If you’re building a website or app that needs to accept payments, then having a solid payment gateway is a must.
As a developer, you need to select a payment gateway that seamlessly works with your website or app, while offering maximum technical features and flexibility.
In this article, we’re going to look at some of the different payment gateway solutions on the market, and detail what they offer for merchants and, crucially, what they provide for developers. We’ll assess the pros and cons of each and explain their key features and the target markets they serve.
So whether you’re building your own eCommerce site, developing an online store for a client, or even if you work in-house for an established brand rebuilding its web presence, this article should help you make the right decision on which payment gateway best fits your needs.
TL;DR
- A payment gateway is a system by which a payment can be made by a customer, authorized by their bank, and ultimately sent to the merchant’s bank.
- A payment gateway API is an interface that allows developers to integrate a payment gateway from their chosen payment processing partner into the website or app they’re building.
- Anybody selling online with a website or app, taking payments from customers or clients, will need a payment gateway.
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What is a Payment Gateway API?
Most developers will be more than familiar with using application programming interfaces (APIs) to integrate external functionality into websites and apps. From pulling in pricing details from different merchants on price comparison sites to sharing live sports scores, APIs are everywhere and allow developers to work with outside data when building a new online product.
A payment gateway, meanwhile, is the system by which a payment can be made by a customer, authorized by their bank, and ultimately sent to the merchant’s bank. There are lots of different types of gateway but most commonly they are used for the processing of credit, debit, and charge card payments.
A payment gateway API, therefore, is the interface that allows developers to integrate a payment gateway from their chosen payment processing partner into the website or app they’re building.
What is a Payment Gateway Used For?
The world of payment processing and financial transactions, in general, is fairly complex so all sites that seek to process customer payments need secure and regulated partners that can handle those payments (or refunds).
This is where a payment gateway comes in.
A secure payment gateway will facilitate transactions on a site or app and will also help protect the merchant from fraudsters. In addition, the payment gateway should ensure adherence to compliance in a landscape of complicated financial regulations that can vary from territory to territory.
Who Uses Payment Gateways and Payment Gateway APIs?
Anybody selling online with a website or app, taking payments from customers or clients, will need a payment gateway. The payment gateway API is the way in which to build this third-party gateway into your product.
When you consider that well over 50% of all US consumers pay for goods with credit, debit, or charge cards today, it’s increasingly important that your site or app can accept and process these payments.
As such, your website or app should be set up in a way to allow customers to easily enter their credit card info and complete their purchases. You cannot process secure payments online without a gateway, and the payment gateway API is your route to setting up and integrating your gateway successfully.
Bear in mind that customers need to be confident that sharing their personal financial information (whether that’s their Mastercard number, bank account, or even Amazon Pay details) is going to be secure and carry minimal risk. So, your gateway must be reliable, fast, and trustworthy.
In addition to selling products online, another payment gateway use case scenario could be a subscription or service-based business that takes payments online.
Many service professionals such as web designers or lawyers charge clients on a monthly retainer fee basis, allowing their clients access to their expertise on an ad-hoc basis. Instead of sending these clients monthly invoices and having to monitor, chase, and record payments, you can set up recurring payments through your third-party payment gateway provider. This saves time and effort for both parties, allowing all future payments to be automatically taken care of.
What Are the Main Things to Look Out For When Choosing a Payment Gateway?
Now that we’ve covered the fundamentals of payment gateways, let’s look at some of the key considerations to keep in mind when selecting the right one.
Documentation and ease of integration with your site or app
With so many payment gateway solutions on the market, why give yourself an additional headache by selecting a payment gateway with an API that’s less than friendly for the developer?
This is why documentation and support is key. Modern payment processing providers understand the importance of supporting the developers responsible for building and maintaining sites and apps. Therefore, the best payment gateways feature excellent support documentation and integrate with a wide variety of software development kits (SDKs).
If you’re building an app using Java or Python, having a payment gateway API with a backend SDK that supports that platform is vital. Similarly, you’re going to want to make sure your API can be utilized on both iOS and Android devices if you’re building dedicated mobile apps as opposed to a single-page app (SPA).
