How to Choose a Payment Gateway Based on Pricing - Advice That Works

In the modern world, consumers are more accustomed to connecting with things instantly, be it information, entertainment, messaging, calls, or social media, and even to things they want to purchase. With technology fulfilling almost every expectation they have, it is obvious for them to become so accustomed to online payments.

Now, turn the lenses around to see this from a business perspective. The market share of cash usage has declined from 72% in 2017 to 37% in 2021 (Source – Statista). During the same period, e-wallets or digital wallets’ market share has grown from 6% to 25%. With more consumers turning to digital payments, merchants have turned towards payment gateways in India.

But again, payment gateway technology is a priced utility for them. If you are a merchant, you need to pay certain payment gateway charges to start accepting online customers from your customers. Wondering if you should select a payment gateway based on the pricing alone? Continue reading to understand how to compare payment gateways to make an informed decision.

Payment gateway selection: What matters the most to your customers?

Ultimately, you want to integrate a payment gateway to your business website or app to allow customers to pay you online. Hence, it makes sense to follow a customer-oriented approach during payment gateway selection.

Given below is a detailed list of factors that have an impact on the overall customer experience as they buy from you:

Payment failure

Multiple instances of payment failures on a website or app can make customers leave without buying. While you can only optimize your website for technical issues if any, failed payments often increase cart abandonment rate.

Also, keep in mind that digital payments can fail because of several reasons, including:

Errors on the customer’s end in terms of incorrect card details, entering the wrong OTP, or having insufficient funds
Downtime experienced by different players involved in processing transactions, such as an acquiring bank, an issuing bank, or a payment processor
Availability of payment options

While selling products online, you never know which payment option your customer would like to choose to transfer payments. Many customers would simply abandon their carts because of the non-availability of the preferred payment option. As payment technology keeps on improving and more consumers turn towards online shopping, it is essential that businesses fulfill this fundamental need and offer maximum payment options to avoid losing sales.

Besides this, you should also consider implementing ways to accept payments via popular digital wallets as not everyone wants to pay with a card.

Recurring payment support

Over the changing times, subscriptions have become a part of our daily lives. Whether it is for grocery delivery, entertainment, Internet connection, or online shopping, it becomes easier to continue with a subscription plan for regular needs. With a subscription feature that enables pre-set payments, your loyal customers do not need to worry about entering payment details every time they buy from you.

However, some customers may avoid buying from you if you do not have a subscription-payment model implemented on your online store. Even in this aspect, the right selection of a payment gateway can do wonders for your business.

Payment security

Along with the 30% rise in digital commerce transactions in 2021 as per the RBI report, digital payment frauds have increased considerably. This is one of the reasons why consumers in India are quite skeptical about paying for things online on unreliable websites or apps. By considering the customer’s mindset about payment security, it is crucial for merchants like you to ensure the same with the right selection of a payment gateway.

The payment gateway you select must have all the in-built security features to prevent fraudulent transactions, thus ensuring a worry-free payment experience.

EMI option if available

With the rise of Buy Now Pay Later and No Cost EMI as payment options, many businesses look forward to offering products and services on EMI to support large ticket purchases. As a business owner, this would involve setting up a financing program, checking customers’ creditworthiness, and facing repayment-related risks.

However, things become much easier for you when you select a payment gateway that allows you to extend the BNPL and No Cost EMI facility to your customers.

Trust factor

Peer recommendations about the choice of digital payment options do have an impact on consumer behavior. Step into your customers’ shoes and you will realize that payment option recommendations bring with them a certain level of trust. As a buyer, you would feel safe to transact and send payments online, knowing the fact that someone like you also uses this payment option for regular needs.

In India, popular payment service providers have already established a reputation for being a safe way to transact. Hence, if you select a payment gateway offered by these service providers, your customers will feel safe to buy from you.

More about MDR and other payment gateway charges

In general, consumers do not need to pay any extra charges to make digital payments to merchants. However, there is a cost to be paid by the merchants. Irrespective of the size of your business, you will be charged a certain fee for accepting payments via a payment gateway. This fee is largely known as Merchant Discount Rate or MDR.

As a merchant, you must agree to the MDR terms related to the chosen payment gateway provider before setting it up to accept payments online. In general, it is around 2-3% of the transaction amount.

For instance, if a customer pays Rs. 500 via a debit card to you while the MDR is 2%, then you will be charged Rs. 10 to accept the payment.

You should also know that the MDR may vary from one payment mode to another. Besides this, different payment gateway providers may ask for different MDR for distinct payment modes like credit card, debit card, etc.

Also Read: MDR, PSP Fee, Interchange Fee, and Other Payments Charges – Explained

Paytm Payment Gateway – A Comprehensive Solution for Your Customers’ Needs

Ideally, you would want your payment gateway to support all your customers’ needs (as mentioned above) even if it has competitive pricing. If you want a payment solution that can cater to all these needs, you can switch to Paytm Payment Gateway which comes with the following benefits for your business: