The internet has revolutionized the way goods and services are sold. You can now purchase anything from groceries to cars from the comfort of your own home. All it takes now is just a few taps on your smartphone. Never before have we experienced the sort of convenience that the internet has provided us with.

How do the companies that offer these goods and services online accept payments, though? A seamless payment system is crucial to making the online shopping experience worthwhile for customers. Not only does it need to be seamless, but it also needs to be secure.

That is where payment gateways come in. They take care of the entire payment processing operation for the online store. There are several key tasks that payment processes handle in order to securely process payments for merchants.

What is a payment gateway, and how does it work?

A payment gateway is a service provided to merchants that are looking for a solution to process payments online. The vast majority of online stores tend to opt for popular payment gateways instead of obtaining their own merchant acquiring accounts and processing software.

Doing that can be highly capital intensive, not to mention the fact that it also places additional responsibility on the merchant to ensure the security of their customers’ payment details.

There's a core difference between payment gateways and payment processors that needs to be understood. A payment processor takes the payment information that the customer enters into the online store and transmits it to the issuing bank.

A payment gateway does the same, but it goes one step further by also authorizing the transfer of funds between the buyer and the seller.

A payment gateway works by first encrypting the confidential credit or debit card details that the customer enters. This is done to ensure that the information can be transmitted securely between the customer and the acquiring bank through the merchant.

It also validates the payment information that's provided, checks whether funds are actually available, and transmits the issuing bank's acceptance or rejection of the transaction back to the customer.

  1. PayPal

    PayPal is without a doubt one of the most widely used and recognized payment gateways in the world. Many actually know it as a redirect payment gateway as many merchants prefer to just send customers to a PayPal-hosted checkout since they find that it boosts trust in the transaction.

    Merchants also prefer PayPal because it's relatively easy to get up and running with it. Once they have it configured, they can accept payments through major card issuers including Visa, Mastercard, and Amex. It's also possible to accept payments through mobile payment solutions.

    PayPal actually got its start in 1998 back when the company was called Confinity. Its initial focus wasn't on payments but that's what the company ended up pivoting to.

    eBay ended up acquiring the company in 2002 and later spun it off as a separate entity in 2015. It now allows merchants in more than 200 countries and territories to accept payments online.
  2. Stripe

    Stripe is one of the fastest-growing payment gateways in the market today. It has several key differentiating features that make it one of the go-to choices for online entrepreneurs looking for a payments solution. The company is focused on catering primarily to the eCommerce segment with highly competitive processing fees.

    It offers merchants a very advanced software suite. The data that they can get from that allows them to further improve their conversion rates. Stripe prides itself on being a developer-friendly solution as that provides merchants with a lot of flexibility when it comes to customizing the checkout experience.

    Stripe is a relatively new company as it was founded in 2010. It's only available to merchants in about two dozen countries at the moment and is primarily used by merchants in North America and Europe.

    Stripe also offers a point-of-sale solution to businesses called the Terminal so that they can accept cards at retail outlets through a physical card reader.
  3. is a preferred payment gateway for small-to-medium-sized businesses. It provides them with the ability to accept a wide variety of payment methods, including but not limited to checks and mobile payments.

    It also provides support for recurring billing. With custom checkout pages, businesses can exercise control over the checkout process by offering customers branded checkout. was founded back in 1996 and it was acquired by Visa, the globally renowned card issuer, in 2010. The company provides merchants with fraud protection services, simple checkout options, an API, and SDKs for development.

How can I integrate a payment gateway onto my website?

It's very important to have a seamless checkout experience for your online store. Studies have shown that most customers tend to abandon websites that seem to have a complicated checkout process or if they have doubts about the security of their payment information.

The proper integration of a payment gateway on your website will ensure that customers who might be on the fence about proceeding with the purchase have the peace of mind to continue with the transaction.

Hosted or redirect payment gateways like PayPal take customers from your website to their payment processing page once the customer clicks on the purchase button.

The process usually involves creating a payment button through the gateway’s integration tools and adding them to the website.

The integration process for non-hosted gateways, those that execute the entire transaction on the merchant’s own website, is fairly complex. There are additional security considerations that must be taken into account.

For example, to integrate with the API, a sandbox account needs to be created with merchant authorization.

The requests are then sent over the HTTP Post method to the API endpoint URLs. The different integration methods for include Direct Post, Server Integration, Advanced Integration, and Simple Checkout.

Once the integration has been completed, it’s always a good idea to execute a test transaction. This will provide the peace of mind that everything is working as it should be and that there won’t be any unforeseen issues when the online store goes live.

The last thing that an online business needs are issues with their payment gateway when their online store goes live. Usually, the launch is aided by significant marketing spend and all of that can quickly go down the drain if the online store isn’t able to properly process payments for the orders.

How much does a payment gateway integration cost?

All of the payment gateways have their own fee structure for providing you with the ability to take payments online. PayPal, one of the largest gateways, currently charges 2.9% plus an extra $0.30 per transaction. Stripe also charges 2.9% + $0.30 per transaction and so does

Merchants have to include this cost in their pricing as they are required to pay these charges on every single transaction. These costs can vary as well. Many payment gateways offer bespoke pricing to merchants that cross a processing threshold. This is done to encourage larger merchants to stick with the gateway.

Other variables are also a factor when figuring out the payment gateway integration cost. Some gateways charge a minimum fee unless a certain number of transactions are not done in a calendar month.

This can be tough on small businesses that are just starting out because they have to pay a set amount every month even if they’re not doing a lot of volume. Gateways can also have extra fees on transactions paid for using cards that are issued outside the merchant’s country, for example.

Merchants that sell their products globally might also have to take a hit on the exchange rate. While payment gateways are capable of handling transactions in most major currencies, if the merchant requires all of their transactions to be processed in a particular currency, then they will need to take a hit on the exchange rate.

Find the right developer to help customers pay for your products and services online

There are many different things to keep in mind when opting for a payment gateway for your online store. You need to understand whether the gateway that you’re considering has any minimum fee or if they provide volume discounts, something that can help you save money in the long run when you scale up.

You also need to work with development partners that are highly experienced when it comes to integrating payment gateways. That level of experience is necessary to limit the possibility of any cybersecurity issues.

Zibtek has long been a trusted partner of companies that want to accept payments online for their goods and services. We can guide you on what gateways will best suit your business needs. Our team of highly skilled developers will also work with you to ensure the proper integration of the payment gateway on your store. Have any questions about how we can help? Contact Zibtek today and we’ll be happy to guide you.