What are payment gateways and which should you use for your ecommerce business?

Many people who want to set up an ecommerce business struggle to decide which payment gateways to use and which would best fit their e-store. It is true that online payments and payment gateways can be daunting, especially if it is the first time you have ventured into the world of ecommerce.

There are several payment gateways available and it can be difficult to decide which ones to go for. In this article, we hope to talk you through the decision and simplify it for you. Then you’ll be able to select the perfect online payment options for you ecomm business easily.

Ready to find out more? Let’s dive in. 

What is a payment gateway?

A payment gateway acts as the midpoint between your e-store and the processor which receives a payment from your customer. When someone inputs their payment details on your website, the payment gateway passes that information on to the processor in a secure fashion.

A payment gateway authorises a payment and ensures that the data a customer provides is sufficiently detailed to finalise payment. It encrypts sensitive information like credit card information so that the process of sending that information and any other private data to the processor, is safe and secure.    

By sending that information to the payment processor and then sending details of the transaction back to your website, it allows your ecommerce website to function seamlessly. Having a payment gateway is essential for your ecomm business, as it serves as the link between your product sales and your customers.

How do payment gateways work?

As the owner of an e-store, you don’t need to know the mechanics of how payment gateways work. All you need to do is select a gateway and integrate it with your e-store. You can usually do this through an easy to use setup wizard. When you’ve done that, you can let it work and collect payments from your customers.  For those of you who are interested, though, here is a quick summary of how payment gateways work. 

Someone places an order on your online store. They go to the checkout and enter their credit card information and details. The gateway encrypts this information and transfers it to the payment processor, safely and securely. Then the customer is directed to the payment processor. The processor guides the customer to complete their payment and verify it. It tells the customer whether the verification process has been successful. If so, the customer is returned to your ecommerce store.

Thus, the job of a payment gateway is to facilitate communication between your customers and the payment processor.

How to pick a payment gateway?

When choosing a payment gateway, you first need to ask yourself some important questions. Let’s address them each in turn.

Is the gateway you’re considering supported by your ecommerce platform?

Depending on which ecommerce platform your store runs on, you will have some gateways available to you and not others. Almost all ecommerce platforms support PayPal, Amazon Pay, Stripe and Square, as well as Autheotize.Net. Most platforms use more than one of these gateways. SimpleShop, for example, supports PayPay and Stripe. In fact, it is so easy to integrate SimpleShop with Stripe you don’t even need to have a merchant account. You can check which payment gateways are supported by your ecomm platform by checking that platform’s documentation or extension catalogue and referring to the payments section. 

Do you want your customers to be able to enter their payment details directly onto your website?

There are three ways you can take payment information from a customer:

  • Using a payment form on your site with details sent to your server- The best checkout experience from the point of view of your customers is to enter their payment details into a form on your site. This has the disadvantage of being the least secure way of processing payments, so unless you’re hugely successful you won’t want to go for this option.  
  • iFrame or redirect – You can put a checkout form in a secure iFrame on a page on your site, which will redirect customers to a hosted outside payment page. This may not be easy to match to the rest of your website but it is a very secure process.

Payment form on your site, with the details, sent from the browser through a secure payment gateway – This is how most payment gateways operate. Using Stripe, for instance, lets your customers type their payment details into a form on your site. The data is then encrypted and taken via a secure channel to Stripe’s server. This is more secure than if details are sent to your server and provides customers with a smooth, easy checkout experience.

Would you like to deal with the same company as your payment gateway and payment processor?

Payment gateways and payment processors are two different things. You need both in order to allow customers to buy anything from your e-store. Therefore, finding a company that can provide you with a gateway and deal with payment processing is ideal. Stripe and PayPal provide both, which makes integration with your online shop much easier. If you choose to use a company who just provides a gateway, you will need your own merchant account. SimpleShop supports both PayPal and Stripe, making integration super easy. The transaction fees when using combined services tend to be a bit higher, however (please note: SimpleShop itself does not and will never take any fees on your sales).

Will you need to use more than one payment gateway?

You can have more than one payment gateway on your ecommerce website. In fact, it is actually a good idea to give your customer more than one payment gateway to choose from, so that they can use whichever they prefer. If you don’t provide your customers with their favourite gateway, they are unlikely to buy from you. The most popular gateway is PayPal. This payment gateways also enables you to sell products internationally.

What are the fees for transactions?

Merchant accounts and payment gateways charge different fees for their services. These can include monthly fees or fees per transaction. Some may charge variable fees based on a percentage of the amount paid. Extra fees may be incurred for things like payments from international cards and chargebacks etc.

Always double-check that you know the fees incurred when using a particular gateway before you use it long-term.

Is there minimum contract length you have to commit to?

