What is an Online Payment Gateway? And How Does it Work?

Understand what an online payment gateway is and the factors you should consider before getting one.

An online payment gateway allows a business to collect digital payments through their website or mobile application. It is estimated that in 2019, nearly 1.92 billion buyers purchased goods or services online through eCommerce and online stores. A payment gateway represents the bridge through which customers can purchase online goods from anywhere in the world.


Moreover, eCommerce has become one of the most popular mediums for large and Small Medium Enterprises (SMEs) to provide their services. Retail purchases from eCommerce websites are expected to reach 22% in 2023. While online payments have become a common parameter in eCommerce stores, they are no longer restricted to credit and debit cards. Payment gateways now integrate a multitude of features as well as options including UPI, netbanking, wallets, and more so as to optimize user-experience.


In this article, we explore the basics of an online payment gateway, its integration, benefits, and requirements so as to enable a smooth experience for customers and enterprises.


What is Online Payment Gateway?

An online payment gateway functions as the technology that transfers financial data from customers to the enterprise or merchant. Payment gateway integration verifies customer’s financial details and transfers funds to the merchant’s bank account. It also encrypts the private financial data of customers and ensures that the transaction is secure.


It acts as an intermediary between a merchant and its customers. Along with securing the sensitive details of a customer, the technology ensures that the financial data gets successfully transferred between entities. Integrating a well-performing payment gateway allows merchants or enterprise to expand their business overseas, increase brand credibility, provide an optimized customer experience, and further streamline financial payments.


How to Integrate with the Right Online Payment Gateway?


Online payment gateway

A payment gateway has become a vital integration for online stores, eCommerce websites, and marketplaces to expand its business operations across the globe. Additionally, these fintech innovations are no longer restricted to large enterprises or global marketplaces. These payment systems can also be leveraged by a freelancer seeking to provide services or a small enterprise offering its products to various different regions.


A payment gateway further allows stakeholders to expand their sales on an international platform. The payment gateway acts as the middlemen for websites and global customers to interact with each other. It is important to choose the right system that facilitates a seamless experience for merchants as well as their customers. Here are some of the considerations whilst choosing a payment gateway that meets your business needs:

  • Security - Transactions conducted through the payment gateway need to be completely secure with advanced technology so as to mitigate the risks of hacking attacks. Further, the payment system also needs to ensure the safety of the private and financial data of its customers.

  • User-friendly - The right system facilitates easy integration to your website and mobile app through different methods. Also, it should provide swift payment processing which is convenient so as to provide an optimized user-experience to your customers.

  • Onboarding - A payment gateway should provide quick and easy onboarding of merchants so that they can start accessing it without any hassles.

  • Global Payments - One of the vital requirements is that the system supports multi-currency transactions so that you can cater to a global audience.

  • Payment Options - The current infrastructure of payments incorporate wallets, netbanking, UPI, and countless other payment options. The right payment gateway needs to facilitate a multitude of options for customers.


XanPay: Best Online Payment Gateway in Asia

XanPay is your tool for expanding your business opportunities on a global scale without any hassles, all the while providing the best services to your customers. Its unique C2C routing technology enables easy processing of cross-border transactions in a much more efficient and affordable way. Moreover, we leverage our network of digital currency liquidity providers to enable payments between payment service providers (PSP), merchants, and their customers.


XanPay: Best Payment gateway


The wide network of XanPay integrates more than 10 payment methods which further ensures a convenient and faster way to process transactions. By providing our services in more than 10 countries including Singapore, Malaysia, Japan, Hong Kong, Korea, Australia, New Zealand, and more, we strive to connect more than half of the global population to a single stack of software.

  • Onboarding - Simple process with fewer requirements which can be completed within 3 days. In comparison, traditional financial institutions like banks and big payment gateway companies takes between 7 to 14 days to onbard a merchant

  • Local Payment Methods - With a single integration, merchants get over 10 payment solutions. Their customer can pay using local currencies via methods such as PayNow in Singapore, GoPay in Indonesia, UPI in India and FPS in Hong Kong

  • Integration - XanPay offers an easy way to integrate the payment gateway through three different methods so that merchants can provide an optimized user experience.

  • Competitively low fees - Pride on transparent fee structure, XanPay is on a mission to serve brands who had difficulty in getting financial access. See below for a quick guide:

Transparent fee structure

XanPay

Other Payment Gateways (Traditional FIs, credit card payment gateways)

Initial cost

0% set up fee

0% annual fee

Fixed set up fee

Fixed annual fee

Currency conversion cost

0% currency conversion fee

1-2%

FX rate

Mid-market rate

Determined by respective credit card schemes

Transaction cost locally

0.60%

1.5-3%

Transaction cost overseas

1.99%

3-5%

Payment methods

Affordable local payment methods

International credit card networks, financial institutions and its intermediaries

Furthermore, XanPay facilitates cross-border transactions with a lower transaction fee. Payment service providers charge as high as 6.8% to businesses engaging in cross border transactions. XanPay charges a transaction fee of 1.99% flat without any additional charges.



Bottom Line

Payment systems have become an integral part of the overall customer experience. In essence, they extend far beyond an experience. From allowing you to scale your business globally to reduce your overall expenses, payment gateway plays a vital role. It becomes imperative to select a payment gateway that successfully meets your needs.