Payment Gateways

Ecommerce Guides

By the time someone comes to checkout from your online store, and to actually commit to pressing the buy button, you have already overcome a substantial host of challenges and potential distractions. At this stage, your customer is convinced that you are credible, they are happy with your headline terms and conditions, and they have their card details or their Paypal account logins ready to get going.

As in any physical retail environment, this is the best time to present them with additional, alternative products. Amazon do this incredibly well, by suggesting products that other shoppers have bought at the same time as the current product. At this stage, you are about to send a package to the buyer anyway, so you may as well be selling them an extra product, even at a small value, to squeeze maximum efficiency from your marketing and sales process.

By not offering POS add-ons and upgrades, you could be doing yourself out of as much as 20% additional revenue. In the competitive world of online retail, they are sales you can’t just leave on the table.

There are various ways you can present additional products at the point of sale. By ensuring that what you present is visible, complementary and an easy add-on to the shopping cart at the last gasp, you will allow for impulse purchases and extra spending at a time when your customers are most ready to close the deal.


Up-selling happens on a daily basis, and it’s almost an expected part of so many mundane transactions that the collective conscious doesn’t even notice. Do you want to go Large? Extra cheese? Do you want a different colour?


Offering your customers the chance to upgrade is an effective way to segment your customers at the point of sale. Those who are price sensitive will stick with the regular price point. Those who don’t care will happily give you more money if you ask them to. It’s this crucial differentiation technique that allows retailers to squeeze a bit more profit from customers who are willing to pay it.

Think about ways you can up-sell for your products, and implement them from the beginning to maximise your overall sales. GoDaddy is one incredibly successful company that loves to up-sell, almost to the point of irritation. They don’t do it to be deliberately obnoxious – it’s because this helps squeeze more money out customers when the customers are obliging, and to not ask would be to shave a hefty chunk off the business.


Similar to up-selling, cross-selling is the positioning of other products that your customers might like to buy. If someone buys a bucket, the might also be interested in buying a space, and cross-selling puts this opportunity to them.


Think of Amazon’s ‘other shoppers also bought these products’ – this form of marketing is again reaching out to customers with the budget to buy more, and making them a highly targeted offer. This way, you can sometimes sell two products, rather than always selling a guaranteed one.

Payment Gateways

Payment gateways are important to your customers, because shoppers have doubt when buying anything online. Your payment gateway can reassure your customer that you are legitimate, or put them off entirely if you make the wrong choice. It can also determine whether your customer has a smooth checkout process, or it takes too long.

At the split second of purchase, these issues matter a great deal to your conversion rates, and so taking care when choosing how to handle payments is highly recommended.

There are two types of charges that can factor in when choosing your preferred gateway – sign up/service fees, and transaction fees. Some payment gateways require an upfront fee and/or a monthly flat fee to use, plus a transaction fee, usually a small percentage on each transaction.

Others are free to sign-up, but charge a transaction fee. Payment processing fees are a cost of doing business, so it’s important to think about cost comparisons carefully – small savings can make a big difference when multiplied over sizeable transaction volumes.

There are several natural choices most people opt for, and in reality these are the most familiar to consumers. Let’s look at a few of our favourites.


Paypal is trusted. Most people have a Paypal account, or have at least heard of Paypal, so they trust putting their money through it. For all the service isn’t necessarily the best seller experience, it is particularly buyer friendly, and this is the reason so many people persist with using it. Perhaps the major drawback with using Paypal is that it’s relatively expensive, with a 20p + 3.4% charge per transaction. Especially for smaller purchases, this can be a considerable cost.

Ultimately, Paypal gets used because customers like it. And the bottom line is that you’ve got to let the customers decide.

Paypal Pros 

  • Familiarity: Your customers are already familiar with Paypal. They trust the brand, and may even have an existing Paypal account themselves. This makes Paypal a front-runner for any ecommerce site, as at the very least one of several payment options available.
  • Existing Funds: Your customers may have existing funds within their Paypal account, which they are more likely to feel prepared to spend. Because Paypal is used so widely, this can have an upwards impact on your conversions.
  • Flexibility of International Payment: Ideal for receiving payments from buyers across the world, Paypal is a flexible solution in terms of serving local currencies and converting into your own base currency, saving you a number of common ecommerce headaches.

