Merchant Account Services

Six Payment Gateways Reviewed

Offerings from Authorize.net, Verisign, Plug 'n Pay, and LinkPoint are compared.

 

Author: John Conde ()

Rating: 10.2

Pages: 1|2|3|4|5|6

So you're starting your own ecommerce Website? Good for you! But you have many decisions to make. Do you write your own shopping cart or use an existing one? Who should be your merchant account provider? Who will deliver your goods? With so many decisions, you hardly have time to sort through all the information you'll need to know in order to make the best choice for your business.

One of the most important decisions you'll face is to choose a gateway to handle your credit card payments. The well-known Authorize.net may spring to mind, but is it really the best option for your business? In this article, we'll take an in-depth look at some of the popular gateways and explore the ins and outs of the services they provide.

What is a Gateway?

In short, a gateway connects your ecommerce Website to your merchant account.

The gateway facilitates online payments by connecting your secure order form with your specific merchant account at a processing bank. The gateway takes the submitted form data and presents it to the processing bank. When it receives a response from the bank, it presents that return data to the site of origin for appropriate handling.

The gateway itself doesn't provide ecommerce features such as shopping carts, Web hosting, or merchant accounts, although, as you'll see, many larger gateway providers do offer additional services like these.

Criteria for Comparison

Before we can compare gateways, we must decide on the criteria we'll use. To keep this assessment relevant and concise, I'll limit my comparison to three factors:

  1. Available features
  2. Cost
  3. Reliability

One of the greatest concerns for all parties involved in an ecommerce transaction is security. Not only is your sensitive information kept on file, but your customers' personal information passes through your gateway every day. This information is of considerable value to hackers, so it must be protected. So, when you choose a gateway provider, you must be confident that security is the provider's number one priority.

That said, this review won't assess the security offered by the various gateway providers we consider. All the gateway providers we'll consider house their operations in state-of-the-art datacenters, and use the latest security methods to keep data safe.

The gateways we'll review are fully compliant with the security initiatives put forward by the major credit card providers, including the Visa Cardholder Information Security Program (CISP), MasterCard Site Data Protection (SDP), and Discover Information Security and Compliance (DISC). If you decide to user a lesser-known gateway provider, you should verify that the service is compliant with all those initiatives. If it's not, you could end up paying higher fees, having your account closed, and possibly having your organization added to The Match File, a credit card processing blacklist.

Features

Most online merchants don't realize that their gateway may offer many more features than the ability to accept credit cards through an online form. The truth is that most gateway providers offer value-added features that either make the merchant's life easier, or help to increase your revenue streams. Here are some of the more common features.

Virtual Terminal

Let's say you receive a call from a customer who has questions about a product on your Website. You answer her questions adequately, and she decides she wants to purchase the product. Do you tell her to go back to your site to place their order? Well, you can. But why risk that customer never completing her purchase, when you can take her order right there, over the phone? You can process the customer's credit card payment on the spot, using a virtual terminal!

A virtual terminal is a Web form that's accessible to the merchant, and allows you to enter credit card payments manually. It can also be used to issue returns and void previous transactions.

Fraud Prevention

Fraud prevention tools are probably the most important, yet under-utilized, feature offered by the major gateways. Merchants whose stores have been online for over six months will have been introduced to chargebacks, and will probably have first-hand experience of their negative effects. One of the main causes of chargebacks for online transactions is fraud. Utilizing the fraud prevention tools offered by your gateway provider will allow you to spend less time dealing with chargebacks, and more time making sales and promoting your business.

The gateways discussed here support the basic fraud prevention tools. These include Address Verification (AVS), which compares the customer's delivery address with the address that the card-issuing bank has on file, and CVV2, the three-digit security number that appears on the back of VISA, MasterCard, and Discover Card credit cards (a four-digit number on the front of American Express cards).

Recurring Billing

Merchants who charge their customers on a periodic basis will find the recurring billing feature offered by many gateways a big time-saver. Using recurring billing, you can simply provide your gateway with billing information, and tell it how often to charge the customer -- the gateway takes care of the rest. There's no more keying information into a piece of software or credit card terminal every month! This feature is great for subscription and membership based businesses.

eCheck Processing

Although credit cards are, by far, the most popular way to pay online, other payment options shouldn't be ignored. After all, your goal is to make it as easy as possible for customers to part with their money. Electronic checks (eChecks) are an increasingly popular payment method that allows customers simply to enter their banking information, rather than physically send a check by mail.

Integration

Though it's perhaps not a true "feature," integration is still worth considering when you're choosing a gateway. Should you make your checkout process completely transparent to customers? Are you a programming "newbie" who wants a simple set-up that you know will work? Or are you waiting to switch to a more advanced set-up when you have the time and experience? Having the option to choose the integration method without incurring any extra costs can help you avoid headaches during the setup process, and as you manage your business's growth in later months.

Cost

As with any merchant account service, fees are associated with using the gateway -- fees that are separate from those billed by your merchant account provider. Luckily, gateway provider's fees are a fairly standard, which makes comparison easy. These are the most significant:

  • Setup fees: These fees are charged when you first establish your gateway (before it's built), and are generally non-refundable. These costs may vary from hundreds of dollars to absolutely nothing.
  • Monthly fees: As with most merchant account services, gateway providers charge a monthly fee for their service. This fee is usually independent of monthly processing volume.
  • Transaction fees: Most providers charge for every transaction they process, regardless of whether the transaction has been approved or declined.
  • Additional Features: Generally, gateways charge for any additional features you might decide to use. Charges may include set-up fees, monthly fees, and transaction fees that are separate from the standard charges above.

Reliability

On the Web, it seems that one second equals an eternity. Every online merchant knows that if they can't process a transaction when their customer's ready to buy, the sale is lost. Why would customers wait around for a problem to be resolved when they can go to a competitor's site and make their purchases right now? The last thing you want is a third party service failing when you need it most. Your gateway must be up and running 24-7.

The Gateways

So, now you know what to look for in a gateway. Many providers will vie for your attention: who will you consider?

I've researched some of the more popular gateways; I'll break down their features, costs, strengths and weaknesses. Here are the contenders:

Some of these gateways offer different features -- charge different prices -- depending on which method of integration you choose to use. I've listed each of these offerings separately, classifying each as its own, unique product for the sake of easier comparison.

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