Another thing you must remember to check is whether you will be locked into long contracts of up to two years or longer. This can be annoying if you discover a problem with your provider not long after signing up, or if you’re not happy with the services provided.

Ensure you understand exactly what you’re signing up for and that you know about the rules and regulation before you do so.

Is the payment gateway a reputable company, have you read their reviews?

Regardless of which payment gateway you pick, you will always find some negative reviews of your chosen gateway. This can make it hard to access whether it is a reputable company. There are two main reasons for the presence of negative reviews:

  • Payment gateways deal with millions of payments each year– It is therefore inevitable that some of those payments will fail.
  • People tend to talk more and leave reviews more often if they are unhappy with a service.

Nonetheless, you’ll want to search for a payment gateway with a good reputation. If you’re unsure, go for a large payment gateway that’s been in the market for a while.

What features are you specifically going to need for your online shop?

Not all payment gateways are the same. Some can do more than others. Sometimes you might need a gateway that’s able to do more than just process one-off payments. Will you need to charge recurring payments? Do you want to play the part of the marketplace and take payments on behalf of sellers listing products on your website?

Ensure that the payment gateway you select has the functionality and features you need.

Does the payment gateway support your target audiences’ typical payment methods?

There are a huge number of online payment methods used around the world, ranging from well-known cards like Visa and MasterCard, to niche payment methods used in just a few countries.

Different payment gateways support different payment methods. Research which payment methods your target audience like to use and choose your payment gateway(s) accordingly. If you don’t let customers use their preferred payment methods you’re likely to use their custom. 

It’s a good idea to look at your competitors’ websites to check what payment methods they offer.

Is your ecommerce niche classed as “high risk”?

Check to see if your business is considered by payment gateways to be high risk. Businesses thought to be high-risk include, but are not limited to:

  • Tobacco
  • Travel
  • Debt Collection
  • Gambling
  • Adult content

If your business operates in one of these industries, you’ll need to find a provider who specializes in so-called ‘high-risk’ payment processing.

Now we know what to look out for when you search for a payment gateway to use for our ecomm business, let’s take a closer look at two payment gateways SimpleShop integrates with.


PayPal is the best-known payment solution out there. It is a combined gateway and payment processor that everyone, not just businesses, can use. Therefore, it is a must-have for your ecommerce store. It’s a single solution which enables you to sell your products to everyone. 

There are different accounts on offer from PayPal.

  • PayPal Payments Standard– With this option, a customer places an order on your site, customises it and then gets directed to PayPal to make the payment.
  • PayPal Express Checkout- With this flavour of PayPal, people immediately get redirected to PayPal to authorise a payment, but don’t complete the process there. Instead, people will be able to come back to your e-store and customise their order and then be charged without having to leave your site again.
  • PayPal Payments Pro- Using this option, you, the business owner, can customise the entire checkout process. Your customer remains on your website the whole time. This option is currently only available in a few countries.

There are some obvious advantages to using PayPal. You can use it to send invoices and you don’t need your own merchant account to use it. You also get advanced fraud protection and can withdraw money quickly and easily into your bank.

PayPal charges 2.9% of the purchase price, plus an extra 30 cents per traction if you have a standard account. The charge also applies if you have a PayPal Express account. If you have a PayPal Payments Pro account you have to pay this fee, plus $30 a month. 


Stripe has been a popular payment gateway for the last few years. There is a clear fee structure and it has good integration with all main ecommerce systems. It’s also easy to use, which serves to make your customers happy.  You can fine-tune Stripe for use in your business so that it fits perfectly with the way your business operates. You can deal with one-off payments, charge customers on a recurring basis and even deal with payments made in-person. Furthermore, you have the ability to set up a marketplace. It also offers excellent security in terms of the transactions made. All data is encrypted and processed via secure channels. Stripe operates in over 30 countries, has PCI DSS Level 1 certification and works with over 135 currencies. Additionally, it is super easy to integrate with many different ecommerce platforms, including SimpleShop and is PSD2 and Strong Customer Authentication (SCA) compliant in the EU. If that were not enough, it provides you with first-rate 24/7 support via email, chat and telephone.

Its standard charge is 2.9% of the purchase price, plus 30 cents. An additional 1% is charged when an international card is used.


So there you have it, a guide to choosing payment gateways for your own ecommerce business. Today, we’ve explained what a payment gateway actually is and gone through some crucial questions to ask yourself when deciding which ones to use on your e-store. This can include things like making sure a particular gateway has the functionally and features you need and making sure you offer your target audiences preferred payment option, through to checking charges, rules and regulations. We hope you now have the confidence to go and choose the ideal payment gateways for your ecommerce website, which are sure to help your business to succeed and thrive in the months and years to come.

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