The digital era is teeming with endless possibilities for online businesses. One such emerging sector to go toe to toe with eCommerce platforms is payment gateways. The demand for digital payments is increasing with each passing year. According to the research made by Finaria, the digital payment market would rise to 6.6$ trillion by 2021. The statistic clearly indicates how much potential payment gateways hold in store in the digital era. But why is this so? Let us try to understand it thoroughly.
Table of Contents
What is a Payment Gateway?
A payment gateway is the middle link that helps the customer and merchant connect their bank accounts via monetary transactions. To make things simple, when you purchase a product from an online store, you have to make a payment for it. The page you are redirected to for payment is the payment gateway. The role of the payment gateway is to authenticate and safely transfer the customer’s banking information to the payment processor. Once the payment processor confirms with the customer’s issuing bank account, it reverts the information to the payment gateway who then notifies the merchant and the customer for the completion of the transaction.
With payment gateways, merchants can safely receive payments from customers for online shopping and services.
The Digital Era
Ever since the Covid pandemic, the mode of operation for many businesses has shifted to the online medium. While this radical shift might seem not to have been a voluntary decision, one cannot deny the already emerging trend of online businesses. Companies like Amazon and eBay have only made their names through the online channel. What the pandemic did is that it gave impetus to many commercial platforms to give the online medium a shot. And it seems to work out pretty well. Now things have reached such a height that online shopping and services have become an everyday phenomenon.
Payment Gateway in Digital Era
When purchasing goods and services online, you cannot do without making online payments. And this is where payment gateways come to the scene. With increasing online transactions taking place every day, payment gateways provide both security and proper management between customers and merchants. From a merchant’s perspective, there are several advantages that a payment gateway can provide in this digital era. Some of them are as follows:
Keeping Up with the Trend
The digital era moves at a rapid pace. Technological innovations are taking place almost every day. It can become extremely challenging to cope with this rapid progress, especially for a small enterprise. But suppose you have subscribed to the services of a payment gateway. In that case, the gateway will easily handle the transactions department and the new innovations taking place there. As a merchant, you will not have to worry about it.
Digital technology is gradually becoming the primary mode of operation for businesses.
Multiple Payment Sources
When digital payments have become so common, different UPI and wallet services have cropped up in a matter of a few years. If you are handling payment manually, keeping up with all these payment methods might be a bit challenging for you. But payment gateways have taken care of that. They not only accept payment from different sources but also accept international currencies. So, no matter from what source the customers are paying, your payment gateway will handle all of that.
Improvement in Abandonment Rate
According to recent statistics, the average abandonment rate in online shopping carts is around 70%. Among this number, approximately 28% of people stated that they did so for the lag in the performance of the payment gateway. But as payment gateways are now coming up with advanced features, we can witness a reduction in the abandonment rate at online stores. This is a clear indication that businesses can soar overnight with the right payment gateway.
Frauds can take place anywhere, and it is quite common to see them on the internet. Those who are not tech-savvy can easily put their foot down when it comes to making payments online. But payment gateways give assurance to the customers to engage with eCommerce platforms freely. The security of the transactions rests in the hand of the payment gateway, and they make sure the money and banking information of the customer and the merchant remain inaccessible to third parties. For this, gateways use encryption technology. The latest security features include biometric and two-factor authentication that makes transactions even more protected. Security is quite an important aspect for online businesses, which makes payment gateways indispensable to them.
Businesses that maintain a strong cash flow can benefit from payment gateways. When merchants use traditional payments, it takes at least 2-3 business days for the payment to enter the merchant’s bank account. On the other hand, with a payment gateway at your side, you can receive a payment pretty fast and use the money for further inputs in the business. If the payment is made via UPI or online wallets, the speed would be even faster. This way, payment gateways help you maintain a strong cash flow that traditional payment methods cannot provide on their own.
In a company, salaried employees are paid on a monthly basis. Getting paid on the given date keeps the employees happy and encourages them to work dedicatedly. However, sending them money manually each month is a long and tedious process. But with the feature of recurring payments in the payment gateway, you will not have to go through this process again and again. All you have to do is set the payment period, the amount, and the details of the person you will be sending the money to. The payment gateway will disburse the salary automatically in the stipulated month.
As it is evident, payment gateways give the digital industry and eCommerce platforms the push that would drive them even further. But a good part of it depends on what payment gateway you are using. There are many of them out there, but not all of them are as well-equipped as some of the top players are. So, make sure to go for the payment gateway that you can rely on from all ends.