Fees and payment structure
Whether working on your own site or supporting a client, payment gateway fee structure has to be among your top priority considerations. After all, selecting the wrong option for your site or app’s needs could mean thousands of dollars in additional fees each year.
Not all gateways bill in the same way and your (potential) volume of sales along with how your customers tend to make payments might influence which provider offers the most appropriate fees for your business.
For example, if your customers typically choose to pay by credit card, you might want to consider the gateway with the lowest fees to process credit card transactions.
The frequency of sales and average price per transaction might mean you’d be better off paying a one-off monthly fee to handle the processing of all payments, rather than paying a percentage and fixed fee per transaction.
If you’re selling high-value items, the percentage paid to your gateway partner can get quite significant. Selling a $45,000 watch, for example, could mean parting with $1,755 of that sale if you’re charged 3.9% per payment processed.
Service area
This might seem obvious, but you’ll also want to consider where your customers are located. Some gateways only service certain markets and others will be better set up to take international payments from customers worldwide.
Don’t forget to think about future-proofing your business. If you’re launching in just one country but have ambitions to someday service customers from other countries, don’t give yourself more work to do later down the line. Picking a payment gateway that won’t need to be changed when and if you begin servicing customers from other countries can save a lot of future headaches.
In-person sales
Brick-and-mortar sales may also be another key consideration, particularly if you have a physical storefront.
An example of this might be a coffee shop that sells coffee beans and merchandise online while selling hot drinks and pastries in-store. The best solution here is a payment gateway that supports both online and offline transactions. (Bonus points if the provider gives you access to the right hardware and payment terminals.)
Software integrations
Let’s be honest—most people don’t enjoy bookkeeping so anything that makes recording and logging transactions easier should be welcomed. If your payment gateway easily integrates with your sales and accounting systems (e.g. Xero, Wave, or Quickbooks) this can save you hours or even days of work to manually tally up sales records.
Compared: the Best Payment Gateway APIs for Developers
We’ve determined this list based on which gateways perform best overall in the majority of use cases, along with their pros and cons from both a developer and merchant perspective.
1. Stax
An all-in-one payments platform, Stax has a range of offerings for businesses of all sizes—from SMBs to enterprise. The company also supports numerous modes of payment, including credit and debit cards, ACH, SMS payments, mobile payments, and more.
Key features
– Accept payments online, in person, and over the phone
– Flexible API and range of SDKs
– Maximum flexibility with access to a wide range of popular payment gateways, including Authorize.net, instead of offering just one
– Allows for recurring payments and scheduling future payments
– One-click checkout facility for eCommerce sites
– Excellent reporting
– Device agnostic so you don’t need dedicated Stax hardware
– Integrations for Xero, Quickbooks, Zoho, and more
– Flat fee subscription structure and no commitment
Pricing
Unlike a lot of rivals, Stax doesn’t charge per transaction and instead offers an incredibly simple one-off flat monthly fee structure. For developers, the Pro Plan at $159 per month is the one to pick due to its API integration functionality which allows businesses to process up to $500,000 worth of transactions each year with no additional fees. Businesses with a greater annual turnover can get a custom quote from Stax.
Pros
– Integrates easily with both Android and iOS SDKs
– Great customer support
– Easy integration with Javascript frameworks and Python
– Excellent API documentation for developers
– Excellent real-time fraud protection
– Payment analytics is great for assessing customer and transaction data to gain insight
Cons
– Flat fee structure means that smaller businesses with sales worth less than $5,000 per month would pay less with providers charging per transaction
2. Square
Square is a solid option for small and micro businesses. The solution’s simple and straightforward features make it an ideal option for those who are just starting out.
Key features
– Accept payments online, in person (via point-of-sale POS system), and over the phone
– Charges merchant per transaction
– Dedicated portal for developers
– Reporting and analytics included
Pricing
Square charges merchants for every transaction they process, with online and in-app transactions costing 2.9% of the total sale + $0.30. Meanwhile, in-person transactions are charged at 2.6% + $0.10 while payments processed manually, such as those taken over the phone, are subject to fees of 3.5% +$0.15.
Additionally, Square charges for their hardware where customers need in-person terminals to process customer payments along with related setup fees. Their Square Register payment terminal can be purchased for $799.
