Comparison of Payment Software

Payment Gateways: In our comparison, you'll find the best payment gateways – get more important information here

Payment Gateways, also known as Zahlungs-Gateways, Payment Providers, or simply payment solutions or payment systems, handle the processing of all types of online payment transactions. Fundamentally, these are software applications that process transactions automatically. Put simply, Payment Gateways create the finance-specific link between customers, payment service providers, online shops - or other web presences where payments play a central role - and banks.

Popular software for payment processing:

• Klarna

• PayPal

• Stripe Payments

• Amazon Pay

• Apple Pay

• Klarna Sofort (formerly Sofortüberweisung)

• Google Pay

• PAYONE

• Mollie

• Adyen

The basic qualities of good Payment Gateways:

• They can be easily integrated into existing specialized e-commerce solutions or other web presences.
• They reliably handle payments from customers via credit cards, e-wallets, like PayPal, digital transfers, like Klarna, and/or other forms of online transactions.
• They establish a direct connection between (e-commerce) websites, one or even several payment services, customers, and their banks.
• Sensitive customer data and payment processes themselves are sufficiently encrypted when processed by Payment Gateways.

What exactly are Payment Gateways and how do they work?

Payment Gateways simplify transactions by automatically processing relevant procedures and information between online shops, their customers, and the associated banks. Payment Gateways handle the complete processing and authorization of payments for online retailers, other e-business companies or also enterprises selling online and offline. A typical process - described in simple terms - goes as follows.

1. Order: At the beginning there is an order placed by the customer. At this point, there should already be sufficient encryption (SSL), which is not initially guaranteed by the Payment Gateway, but by the website operator.
2. Payment: The payment gateway now collects the data of the following payment directly from the customer's browser. The retailer's systems are completely bypassed. This benefits the e-commercer by reducing compliance obligations, without having to divert the customer from the online shop. The encryption is taken over by the Payment Gateway at this point.
3. Transaction initiation: The data is now processed by the Payment Gateway and forwarded to the retailer's bank. For example, in the case of a credit card payment, the transaction information is transmitted to the card companies, such as Mastercard, Visa or American Express. Normally, the company then forwards the transaction to the correct customer's bank, which issued the card.
4. Authorization: The customer's bank receives an authorization request. Afterwards, the available credit or direct debit is checked and a response with a code is sent back to the Payment Gateway. The code confirms the payment or describes why the transaction may have failed.
5. Authorization notification: After the Payment Gateway has received the response, it is forwarded to the online shop - or to the retailer and the cardholder. Up to this point, it only takes a few seconds.
6. Transaction: The retailer then fulfills the order. There is again communication between the gateway, payment service provider and bank - this time, however, to complete the authorization by executing the transaction.

The entire process from the approval to the actual transaction usually takes about three days. The Payment Gateway is exactly what the name suggests - a portal or gate, which transmits the personal information of the customer via a secure channel to the payment service provider or ultimately to the retailer's bank.

Why are the right Payment Gateways so crucial for digital success?

Regardless of whether the business focus is 100 percent on e-commerce or as part of a multichannel strategy additionally the opening of an online shop is to be initiated – corresponding companies are fundamentally faced with the great challenge of making their online business as profitable as possible in the face of steadily growing competition. Maximizing success involves several factors. According to numerous studies, one of the most important is implementing payment methods that are suitable for the specific target group. Current findings show that more than 70 percent of buyers even abort their purchase if their preferred payment system is not offered. As a result, shopping cart abandonments accumulate. This means that a customer has already decided on a product and is ready to buy it, but then still drops out before the last step of the transaction. Such a drop-out is of course highly annoying and must be avoided at all costs. However, it is hardly a good plan to arbitrarily implement as many payment methods as possible. However, exactly those services should be available that the own target group mainly uses. Furthermore, it is very important to ensure the easiest possible handling for them. And that's exactly what online shop operators achieve by using Payment Gateways. These often combine several payment service providers and offer buyers quick, smooth payments.

What are the key benefits of Payment Gateways for e-commerce customers?

One significant advantage of Payment Gateways was already indirectly addressed in the last section: They offer customers the opportunity to make payments for a purchased product or service quickly, safely and using precisely the method they prefer. This allows retailers to secure market advantages or be competitively active online. In addition, the offering of reputable payment service providers, such as PayPal or Apple Pay, is a clear indication of seriousness for customers. This means - put simply - that, for example, online shops that have PayPal in their portfolio enjoy a generally high level of trust and are therefore preferentially used. By choosing the right Payment Gateway with the right payment options, retailers practically have the ability to tap into entirely new target groups. Even the mere offering leaves an impression of seriousness in some cases and thus strengthens branding. For companies, Payment Gateways - especially those that combine several payment services - also simplify the overview of all transactions. Generally, such solutions offer greatly reduced workload. Responsible for this are especially the many completely automated processes. For example, reminders are also sent without further action when needed.

What specifically should you look out for when choosing a Payment Gateway?

Good Payment Gateways always come with some basic prerequisites and functions or should at least do so. These include, among other things, sufficient encryption and easy handling by shop operators as well as end customers. However, there are also features that not every provider has in its portfolio. We can't describe in detail here how the features of individual Payment Gateways from our comparison are compiled. However, we would like to give you a compact overview of the features you as a shop operator should definitely pay attention to.

Security

Security is an integral part of all Payment Gateways. When making online payments, many sensitive data are transmitted and these must be protected from criminals at all costs. There are a number of rules and security standards. The good news: Payment Gateways usually fully comply and very meticulously observe these standards, otherwise they would not be allowed to process payments at all.

Payment options

In terms of payment options, there are more pronounced differences than with security standards. Some Payment Gateways specialize in one service or only offer their own payment method, while others combine several options. If preferred payment methods of each target group are missing, this can lead to increasing abandonments. A webshop operator knows the own customers or their preferred payment options and should definitely make sure to offer these.

Accessibility

Ideally, online shop operators also offer people with visual impairments smooth shopping - not only when paying. But Payment Gateways should also generally be as accessible as possible. That means, there shouldn't be any problems with the payment processing process. A checkout that hangs or unreliable payment processing always casts a very bad light on the respective company and also leads to abandonments.

Costs

The fees for Payment Gateways differ in terms of setup, monthly fixed costs and/or payments per transaction. The latter are often variable and dependent on total turnover. A free setup and/or waiver of fixed fees are often enabled by higher transaction costs. It is generally assured: Good Payment Gateways can hardly be offered for free. Alone the numerous measures that such service providers must continuously carry out for the safety of their customers and ultimately also of their customers' customers require the investment of enormous sums that of course need to be regained.

Fraud Prevention

Fraud prevention measures are indeed very important, as criminal operations of this nature are unfortunately not uncommon in online commerce. Credit card fraud leads the way. Therefore, many Payment Gateways offer specific fraud prevention features, such as Address Verification System (AVS) or Card Validation Code (CVC).

Recurring Payments

Subscriptions in e-commerce are useful in many contexts and are a fixed part of this form of commerce. Therefore, Payment Gateways often offer options for processing recurring payments based on a subscription.

History

Even across different payment options, the entire payment history should be centrally stored. This way, it is easy to trace back for future operations, such as taxes, or to use it in other ways.

Blacklisting

In connection with considerable fraud rates and generally with the smooth operation of an online shop, the option of blacklisting certain customers is very useful. Here, payment evaders or other problem buyers can be excluded manually or automatically for future business transactions, among other things.