Should you have multiple payment gateways on your site? Voila, the answer to all your questions! Learn the meaning, pros and cons, and how to route transactions.
Not all payment gateways work efficiently in all geographies. Multiple payment gateways can ensure swift transaction processing and better checkout experiences to customers. But what are multiple payment gateways? What are their advantages and disadvantages?
Looking for answers of these questions? Well, here’s the most exhaustive guide on multiple payment gateways to help you out.
Multiple Payment Gateways: What Does It Mean?
But first, let’s get our basic concepts straight.
A payment gateway (PG) is a platform that allow merchants to accept and authorize payments. Payment gateways securely transfer money from the consumer bank account to the seller. Integrating a payment gateway is imminent to running an online store. The pandemic has accelerated the world’s switch to a cashless economy. In fact, reports state that digital payments will reach $6.6 Trillion by 2021. Moreover, there will be a 40% increase in digital payments.
Multiple payment gateways mean one merchant offering various payment gateways (at the same time or different times) on their payment/checkout page.
Pro Tip: What Is Payment Gateway?
Some surveys show that multiple PGs can increase the trust of the customer. It also improves the chances of successful transactions. Now, both the PGs may be offering the same services in terms of payment modes, checkout experience etc.
Multiple PGs allow merchants to route transactions optimally. This results in successful transactions across multiple markets.
Multiple payment gateways can be integrated into a website in two ways:
- Integrating multiple payment gateways at once.
- Integrating multiple payment gateways but routing them selectively
In the next few sections, we will discover the pros and cons of using multiple PGs at once.
Advantages of Having Multiple Payment Gateways
Improves Customer Trust
A customer might not feel safe to proceed with the transaction if they unaware of the PG brands. In fact, 19% of carts are abandoned if customers do not trust the site with their card info. . Customers prefer PGs that they have used successfully in the past. Especially since they trust the PG with their confidential financial details. So, multiple payment gateways can increase customer trust and conversion rates.
For Backup Purpose
Digital transactions may stumble upon technical failures. Payment gateways might fail to process the payment due to sales overload. In such cases, consumers can move to another seller to purchase that product. It is always better to have multiple payment gateways on the merchant website to avoid such scenarios.
Improves International Sales
Reports state that 38% of customers have encountered lack of preferred payment options on sites. The key to solving this issue is to enable multiple currency options on the checkout page.
With an e-commerce website, one can sell to anyone without location restrictions. However, difference in currencies pose an issue. A single payment gateway may not be enough to process payments from several countries. Merchants need to deploy multiple PGs on their platform to collect payments from international customers. Selling internationally improves the business and the seller’s geographical coverage. In fact, 63% of online businesses in India sell to more than one country.
For Instance, Cashfree supports 30+ currencies. Customers can choose to pay in these currencies provided that the merchant has provided all the appropriate documents and gained approval from the banking partners.
Meets All Customers Needs
Different payment gateways offer different features. It is hard to find all the features in one payment gateway. Some gateways don’t accept a few brand cards, and some don’t offer monthly subscriptions. Conversion rate can decrease if customers don’t find the features they are looking for. In fact, 7% of carts are abandoned due to lack of payment methods. Multiple payment gateways offer payment flexibility to the customers.
Provides Analytical Data
Payment gateways offer different kinds of data to the seller. The type of data that is offered by all payment gateway companies is not the same. Each data has its purpose during data analysis. Based on this analytical data, merchants can make informed decisions to improve their business.
Disadvantages of Having Multiple Payment Gateways
Integration Issues and More Paperwork
Multiple PGs might mean multiple integrations and contracts. Integrating the step up is not a hassle-free process. PG integration might demand a lot of time and resources. Since the merchant is installing multiple payment methods on their website, it involves a lot of paperwork. Moreover, merchants need to go through a lot of documentation processes.
Installing multiple payment gateways can cost more too. Moreover, tracking processing fees of all the payment gateway may require additional resources. To avoid this scenario, some business owners adopt combined payment services.
No Volume Pricing Advantage
Gateway companies charge less to sellers if they process more sales through their payment gateway. This is is known as the volume pricing advantage. Let us assume that there is a seller who installed multiple payment gateways. Because of multiple gateways, payments are distributed amongst them, which reduces the chance of having a volume price advantage.
Complex Failover Logic
Multiple payment gateways need complex failover logic. For instance, let’s assume that payment gateway A failed. So what will happen next? Should the transactions be redirected to gateway B or C? This involves complex logic, and it is not good for the conversion rates. One needs to be careful while deciding the best redirection method for failed transactions.
Complex Report Analysis
Multiple payment gateways offer different kinds of reports. Analysing all the data in those reports consumes a lot of time. To manage all those reports, the seller has to develop their reporting system to combine all of them.
Having multiple payment gateways on the website will cause numerous operational challenges. Let’s say someone had a failed transaction but the amount was deducted from their bank account. If might be harder to track which payment gateway the amount was deducted from. These challenges can be solvable, but it consumes more time and needs additional software products to point out the errors.
More IT Resources Required
If a merchant adopts multiple payment gateways, then they need to allocate more IT development resources to maintain them. These gateways involve complex multiple payment gateway integrations. In the case of high sales volume, there are chances of gateway failures. To solve such scenarios, more IT employees need to be employed to make the gateways run smoothly.
Features to Have in Multiple Payment Gateway
Able to Integrate With The Book-keeping Program
We have discussed the complexity of consolidating the reports generated by multiple payment gateways. While considering multiple PGs, a merchant must choose the ones that can integrate with the book-keeping program to generate auto sales reports.
