In any business, working out how you get paid for what you sell is critical. And in eCommerce, there are additional factors to consider. Ultimately you want a process that is easy for customers to use, one that looks and feels secure and one that doesn’t load too much extra cost on your business.
Future solutions will need to offer the convenience of one-click checkout on any eCommerce site, whether desktop or mobile.
The choice of payment gateway is an important one to get right. The fundamental objective is always the same – providing a secure and simple way for your customers to pay for their goods. The method you choose will probably depend on the age of your business, the technical experience of your development team and the number of transactions you expect to handle.
On-site or off-site?
The first decision is often whether you want to handle the payments entirely on your own site or whether you want to complete payments using an external, secure payment gateway.
On-site payment gateways have significant advantages. For one thing you have control over the checkout process. You can refine and improve it to minimise the number of abandoned transactions and your branding is maintained to the end of the purchase. You can configure the payment process exactly the way your customers prefer.
But for smaller businesses and those just getting started with eCommerce, on-site payments can be a challenge. Your site will need to have a current and signed SSL certificate and be fully Payment Card Industry (PCI) compliant. Any data transmitted between the site and the merchant centre that authorises card payments must be encrypted.
Because of the technical demands, businesses often opt to start with offline payment gateways. Here, your customer will leave your site to complete their purchase. They are easier to set up and the external payment gateway provider has the responsibility for maintaining PCI compliance and SSL certification. The third party payment system might also have a higher degree of recognition and perceived security than a website that a customer visits for the first time.
Whatever route you choose you’ll need to look carefully at how the payment gateway service is charged for. Different gateways have different levels of charges per transaction and minimum monthly fees. If you have a large number of transactions you might find a higher fixed monthly fee and lower per-transaction charges a better option.
There’s always PayPal
For many smaller eCommerce businesses PayPal can be a good option for many reasons. First of all it’s recognised, which immediately gets over the security concerns. Potential customers are quite likely to have a PayPal account which means they don’t have to hand over personal data to yet another website. PayPal can also accept payments from major credit and debit cards so even those without an account can use the service to buy from you.
The final point is also worth remembering, whatever payment gateway solution you opt for. The wider variety of payment options you are able to accept the better – you can’t expect your customers to fall into line with whatever is most convenient for you. But again, there can be a cost consideration. Accepting American Express, for example, could mean that you incur an additional monthly fee. But if you’re selling to other businesses this could be a common method of payment. It’s all about knowing your customers and what they need.
What does the future hold?
Online checkout processes are still a major cause of friction in eCommerce with up to 60% of transactions getting abandoned at this stage. Often the process on mobile devices is even more unsatisfactory as keyboards pop up to obscure forms, input boxes become too small to be easily usable and people have an inherent resistance to using a mobile connection for buying online.
People are also wary about registering card details with multiple eCommerce sites. Little wonder that many take the easy way out and stick to Amazon where they can buy a wide range of things with one click and one password to remember.
Common sense and test data tell us that simplifying the payment process to a single click works wonders for increasing conversion rates and for repeat business. There’s clearly an enormous incentive for people to return to a site where they know they don’t have to type in full credit card and personal details every time.
One-click payments also eliminate many of the sticking points that can result in abandoned purchases. And with mobile eCommerce this is even more of a benefit as form filling on smartphones can be painful.
One potential downside of this could be customers’ concerns about storing card details on various eCommerce sites. These concerns are overcome by tokenised payments such as those we are now implementing for clients through Sage Pay.
With tokenisation customers pay with their card in the normal way but card data is encrypted and substituted for a unique, random sequence of digits, known as a token.
When your customer pays, the token is sent to the merchant's payment processor along with the last 3 digits from the back of their credit card (for 4 digits for those of use who use American Express) and is matched to the original card number for the transaction to be authorised.
PCI compliance is greatly simplified by using tokenisation as the eCommerce store isn't required to store any cardholder data which can provide a massive cost saving for both the stores and eCommerce agencies.
We're also following the integration of the Google Wallet with Chrome, which is currently undergoing BETA testing.
Once this service is established, buying anything online could be almost as simple as purchasing a download from Google Play. Your credit card details, together with any loyalty card information will be stored in your Google Wallet. When an eCommerce store has the Google payment system integrated all you’ll need to do is click on a button that says ‘pay securely with Google’ or something similar.
The Google Wallet will also hold any delivery addresses you’ve used before so you can select the relevant one with a single click. You can synchronise your data across all of your devices (including iOS ones) so it doesn’t matter whether you’re on your desktop or a smartphone.
Google is also promising some sophisticated fraud protection built into the system. For example the payment system will generate a use-once credit card number for each purchase that is only matched to your real card on the Google server. This gets over the issue of having your credit card information stored on multiple sites and generating multiple opportunities for it to be hacked.
If you want to know more there’s a bit of a techy demo of how to buy with Google Wallet from some Google developers here:
It’s not the finished article but it will give you an idea of how the process will work. From what we know so far this looks like a giant leap forward in eCommerce and mobile eCommerce in particular.