Paypal Cons

  • Expensive: Paypal isn’t exactly cheap, and depending on your set up you could be paying a monthly fee in addition to the flat and percentage portion of each transaction. These costs can seriously mount with volume, eroding your margins and making your job much more difficult.
  • Off-site: Paypal takes your customers off-site, through their own gateway in order to process the sale. This can have a negative impact on conversion rates, especially for larger online retailers who may prefer to make these marginal gains through retaining the sale on-site throughout.
  • Flow Issues: Paypal’s website has something of a retro feel to it, and it hasn’t been visually revamped to any great extent in years. For some sales, this could have a less than desirable effect on your conversions.


Would-be industry up-starts Stripe have become serious players, catering to merchants in a way that Paypal doesn’t. Stripe can be integrated within your ecommerce site directly, which means customers never actually leave your shop. With Paypal, they are routed through the Paypal website. On a large scale, even this incremental difference could detract from the desired consistency of your shopper’s experience through the payment process, which makes a solution like Stripe more applicable.

If it’s not a feature thing, ecommerce sites are choosing Stripe because is compatible with a wide range of payments, and much cheaper than Paypal in terms of transaction fees.

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Stripe Pros

  • Cheaper Than Paypal: Stripe is cheaper than Paypal for most transactions, which is enough reason in itself to make it a serious contender.
  • Easy To Integrate: As integrations go, Stripe is reasonably straightforward. However, if you aren’t technically minded, you’ll almost certainly need support to get Stripe functioning effectively on your website.
  • Keep Checkout On-Site: In a conversions business, sending your customers somewhere else to complete payment isn’t always desirable. With Stripe, customers are still on your site with your branding, so they can feel more certain during the checkout process.

Stripe Cons

  • Expensive for Debit Card Transactions: 2.4%+20p is expensive for debit transactions, and other payment providers do have cheaper costs for debit card (as opposed to credit card) purchases.
  • Requires Integration: While it’s easy enough to integrate, this is still a process that will require external assistance for most people, without the technical skills required to hook things up effectively
  • Email Only Support: For a mainstream payment processor like Stripe, this isn’t really good enough. Support comes only via email, and while their support function is quick, it’s not ideal to be waiting on an email response to often time-critical gateway issues.

Amazon Payments

Amazon Payments is another great payment processor you can use, bringing the trusted name and brand of Amazon to your checking out process. Most people who buy from you can just log-in to their Amazon account to pay, or will have little resistance to checking out through Amazon if they haven’t done so before. This can be a major asset in finally closing the deal, and converting as many nearly buyers into actual sales as possible.

Amazon is probably best used for those selling items over £20, because the per transaction fees can be very high for low-level transactions when compared to other payment processors.

Amazon Payments Pros

  • Strong Seller Protection: Amazon back up their sellers, and provided you play by the rules of the programme, you will be protected against common fraudulent activities in the course of your ecommerce business.
  • Convincer For Customers: Like Paypal, people know and trust the Amazon brand, and may even have their own Amazon account at present. This is perfect for convincing and reassuring during the checkout process, helping to prevent abandonments and lost sales.
  • All Compliance Handled: With Amazon Payments, there are no need to worry about additional compliance requirements or merchant accounts, all of which are handled by Amazon on your behalf.

Amazon Payments Cons

  • Maximum Purchase Levels (20 items): Staggeringly, Amazon Payments only allow 20 items to be purchased on a single transaction. For reasons unknown, this decision could have an impact on certain types of ecommerce businesses using Amazon Payments.
  • Same Costs as Paypal: Amazon Payments is benchmarked against Paypal in terms of its costs, which can quickly become a significant burden for ecommerce retailers. is feature heavy, but it comes at a price. If you want, you need to pay a $99 signup fee, plus $20 monthly to use the service, plus a $0.10 transaction charge. However, for merchants with particular, specialist requirements, these costs do make sense.