More Payment Modes
Offering multiple payment modes can improve sales. Payment habits vary among the customers. Some wanted to use internet banking and others may give preference to UPI or debit/credit cards. So, choose a PG that offers more payment modes. The most preferred payment method for global online shoppers are eWallets (36%), credit cards (23%) and debit cards (12%). In India, UPI is the most preferred digital payment mode with 41% market share.
Should Support International Payments
Buyers from different geographies may visit your Commerce store. It is essential to choose a PG that supports international payments.
Should offer Timely Support
It is important to choose a PG that offers good support service to its customers. Choosing the one with bad customer service can damage the sales. In fact, reports state that, 78% of consumers will do business with a company again even after a mishap if the customer service is outstanding.
Should Offer a Good Success Rate
Selecting a gateway with a low success rate can badly affect the conversion rates. So, always choose the one that offers a high success rate.
Should Offer PCI-DSS Compliant Security
PCI-DSS compliance systems securely allow the customers to store their data in the gateway for recurring payments. Latest surveys state that 81% of customers need to trust the brand in order to buy from them. Customers are more likely to engage with a brand if they know that their financial data is safe.
Should Be Cost-effective
No one wants to install a PG that costs a tons of money in the name of processing fees and transaction costs. So, choose a cost-effective one. But that doesn’t mean choosing a cheap and low-quality one. Moreover, there are substantial MDR differences for the same payment methods across different PA/PGs. So, carry out through research and pick a PG that meets your needs the best.
Free Setup and Zero Maintenance Charges
A good payment gateway sets up the system for free and offers zero maintenance charges. A lot of Indian payment gateways charges zero setup fee and maintenance charges from merchants.
Should Offer White-label Wallet
Some payment gateways allow the user to perform transactions from a mobile wallet. Nowadays, most consumers use their mobile wallets to process almost all kinds of payments. So, choose the one that supports a white-label wallet.
Should Accept Recurring Payments
Choose a payment gateway that can accept recurring payments. Many consumers set recurring payments to subscribe to products of certain businesses. If they don’t find this option, they move to another seller.
Cashfree Subscriptions helps in setting up and management of recurring payments for your customers. Using Cashfree Subscriptions, sellers can easily manage subscriptions for the customers and charge them automatically as per the plan.
Should Be Mobile Friendly
Nowadays, most of the payments are made using smartphones. In fact, expected annual growth rate of mobile payments is 80% between 2015 and 2020.
So, choose the payment gateway that is mobile friendly.
Using Multiple Payment Gateway but Routing Selectively
The majority of cons of multiple payment gateways are solvable by routing them selectively. Transactions can be routed to the PG that performs best in that particular region. Moreover, some PGs are more suited to mobile payment than others. So, routing the PGs selectively to web users and mobile users can improve conversion rates.
Key Factors To Consider While Routing Transactions
Some of the key factors to consider while routing transactions are as follows.
There will be differences in merchant discount rates among various payment gateways. Merchant Discount Rate (MDR) is the fee charged to the merchant whenever a customer makes a card payment. So, merchants should consider these costs while routing transactions.
Payment Success Rate
The success rate between PGs may vary. The merchant can choose to route the high volume transactions to the PG that has an accomplished record of successful transactions of a large number of funds.
System downtimes are common and they happen due to server issues. So, the merchant needs payment gateways with dynamic routing capability.
There will be certain days in a year when merchants offer huge offers on their products. For instance, 65% of festive sales in India fell between October to November 2020. During such events, there is a chance of a high load on the PG. So, it is better to choose the one that can handle such loads while routing transactions.
Business Use Cases
You can route transactions to the PGs on the basis of the business use cases. Some PGs have unique solution fitted to a particular industry and their financial needs. A lot of eCommerce payment gateway have unique payment products like subscription, partial, full and instant refunds, split commission with vendors and many more.
How To Route Transactions Efficiently?
Success Based Routing
Machine learning algorithms can monitor and get trained from payment failures across the ecosystem. Thereafter, they can make fully automated routing decisions. All possible combinations of PG errors and payment methods that caused the failures can be taken into account. In fact, the algorithms can identify potential downtimes in near real-time.
But what if the downtimes are not global and specific to the merchant? Well, here the router can make routing decisions using merchant level pattern. Moreover, the merchant can configure thresholds of failures at the merchant account level or payment method level. They can even choose to enable or disable payment methods to be a part of the routing algorithm.
A mathematical algorithm can evaluate payment gateway health. Thereafter, it can assign scores keeping the company’s business needs in mind. These scores can be used to filter out poor performing getaways at the time of transactions.
Business rules-based routing
Every business can make some routing rules based on the payment parameters like card brand, issuer, payment method etc. According to their needs, business owners can build their own routing rules.
No one wants their payment to get rejected and go through customer support to get their refund. Payment gateways are the most important component of the customer’s buying experience. The better the user experience, the higher the conversion rate will be. If the merchant uses a sub-standard or unfamiliar payment gateway, the consumer may not process their transaction and the chance of moving to the competitor’s website increases.
A good payment gateway improves customer trust and builds your brand. Businesses always need a gateway that is compatible with their website; otherwise, an unsupported payment gateway can cause many issues. In this article, we discussed the advantages and disadvantages of multiple payment systems. It is better to consider all of them and research more before setting up gateways on e-commerce websites.