponsored by PayPal)
What are the key differences between PayPal business solutions?
♦ PayPal Standard vs. PayPal Pro
PayPal Pro has the following additional features
- Custom checkout experience (design and host your own checkout page)
- Customers can pay without leaving your website
- Includes a Virtual Terminal for phone, fax, and mail orders
For an extra $30, PayPal Pro is a pretty good deal. It’s a non-hosted gateway and requires an SSL certificate, unlike PayPal Standard.
♦ Braintree vs. PayPal Standard vs. PayPal Pro
The key differences are:
- Braintree supports mobile payments like Google Pay and Apple Pay
- It includes built-in PayPal Express Checkout functionality
- It supports non-hosted custom checkout at no extra cost
- PayPal Standard/Pro support more countries and currencies
Since PayPal Pro and Braintree include an Express Checkout functionality, do not turn PayPal Express Checkout on or the two versions will conflict with one another.
| ||PayPal Payments Standard<||PayPal Payments Pro||Payflow||PayPal powered by Braintree||PayPal Checkout (formerly known as Express Checkout|
|Design and Host your own|
check out pages for full control
| ||♦||♦||(if allowed by your partner site)|| |
|Accept Credit Cards via phone,|
fax and mail (VT)
| ||♦||♦||♦|| |
|Accept credit and debit cards|
(your buyers don’t need a PayPal account)
(Must have a 3rd party processor)
|Accept PayPal payments||♦||♦||♦||♦||♦|
|Send Invoices online for fast payment||♦||♦|| ||♦||♦|
|Accept payments in 25 currencies|
from 202 countries
|♦||♦|| || ||♦|
|Simplified PCI compliance||♦||♦*||♦||♦||♦|
|No long-term contracts, setup,|
withdrawal or cancellation fees
|Nonprofit discount available|
for PayPal transactions
|♦||♦|| || ||♦|
|Toll-free phone support||♦||♦||♦||♦||♦|
|Offer special financing on|
purchases $99 and up
|♦||♦**|| ||(only through PayPal Standard or Checkout)||♦|
| || |
**Requires use of the hosted templates in PayPal Payments Pro.
Source – PayPal Help Center
Braintree vs Authorize.Net
Authorize.Net has been around since 1996. Their seniority in the payment gateway market is a sign of reliability and security. However, it doesn’t have any features that differ greatly from other more affordable options.
The key differences are:
- Authorize.Net gives you the option of connecting your own merchant account
- Braintree supports more currencies and countries
- Braintree supports additional payment methods
- Authorize.Net is more expensive, $49 setup fee + $25 per month
Dwolla vs PayPal
Dwolla is a US-based company that specializes in offering affordable cash transactions. The beauty of Dwolla is that it doesn’t have a middleman. It connects directly to your bank account.
The key differences are:
- Dwolla charges only 0.5% per transaction (with a maximum fee of $5)
- Dwolla is only available for US merchants and only has one currency – USD
- Since Dwolla is a separate payment option (like Visa/MasterCard), it may affect conversion rates
Stripe vs Square
Both Stripe and Square recently emerged as two big contenders to giants like PayPal. Square excels in mobile payment processing, while Stripe is geared towards ecommerce payment processing. Both payment solutions offer lots of features for running businesses like sales, marketing, and CRM.
The key differences are:
- Square is more for POS and has great options for in-person payments like chip readers and terminals
- Square is only available in the US, while Stripe supports 100+ countries
- Stripe has one of the best APIs on the payment gateway market
2Checkout vs. PayPal Pro
2Checkout is one of PayPal Pro’s main competitors. Their latest platform, 2Checkout 2.0, offers an all-in-one monetization platform that can handle simple transactions, subscription-based products, and digital goods. Like PayPal, 2Checkout covers almost the entire world. However, there are some caveats.
The key differences:
- 2Checkout’s transaction fees — 3.5% + $0.30 — are the highest on the market.
- 2Checkout supports more currencies, but currency exchange rates have been noted by users to be higher than average
- Unlike PayPal Pro, 2Checkout does not charge a monthly fee
Takeaways — The best payment gateway for ecommerce?
The main takeaway from this comparison is that your choice of payment gateway for your store should stem from factors like security, features, cost, and customer acceptance. There’s no point in adding a gateway with tons of features that no one knows about. And there’s no point in adding an expensive gateway that has high user acceptance if you only use a few features.
The out-of-the-box Magento recommended and supported solutions — PayPal and Braintree cover a lot. You get tons of features for a reasonable price. If that’s not enough for you or your store is located outside the US, it would make sense to add another gateway. There are also new kids on the block, like Klarna, which offer flexible payment options that are worth looking into.
The main idea here is that you can have more than one payment gateway. As an added bonus, most payment gateways are free-to-use (transaction fees still apply) so you can try them out without much commitment. There’s no silver bullet for payment solutions, so we recommend staying up-to-date with trends and paying close attention to customer feedback and abandoned carts.