For example, has particularly advanced fraud protection features, which allow you to block certain known fraudulent IPs and to set filters for suspicious transactions and buying behaviour. Even filtering one or two fraudulent transactions can pay fees, so it’s easy to see how this could be a preferable option. is owned by Visa, so you know you are dealing with a serious company. You do need to implement the gateway yourself, but those selling in volume will already know if this is the best option. Pros

  • Good Support: support are on hand to help resolve any issues you experience along the way, with a responsive, helpful team at your disposal.
  • Low Transaction Fees: Once you get over the setup fees, the per transaction fees are much lower with relative to other payment processors, resulting in significant savings for volume sellers.
  • Integrates Well With Ecommerce Platforms: payment gateways are easy to integrate across different ecommerce platforms, and well supported through various ecommerce and shopping cart scripts. Cons

  • Requires Merchant Account: doesn’t come with a merchant account, and you will need to set this up separately before you can use the service. Merchant accounts can be a headache for ecommerce retailers to setup and maintain.
  • Requires Additional Compliance: Because of the structure of the service, you need to take care of additional compliance steps to stay legal.
  • Setup Fees: The setup fees for are a downside to bear in mind, although most ecommerce retailers can recoup these over time in terms of savings on the cost of per transaction fees.

Should You Force Sign Up To Checkout?

Some merchants force buyers to sign up, or to log-in before they are able to checkout their purchase. It is easy to understand the reasoning for this – by securing the sign-up, you get the chance to harvest important data, most pertinently the email address of your buyer, so you can pitch them offers in the future. But is this worth the potential implications on your conversion rates?

Any barrier to the checkout process is likely to have a negative effect on your conversion rates, reducing the numbers of those who will see the purchase through to its conclusion. Guest checkout is an absolute must if you want to optimise your web conversions. That doesn’t mean you have to lose out on all that valuable data – it’s about putting the customer experience at the core of your payment and checkout process, so it’s as easy as possible to give you money. Anything else can be collected after the event, in a way that doesn’t hinder your conversions like a forced signup.

Shoot For 1 Page Checkout

The optimum process for your checkout is to reduce the flow to one page. If ecommerce is a process of finding the most streamlined flow through your website, from first visit to successful purchase, a sharper 1 page checkout allows your buyers to get to the point of transaction much more quickly. Contrast this with checkout processes that require a signup, or a multiple stage process to get to the transactional stage. The quicker you can present the payment button to your buyer, the less likely they are to abandon, or to head elsewhere.

Reduce your checkout process to a single page wherever possible. Then start your CRO processes on that checkout page. This will deliver the strongest yield, in terms of driving your checkout rate upwards as you move to the optimum payment and checkout model.

Resources/Further Reading:

PCI Compliance

PCI compliance is an issue for any business accepting credit card payments. A set standard to which all merchants must benchmark, PCI compliance is about keeping card data secure and ensuring it is handled appropriately.

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There are a number of general principles to be adhered to in order to remain PCI compliant, which aim to:

  • Create and maintain secure networks
  • Protect sensitive cardholder information
  • Maintain vulnerability management programmes
  • Create robust access control measures
  • Monitor and testing networks regularly
  • Maintaining information security policies

PCI compliance may be handled for you if you use an external payment processor, for example, Paypal, where you are never in receipt of the sensitive cardholder data to which these standards relate. However, in any event it is worth checking that you are discharging your compliance obligations with your payment gateway, to avoid incurring fines from the payment processors directly.

Further reading:

HTTPS Security Certificates

If you are facilitating payments on-site, HTTPS security is a must-have. An HTTPS security certificate contains the key necessary to initiate a secure, encrypted browsing experience, which makes it significantly more difficult if not impossible to hack and decode the encrypted information being exchanged during the process.

HTTPS protects your buyers, your reputation and your conversion rate, by reassuring customers they are moving from the general, HTTP web into a more secure environment where they can share their card details without concern. Usually indicated by a padlock in the address bar, HTTPS encrypts the plain-text messages exchanged between server and browser, which might otherwise be open to hackers.

