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Payment gateways explained

2 March - 4 min read

What is a payment gateway, and why your business needs one?

Businesses that sell online need a payment gateway to accept online payments. As the infrastructure that ensures all your payments occur seamlessly in the background, it’s important that you understand what payment gateway providers are available and how this integrates with the rest of your business. Whether you’re a product or service-based business, creating a great experience for your customers is critical. Accepting payment online is a key part of attracting and retaining customers, which ultimately leads to growth.

Defining payment gateways

Put simply, a payment gateway is the technology which securely facilitates the transfer of information during the payment process between your business and your customer.

It is used to authorise credit cards and other online payments which ensures payments are accurate and all of the necessary information is exchanged correctly to successfully process the order. 

How a Payment Gateway works
Who are the main payment gateway providers?

There is a range of payment gateway providers that allow businesses to accept payment online. If you sell to international customers, make sure you select a provider that can facilitate multi-currency payments and interface in different languages. Some of the key payment gateway providers include PayPal, Worldpay, Sage Pay, Braintree, Stripe and Amazon Pay. Our solution, Spenda is a fully integrated solution with real-time stock control and a secure payment gateway. 

What are payment gateway fees?

Payment gateway fees depend on the provider. The typical charges you can expect are the set up fee, annual fee and transaction fees. The transaction fees are ongoing and typically charged as a percentage of the total transaction value, along with a small fee for card payments (usually between 20 cents and 75 cents, depending on the provider. Make sure you check what fees different payment gateway providers charge before you choose one. 

How to accept online payments

There are three key components that you need to accept payments online:

  • A payment processor – the company that processes credit card payments between the customer’s credit card to your bank account and the customer’s bank account.
  • Merchant account – A bank account that allows businesses to make and accept a range of payments, including credit card and other electronic payments.
  • Payment gateway – The ‘bridge’ that connects a payment processor, merchant account and credit card companies.
A business needs all three of the above components to accept online payments.
What’s the difference between a payment gateway and a merchant account?

A merchant account is the business bank account specifically designated for making and accepting payments. The payment gateway facilitates payment to this account. You won’t be able to accept online payments without a payment gateway. With an integrated solution, you have access to a range of backend infrastructure in one place. This solution will also allow you to manage everything on a single platform while syncing with other systems such as your accounting software.

How to choose the best payment gateway for your business

Each provider has different features, and you’ll need to decide what’s important to you in a payment gateway provider. Fees will be an important part of your decision-making process, particularly for businesses that process a large volume of transactions. Choosing a provider that offers an integrated solution can also be an efficient way of improving how you sell online, including managing other parts of your business, such as stock levels and your suppliers.

Accept online payments with Spenda

Our payment gateway offers an integrated solution for businesses that want to sell online. Enjoy the efficiency of setting up your e-commerce store, managing stock levels and accepting payments online all in one intuitive and safe platform. With some of the lowest blended rates in Australia, along with a range of other tools and programs to power your business, Spenda will improve the way you sell online.

Click here to get in touch and learn more about our payment gateway integration to easily accept online payments.

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