What is a payment gateway provider?
If you need information about payment and payment gateway providers, look no further. Continue reading to discover more about payment providers, including:
- What are online and electronic payment providers?
- Types of payment service providers and gateways
- Examples of self-hosted payment providers and gateways
- How do payment service providers and gateways work?
- The best online payment gateways for eCommerce stores
- The best alternatives to payment service gateways
What are payment providers and gateways?
A payment service provider or gateway is a third-party technical company that enables businesses to accept online payments on checkout pages, such as credit card, debit card payments, BNPL, digital wallets, and local payment methods. For example, if you buy an item online on eBay, an eCommerce payment provider will act as an intermediary or gateway between you, the buyer, and the seller.
That means that the payment details you fill in on the payment page and the funds get transferred from you to the buyer via the online payment service provider or online eCommerce gateway.
Payment service providers and gateways make it simple to take card payments, account-to-account payments, BNPL, and other alternative payment methods in online or offline, or in-store, with eCommerce in-store Point of Sale (POS) systems.
As a result, payment gateways best simplify the integrations and give access to different payment options without the necessity of internal development for different payment options.
Having a payment gateway can be the best way to handle low-volume sales. Still, with processing fees involved, it could be better to pay a monthly fee to have merchant processing included with your account if you begin to take a large number of online transactions.
The best payment service providers should offer easy merchant integration, global gateway processing, the best flexible pricing plans, mobile payments, robust online security features, multiple languages and currencies, and more payment gateway features.
Fondy as a payment gateway
Fondy is a perfect option for merchants and businesses of all sizes. That’s because the Fondy gateway enables companies to accept payments in a variety of ways, including:
- International payments.
- Recurring payments.
- Payment tokenisation.
- One-click checkouts.
- Multiparty payouts and instant settlements.
- Credit card authorisation holds.
- Split payments.
- Payment notifications like abandoned cart reminders.
Even better, the Fondy gateway, along with the aforementioned host of features, means that merchants have access to payment options such as:
- Bank networks like Mastercard and Visa.
- Digital wallets such as Alipay and Apple Pay.
- Crypto wallets like Argent and Coinbase.
- Local options such as Giropay and iDEAL.
- Open Banking.
- Online installment providers, i.e., BNPL, like Klarna.
Discover more on Fondy’s international payments homepage.
What are the different types of payment service providers and gateways?
Depending on the nature of your eCommerce online business, your payment service provider will likely fall under one of three online categories of the payment page integration: a hosted, an API-hosted, or a self-hosted provider.
With a hosted payment service provider, merchants and business owners can paste or embed the payment link onto their own website via the source code. From there, buyers can click on it and get directed to a separate payment and eCommerce checkout page. Although hosted gateways are safe and relatively cheaper, the extra step of leaving one website and completing the payment on another may be off-putting to some, resulting in merchant cart abandonment.
API-hosted payment providers let businesses handle the entire payment process themselves. That means that everything from payment initiation to payment completion takes place on the merchant’s website. API-hosted payment gateways are best for multi-national, multi-corporation businesses or merchants that handle large volumes and need all customer payment details to remain in-house.
API-hosted payment providers are only really affordable to large companies as they need to develop and maintain the online technology while covering the additional costs of merchant SSL certification and PCI DSS compliance.
Finally, self-hosted gateway providers work by taking the buyer’s payment details directly on the merchant’s website instead of on an external, third-party online website. That’s made possible as the merchant’s website already has a payment gateway pre-installed. The customer’s card details are only encrypted and submitted to an external party payment provider for online verification. This means that the checkout page is displayed on the eCommerce merchant’s website, and there’s no need to leave to go to another online website.
As a one-stop payment platform, Fondy understands the need for businesses and electronic commerce stores to be flexible and to accept the best payment methods in a variety of currencies. That’s why we enable you to complete your payment page integration via either a hosted, API-hosted, or self-hosted provider, meaning that merchants can start taking payments on the same day.
What do payment service providers (PSPs) do?
Payment gateways enable merchants to accept different payment methods and process payments without the need to pair or be reliant on a particular banking institution.
Payment service providers are an important part of accepting online payments, but they work in conjunction with other bits of advanced technology. Payment gateways use API technology to communicate between merchant online eCommerce websites and payment processor solutions.
Physical merchant stores and businesses use payment gateways like POS terminals to connect to the payment processing network via a phone line, but more commonly, a WiFi network.
Initially, POS terminals were used to accept bank cards (via card swipes, the manual input of data, or a signature). That later turned to “chip and pin” payments, where customers were required to insert their bank card into a POS terminal and input a personal identification number (PIN).
Nowadays, near-field communication (NFC), or contactless payments, means that payment gateways can process more transactions than ever. Today, payment service providers and gateway solutions can exist entirely online, meaning you can process payments from anywhere without needing a POS terminal provider.