Further reading:

Virtually all e-commerce sites accept credit cards as their primary form of payment. To accept credit cards, you need a merchant account with a bank. A payment gateway is simply a service which connects your Web site with the bank. While there’s a bit more to it than that, in essence that’s all it is – a way to take payments online.

Typically, when a customer enters credit card details on your Web site, those details are sent to the payment gateway, which then does some hard work in the background and processes (or rejects) the transaction. It then tells your shopping cart whether the payment was accepted or rejected. All this happens in a few seconds while the customer is waiting. The money is then transferred to your bank account – when that happens depends on the terms of your service.

It’s a diverse industry and the description above is the most common scenario, but there are many variations on it.

There are three basic types of payment gateways. The first is an API (Application Programming Interface). This means that the customer never sees the payment gateway Web site – your shopping cart talks to it seamlessly in the background. This is generally the best option as it’s a transparent experience for the shopper, rather than being transferred to another site at the crucial moment of taking the money.

APIs sound a bit scary, but your shopping cart vendor should have done the hard work to support it, so there’s very little work for you, the shop owner, to do – see below for more. The only catch with this option is you’ll need a secure certificate installed on your server. These start at around $100 per year and work their way up quickly.

The second type is a third-party payment gateway. The customer starts the checkout process on your site, but completes payment on the payment gateway site. While this can be simpler to setup in some cases, the experience is unsettling for the customer, and you’ll probably lose a few sales. Some third-party payment gateways allow you to customize the page design.

There are also integrated payment gateways. In this scenario, you don’t need a merchant account from your bank – the payment gateway does everything for you. For start-up businesses, this can be an easy start. Generally the fees are higher for an integrated service, but the trade-off is simplicity for the shop owner. The best known integrated gateways are PayPal and 2Checkout.

How to Choose a Payment Gateway?

The first thing you need to know about a gateway is whether your shopping cart supports it. Unless you want to do some programming, you need to check for support. Most shopping carts support at least a dozen gateways, so check the list on your shopping cart vendor’s Web site.

Different payment gateways support different features. The most common features that you might need include:

  • Fraud detection: If your business is susceptible to a lot of fraudulent transactions (for example, you sell digital goods or mobile phones) then you should ensure your chosen gateway has fraud detection technology. You may pay a little extra for this, but it could be worth it. A shop selling women’s fashion will have far fewer fraud problems, so the extra cost (if there is one) may not be worth while. Additionally, if your business is classed as “high risk” – especially adult sites – many gateways won’t take your business.
  • Virtual terminal: This is a place where you can log in and manually process transactions among other things. For example, if you do phone orders, a virtual terminal may be important.
  • Recurring fees: If you have a service that takes regular payments – a monthly subscription for example – make sure your gateway supports this.
  • Fees: Of course, the fees the payment gateway charge are important. Be careful as there are a range of fees, and some services can get pretty imaginative on how to charge you. Fees might include a setup fee, monthly/yearly fee, fee per transaction (fixed or percentage), withdrawal fees (getting charged to get paid – amazing!), chargeback fees (these can add up quickly), fraud detection fees and possibly more. You’ll need to have an estimated number of transactions per month before you start to work out the best service for you.
  • There are many other issues to consider, such as accepting foreign currency, so you need to look at your individual requirements.

 Setting up a Gateway

Generally, setting up a payment gateway is easy. When you sign up, they’ll usually give you a customer ID, API key or similar. You go into your shopping cart, choose the payment gateway you’ve signed up for, and enter the details provided. That’s it!

There’s usually a “test mode”. This means the shopping cart will be integrated with the payment gateway, and will talk to it, but won’t actually process the transaction. Sometimes they have a special credit card number for test mode (Visa card 4111 1111 1111 1111 is a popular one) – check with your payment gateway for more details.

Choosing a payment gateway can be tricky. But apart from sign-up fees (which can often be waived if you ask nicely), it’s not too hard to switch to another if your service isn’t performing well. With easy integration and low barriers to switching, it’s a buyer’s market out there.