eCommerce payment gateways function like physical POS (point of sale) terminals in brick-and-mortar stores. They accept credit card details at checkout, validate them, and pass them to a payment processor which alerts the issuing bank. If the charge is authorized, funds are transferred and the payment gateway confirms the transaction. It’s a straightforward process that works behind the scenes.
The trouble is that not all payment gateways are equal. Your current payment gateway may be holding you back.
As with so many questions about eCommerce, the answer lies in the data.
Examine your website’s KPIs (key performance indicators) for customers at checkout. Start with the Abandoned Cart Rate. Is it below 69.80%, the average ACR across all industries? Is it higher? If a large proportion of prospective customers don’t make it past checkout, your payment gateway or payment options could be the problem.
(We’re assuming that your website is responsive, fast, and engaging. If it isn’t, track down and fix the eCommerce Pain Points that Kill Conversions.)
If the data indicates that your payment gateway is a problem, how will a new one help?
While no customer journey is perfect, you can get a lot of value at little (relative) cost by offering customers more ways to buy.
This is exactly what Bulls eBikes did to help them achieve an 80% increase in conversions in 2019. By adding a pay-over-time option through services like Affirm (more about this later), more customers were able to buy their big-ticket electronic bikes.
This isn’t a unique situation. Customers value flexibility when it comes to buying online. Options and confidence go hand in hand. This leads us to another integration benefit.
Trustworthiness is the most important factor that determines whether a customer buys from you.
Some companies and brands have the luxury of broad name recognition. Most do not. While you should strive to develop strong relationships with customers via quality, targeted content, and consistent messaging over time, one of the easiest ways to enhance the trustworthiness of your business is to adopt a recognized payment gateway.
For example, a customer located across the country from your business who likes your products and pricing may still hesitate at checkout. Why should he trust you over a big-name brand closer to home? Fair question. But when he sees the option to buy through PayPal, for example, many security concerns will likely dissolve. The same applies to payment options such as Amazon Pay and Apple Pay. Their names lend credibility to yours.
Our client, Cutting Edge Stencils, is a case in point. As part of their larger Magento 2 Migration, we added three payment options to their checkout via their Stripe payment gateway integration. This move was responsible for a significant drop in checkout time and contributed to a 50% rise in conversions.Many of the most popular payment gateways, which we discuss below, allow you to toggle different payment options on your checkout page. Robust payment gateways also bring another benefit to your Magento store: built-in PCI compliance.
“The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that ALL companies that accept, process, store, or transmit credit card information maintain a secure environment.” — PCI Compliance Guide PCI standards apply to every business that accepts, transmits or stores any cardholder data. Non-compliance can be costly. Banks often issue fines from $5,000 to $100,000 per month for compliance violations.
Other risks include increased transaction fees or termination of service. Your managed support partner will likely have options for regular compliance audits to keep you up to date with the latest standards.
If you choose (we don’t suggest this) to be non-compliant, you will need to run transactions through a third-party, off-site service. This increases the likelihood of abandoned carts as it extends checkout time by taking customers away from your site.
Convenience, trust, and compliance are three excellent reasons to consider integrating alternative payment options or even a new payment gateway into your Magento store.
One or more payment options like Amazon Pay, Apple Pay, and PayPal should be part of your website’s checkout experience. But there’s another payment option that has gained a lot of ground in recent years: pay over time.
Services that allow customers to pay for a purchase over four interest-free installments (the industry standard) help remove price as a barrier to buying. The benefits of such services also scale when applied to expensive or ‘big ticket’ purchases ($150 to $1,000+).
Three popular pay-over-time services are Affirm, Klarna, and PayPal Credit. All will help you boost your average order value (up to 85% according to Affirm), repeat purchase rate, and new customers.
There are many payment gateways to choose from. Though they all do approximately the same thing, when it comes to transactions on your website you’ll want to work with the most trusted names in the business:
You’ll have to do more research to understand which gateway is best for your business. We trust all of them, though each varies on security features, integration capabilities, currency choices, ease of setup, and, of course, transaction fees. Most also offer volume-based discounts to clients that meet or exceed a minimum order threshold.
It is helpful to speak with your developer as well; they will help you decide which gateway works best with your platform, ERP, and other business software. And speaking of ERPs, each of these payment servicers can integrate with your ERP payment gateway. This means that when customers order in Magento, their information will be sent to your ERP which will complete the transaction. Your ERP will then send verification back to Magento and the customer. As with all custom integrations, payment gateways can be configured based on your needs and preferred business practices.
Payment gateway integrations are not generally long or costly projects. In our experience, however, they are often part of a larger enhancement project that covers things like ADA compliance or SEO optimization. Many Magento 1 companies are opting to integrate a new payment gateway as a band-aid for their website before embarking on a critical Magento 2 migration.
Whatever your situation, it is worth examining your payment gateway to see if you aren’t missing out on some incredible benefits for your business. If you have questions about integrating a new payment gateway with your Magento store or ERP, get in touch today for a free consultation.
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