21 Jul Why Payment Gateway is Important for Online Business?
The e-commerce boom has revolutionised payment methods. Whereby once Cash-On-Delivery (COD) and bank-in were the preferred methods of payment, many e-commerce merchants are increasingly shifting to payment gateway due to the many benefits it offers. In fact, it is common to find payment gateway as the only payment method for many merchants!
Curious to know what the hype is all about?
First, let’s define what a payment gateway is. According to Investopedia, it is “the front-end technology that reads payment cards and sends customer information to the merchant acquiring bank for processing”.
Acting as a “middle-man” between the customer and seller, it ensures secure electronic payment in an encrypted manner. A payment gateway is the only way to authorize credit card or direct payment transactions from the merchant website itself.
Some of the benefits of a payment gateway include:
- Convenience for Customer
- Safer Transactions
- Easy Setup with Automated Payment Process
Convenience for Customer
According to Statista, almost half (42%) of worldwide online shoppers prefer using credit cards, followed by electronic payment (36%) and debit cards (28%), with COD (23%) and bank transfers (20%) trailing behind.
Payments made online are significantly hassle-free, as successful payment only require several clicks. A hassle-free payment process prevents customers from ditching their cart at the last minute due to a less-than-convenient payment method. As an online business owner, this means payment methods have to be shifted according to customers’ preferences.
Payment gateways can help as they allow customers to complete their purchase from the website itself, without having to meet the seller (COD) or transfer money to the seller via online fund transfer/manual bank-in.
Although it seems like a small step, it definitely does not hurt to add a payment gateway to make the process easier. It is a win-win situation as customers enjoy convenience, while e-commerce merchants enjoy an increase in conversions and sales.
We have all heard scary stories of online transactions gone wrong at some point. Online transactions can be dangerous without fraud protection and stringent security measures in place. Thankfully, payment gateways greatly reduce safety risks associated with making payments online.
Payment gateways enable safe transactions in e-commerce. Safe and secure transactions are beneficial to both customers and e-commerce merchants. Customers pay with peace in mind when there are adequate customer dispute support services. Meanwhile, e-commerce merchants will be protected from any misuse or fraud attempts.
There are also many safety features associated with payment gateways, such as data encryption and Secure Socket Layer (SSL). SSL and data encryption are important features to ensure secure transmission of sensitive information to authorized sources.
As payment gateways evolve to incorporate more safety measures in response to ever increasing threats in cyber security, payment gateway is a smart choice to stay immune to security threats in the long run.
Easy Setup with Automated Payment Process
It is simple to integrate payment gateways to e-commerce websites. There will usually be a minimal setup fee charged by the payment gateway company.
However, compared to COD or bank transfers where merchants have to manually check their bank account to confirm payment, payment gateways ensure instant transfer of funds from buyer to seller. This automated payment process will save a great deal of time especially merchants with large quantity of orders.
In short, both merchants and customers will enjoy safe, secure and convenient transaction processes. Contrary to popular belief, online transactions performed through reliable payment gateways are hassle-free and do not incur unnecessary safety risks.
Payment Gateway Options in Malaysia
Interested to integrate a payment gateway into your e-commerce website?
There are four main payment gateways commonly used in Malaysia: MOLPay, eGHL, ipay88, and PayPal.
Do take note the fees and the features of each payment gateway to determine which is most suitable for your business. Refer to the link below for a detailed comparison chart between these payment gateways!