Pros
– Integrates easily with both Android and iOS SDKs as well as with frameworks including React, Native, and Flutter
– No long-term contract
– Dispute management service
Cons
– Fees can quickly add up for businesses processing a lot of transactions each month
– Hardware is expensive for in-person sales
3. Stripe
A popular player in the payments space, Stripe offers a good platform for businesses that want to accept payments online. Stripe doesn’t always have the most merchant-friendly pricing, however, so keep this in mind when considering the solution.
Key Features
– eCommerce focused
– SDKs for iOS, Android, and React Native
Pricing
Stripe charges 2.9% + $0.30 per transaction processed for card and wallet payments while bank debits and transfers such as ACH payments incur a 0.8% fee. There are also further fees for processing international (non-US) cards and for having to convert non-USD currencies.
Pros
– Good API documentation for developers
– Wide selection of online payment options offered
– Excellent fraud protection
Cons
– Limited offering for in-person transactions
– Virtual terminal for processing payments where the cardholder is not present can be challenging
– Documentation, while extensive, is very tech heavy and could be hard to follow for less experienced developers
– Fees can quickly stack up as sales increase
4. PayPal
A household name in the payments industry, PayPal is known for its user-friendly payment solutions that enable users to pay with just a few clicks. It’s globally recognized for its Paymentech, but being such a huge company, it can be difficult for merchants to get the tailored support they need.
Key Features
– Global recognition
– Accept payments online, in person, and over the phone
– Charges merchant per transaction
Pricing
As such a well-known brand worldwide PayPal is able to charge higher fees than a lot of competitors due to being able to offer that level of security that comes with having such dominant brand recognition. They charge 2.99% + $0.49 per credit and debit card transaction online, with different fees for processing different currencies. Other payment methods such as accepting Venmo, are charged at a higher rate of 3.49% per transaction plus the appropriate currency fee on top.
Pros
– A trusted name recognized worldwide
– Growing range of in-person options including QR code transactions
Cons
– Documentation is overly complex
– Support is very hit and miss
– Expensive compared to rivals
5. Authorize.net
Authorize.net is one of the web’s most long-standing payment providers. The solution has a comprehensive set of tools for developers, though some of the documentation may be difficult to navigate.
Key features
– Backed by Visa
– Full suite of developer tools includes SDKs for most major technologies
– Accept a wide range of payment types online and in person
– No contract
Pricing
You can actually use Authorize.net with another provider for your merchant account however if you want Authorize.net to be your all-in-one gateway solution you need to pay the fee for the gateway itself which is $25 per month plus a per transaction fee of 2.9% + $0.20 for card payments and 0.75% for ACH payments. This makes it one of the more expensive solutions listed here, though is backed by Visa and has been operating since 1996 it could be argued they have the credentials to justify its higher rates.
Pros
– Long-established and trusted name in the industry
– Plenty of developer integrations
Cons
– Developer documentation is a little overwhelming and convoluted
– Fewer integrations than some rivals
– Requires a separate merchant account
– Limited plugins
6. Adyen
Adyen excels at offering solutions for various payment methods, all from a single platform. That being said, the company has a rather complex pricing structure that imposes minimum amounts per industry or business model. This makes it a less-than-ideal solution for small or low-volume businesses.
Key Features
– Comprehensive reporting
– Accept payments by credit card, debit card, bank transfer, mobile wallet, and more
– 120 currencies supported
Pricing
Adyen’s pricing structure is a little different from most providers, with all payments processed subject to a $0.12 fee but further fees are determined by the payment method. So for instance a payment via American Express would be charged the $0.12 flat fee plus a further 3.3% + $0.10 whereas an ACH Direct Debit attracts the $0.12 flat fee plus a further $0.25 fee each time.
Pros
– Fully integrated one-platform approach
– Accept over 250 payment types
Cons
– Convoluted pricing structure can end up being more costly for smaller merchants
– Developer documentation is difficult to navigate
Final Words
Choosing the right payment gateway can be tricky given that there are so many options in the market. In order to select the best one, you need to carefully consider your business requirements and budget. Do your research on solutions that meet your needs and have conversations with merchants and other vendors to help you select the ideal solution for your website or app.
