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Jessica Malnik on February 18, 2021 • 16 minute read
How do you accept payments online?
After you decide on what products you are going to sell, this is the next question you will ask when you launch your first eCommerce business.
Unless you are planning to run a cash-only business, you are going to need a way to authorize and process credit card payments.
Fortunately, both payment processors and payment gateways (i.e. more on that distinction below!) have come a long way. There have never been more options to choose from.
In this post, we’re going to take a closer look at the best eCommerce payment processing tools, including:
To a customer, paying for an item online should be a seamless experience that takes a few seconds.
However, there are actually a lot of things happening in the background to ensure the customer’s money gets routed to the merchant.
In fact, one of the biggest misconceptions new eCommerce entrepreneurs have is that they think payment processors and payment gateways are the same thing. That’s not actually the case.
A payment processor serves as an intermediary that authorizes and handles the interactions between the merchant, the merchant’s bank, and the issuing bank. In addition, payment processors tend to be older and require hardware – think terminals and POS systems – in order to process payments.
On the other hand, a payment gateway performs these actions and also handles the transfer of funds between the merchant and customer.
Then, PayPal and Stripe came along and made the process a lot simpler for most online businesses. These two payment gateways eliminated a lot of the headaches and made it possible to get setup often within a day or two.
There are two main types of payments: different types of payment gateways
Most eCommerce businesses use two or more payment gateways. Many of which end up using both PayPal and Stripe as their sole payment gateways.
Here is what to consider when evaluating both payment processors and payment gateways.
Robert Rand of JetRails says, “Most merchants focus on getting a payment processor and gateway that:
After that, they may consider an add-on for recurring subscription products, or a feature that allows shoppers to buy-now and pay-later, but many fail to add a solid credit card fraud prevention tool.
That is, until they realize they’re having a problem. What’s often missed is that, if a merchant isn’t using advanced tools for fraud prevention, they’re probably blocking out a bunch of good orders while still allowing in some bad ones. Solutions that include solid fraud identification tools like Bolt, ClearSale, NoFraud, and PaaY allow in more good orders, making them a part of a good conversion rate optimization campaign.”
Editor’s Note: While PayPal and Stripe are the most popular options, not every eCommerce business can use them. In fact, if you live in a country not supported by PayPal or Stripe or work in a “high-risk industry – such as gambling, drugs, firearms, certain supplements, or adult entertainment – you will have to find another payment gateway.
Once eCommerce businesses find a solution they are happy with, they tend to stick around for a long time. In fact, according to our survey, 30% of eCommerce entrepreneurs have used the same payment solution for 5+ years.
As we alluded to above, the vast majority of U.S. and Canadian eCommerce businesses use either Stripe, PayPal, or both.
However, since it is a best practice to have more than one payment gateway on your site, we’re taking a closer look at some of the best eCommerce payment processing tools.
Founded in 1998, PayPal is the market leader and accounts for nearly 55% of the market.
“The best payment processor for an eCommerce business in my opinion is PayPal,” says Lily Ugbaja of Finding Balance. “Since it was launched in 1998, it has proven to be a reliable platform for merchants and customers to transact seamlessly.
Money can be sent by customers using their credit card directly to the recipient’s email address. Charge per transaction is relatively low and there are no hidden monthly charges or setup fees, making it amongst the top choice for customers and eCommerce businesses.”
Blake Bobit of Solution Scout says, “PayPal is one of the best when it comes to doing fast and transparent business transactions. It’s one that everybody’s heard of, so it makes the payment part of the business a lot easier. On the other hand, for businesses selling strictly fast-moving products using only several channels, Amazon Pay may be the best solution, considering its safe usage and eCommerce UX.”
Jessica Rose of Shantiva adds, “While it may not be the most cost-effective option, the reality is that PayPal has earned incredible trust and brand loyalty from most eCommerce consumers. In fact, some consumers will only use PayPal to complete online transactions because they are reluctant to provide their credit card information directly to eCommerce sites. For this reason, PayPal remains a staple in the eCommerce marketplace and remains an essential payment option for any store. This is not to say that an eCommerce store should use PayPal exclusively, but it does mean that it should at least be an option for your customers.”
Plus, if you are brand new to eCommerce, PayPal is the easiest and most convenient to get up running.
“The payment processing tool that I have found to be most convenient is PayPal,” says Robin Brown of Vivipins. “It offers the fastest transaction for eCommerce business and is vastly trusted by customers. I don’t wish to lose customers by using any other transaction method.
Besides that, it’s budget effective, offering a flat-rate with various pricing plans to choose from.
PayPal can be easily integrated with any website offering a gateway for consumers for easy transactions by directing them to their website.
Not just that, It works with on-site selling too.
Integration with Xero and customer invoice tracking has saved us from the hassle and helps us in time management.
Once the funds are in the PayPal account, they can be easily transferred to bank accounts. With everything going mobile, PayPal is also offering mobile solutions with an app named, PayPal Here, to make the payment process faster and easier. With just a mobile and wifi connection, we are now able to receive payments anytime and anywhere.”