Some other features provided by PSPs include:
- Integrating with other payment processors and payment methods.
- Processing multiple currencies for cross-border payments.
- Payment and partner analytics such as payment frequency, preferred currencies, payment methods, etc.
- Transaction status updates.
- Unified reports for all payment partners and payment methods. Transaction reporting enables businesses to reconcile transactions more effectively.
- Payment reconciliation for sent and received funds.
- High standards of security by staying PCI DSS compliant, meaning that customers’ financial data is secure and transactions are safe from fraudsters.
- Refund and chargeback management.
- Supporting various methods of transaction acceptance such as online payment pages, Mail Order / Telephone Order (MO/TO) payments, point of sale, advanced and new credit card schemes, etc.
The best online payment gateways and providers
Many payment gateways and providers claim to be the best for your business. The truth is that it mostly depends on the size, competitor comparison, and structure of your company. For one-person enterprises or new start-ups, you may be wasting money by paying for a beefed-up payment gateway or merchant payment provider that comes with all the bells and whistles.
Instead, while your business is steadily taking shape, your eCommerce or online business may only need a gateway or provider that accepts debit card and credit card payments, work easily with POS systems, and integrates with external payment apps such as human resources, merchant analytics, and accounting software.
You’ll also need to factor in fees, as they can quickly add up. If you only handle a small number of transactions, then paying a nominal fee now and then for a payment gateway won’t hurt your wallet as much. However, if your business plans to process larger volumes, then a merchant gateway or payment gateway with a fixed monthly cost for unlimited transactions might make more sense.
Fondy is the best payment gateway for marketplaces and marketplace merchants. When you create a free Fondy account, you’ll get access to Fondy’s best suite of payment products in one simple integration. Fondy’s payment gateway processes transactions in over 150 currencies in 200 countries using multiple payment methods, including Open Banking providers across 300+ banks in the UK and EU.
Fondy supports local processors and payments from local bank accounts to digital wallets, as currency conversions of payments are costlier when processed through a local payment processor or payment scheme. Even better, Fondy automatically routes payments according to the location of the payer.
Our payment gateway seamlessly integrates into over 21 payment marketplaces, marketplace merchants, platforms, CMS systems, and website builder providers, including these on the list:
Discover what plugins, platforms, and marketplaces that Fondy supports for your business. If you don’t see your preferred marketplace or marketplace merchant, plugin, or platform on the list, no problem. Our team can help with custom merchant integration solutions. Contact us at firstname.lastname@example.org to get a pricing comparison and get started.
Fondy’s pricing starts at 0.5% plus a set payment fee of £0.20.
What are the alternatives to payment service gateways?
Payment service providers and gateways aren’t the only way to make payments across borders. For instance, imagine you’re a business owner in need of a way to send money to freelancers in another country.
As well as using a payment service gateway or payment merchant provider, you can always:
Make a credit card payment
Freelancers sometimes accept credit card payments via mobile apps for their services. Apps like the PayPal gateway handle these online payments, but they are rarely the cheapest option available. When merchants send business payments to China, for example, the contractor may be also charged withdrawal fees just for transferring payments into their own bank accounts.
Before you use an app to pay by card, bear in mind the exchange rate markup that they charge you. This isn’t usually advertised, and you could end up losing a significant chunk of your cash if you’re not careful. Firstly, it’s unlikely you’ll be offered the mid-market rate, i.e., the best exchange rate. Secondly, you’ll find that the rate on offer favours the app by around 10% – meaning they’ll take that much from the payment you send.
Pay with a freelance provider
Another way of paying a freelancer in another country is to use platforms like Fiverr and Upwork. Services like these are great for finding freelancers but can be expensive when it comes to paying them.
Companies like these can charge the freelancer up to 15-20% of their payment fee. High charges like these often leave the freelancer with no other option than to overquote your business for the work. For more value for your money, try finding the best freelancers online independently and paying them with a specialist business money transfer provider or eCommerce payment service gateway.
Use a remittance service
There are many money payment transfer services and gateways around, such as WorldRemit and Western Union. However, some of these companies are expensive to use and provide a ‘one size fits all’ service to both personal and business customers. The best bet is to find an online remittance payment provider that offers dedicated business merchant accounts to everyone from sole traders and start-ups to multinational corporations. You normally pay a single, low fee and get some of the best exchange rates on the market. Even better, these transfers are usually instantaneous and benefit from some of the best security on the market.
In conclusion, there is a tonne of different options for making online cross-border payments. And depending on where you live and the online technology you have access to, one payment method or gateway may suit your business or merchants better than the next. The solution is probably to use a payment service provider or online gateway that has years of expertise in this field. What most payment service providers feature is a robust one-stop gateway solution that’s best for making global merchant payments.