In addition, if you do a lot of international transactions, PayPal can be a solid option.
Janice Wald of Mostly Blogging says, “There are many advantages to using PayPal. For instance, PayPal takes care of currency conversions for me. Also, PayPal has a mobile app that allows me to accept credit card payments. Finally, when you sign up to use PayPal, that mail you a credit card swiper in case you don’t wish to use the app. For these reasons and the convenience, I recommend PayPal.”
Editor’s Note: If you use WooCommerce and PayPal, this PayPal Account Overview Dashboard allows you to see total sales, popular products, and new customers.
Founded in 2010, Stripe is the second largest payment processor and accounts for nearly 19% of the market.
“It’s a relatively simple technical integration and extremely user friendly,” says Alistair Dodds of Ever Increasing Circles. “It’s fast and reliable. Over the years we’ve worked with a large number of payment processors for our clients eCommerce developments and Stripe is always the go-to when in doubt.”
Tom Zsomborgi of Kinsta adds, “The best payment processor for ecommerce is Stripe. They have a wide range of features, the implementation is easy, documentation is great and the API just works developers love working with it. Additional tools are also available like Stripe Radar which helps ecommerce owners prevent and decrease fraud purchases based on Stripe’s AI. Also, if you reach a given threshold you can get better pricing for your fees. Compared to for example PayPal, Stripe is in a different league.”
If you are on WooCommerce, the integration couldn’t be simpler.
“We use Stripe integrated with WooCommerce and it’s been a great solution for us,” says John Donnachie of ClydeBank Media. “The front end (customer facing side) is really easy to use and nearly frictionless.
For us on the backend, it is really easy to get a good look at our sales and cash flow from our eCommerce store.
Stripe does a great job of organizing customers and their transaction history together so it’s really easy to resolve issues. The backend has been developed with the same focus on frictionless use as the frontend and is a really intuitive process.”
Jonathan Aufray of Growth Hackers Agency adds, “Stripe is a great eCommerce payment processing tool and this is why it is so popular nowadays. Not only is it easy to sign up for an account, it is also so easy to integrate with your website whether you work with a CMS like Shopify or WordPress or you have a native-coded site.
It is great for businesses but not only. It’s also awesome for user experience. Your website visitors will have no difficulties purchasing your products and will have the choice with many different payment methods while having their payment details safe and secure.”
It can also work well for local businesses.
For example, John Pannell of Access Box Storage says, “We’re a local business and we’re using integrated Stripe. It’s a really good payment tool when you’re starting a business. It doesn’t have monthly fees, setup fees and you don’t need a contract. You pay for it on the go.”
Editor’s Note: This Stripe Dashboard allows you quickly see your most important financial metrics.
Square is the 4th largest payment solution and accounts for 2.33% of the market.
“Square is a great payment processing tool for eCommerce businesses, especially when you’re newly started,” says Brooke Markevicius of Allobee. “The fees are on the cheaper side and they have technical capabilities to handle all of your needs. The quick pay feature is easy to use and reliable. They also have a robust POS system for your mobile devices, if you run a mix of both eCommerce and physical selling.”
Reda Elmardi of StrongChap.com adds, “Well if you’re asking for the best payment processing tool based on my experience, I’ll have to go with Square.
It has become one of the most versatile payment solutions for small companies. It enables you to accept payments from everywhere thanks to its innovative mobile card reader. This converts your mobile into a POS system.
Square also provides deposits on demand, fraud protection, and the Square Stand for larger businesses. With Square, you can build a customized register, as well issue invoices and receipts, track View sales reports, inventory, and manage timesheets.”
Heartland Payment Systems is a payment processor and many of the merchants who use it tend to be 8+ figure businesses that do a significant number of transactions through a brick and mortar location(s).
“Depending on the amount of transactions per month and size of transactions is what I use as a litmus test to select a payment processing tool,” says Chris Johansen of Anttix. “I also take in consideration the user experience to make it easy as possible for customers to checkout and buy.
I also make sure that the payment processing is digitally accessible so that everyone have equal and equitable experience. This also ensures the site is WCAG 2.1 AA compliant.
I find if a business is processing under $10,000 per month in credit card transactions, I suggest they use PayPal or Stripe. Both are easy to use, setup, and manage. Their processing fees are approximately 2.75%.
Now, If the business processes more than $10,000 per month, we integrate Heartland payment processing. It’s easy to set up and manage, has end-to-end encryption, and their processing rates are the lowest with interchange plus pricing.
We have been using Stripe and PayPal for 10 years and using Heartland since 2018. We have recently been acknowledged as a trusted developer for Heartland due to the unique websites, applications, and programs we have built with their tool.”
If you can’t use Stripe or PayPal, 2Checkout is a solid alternative since they support more than 200 countries as well as a lot of high-risk industries.
Julien Raby of Coffee Works says, “I’ve found 2Checkout to be one of the best if not the best payment processing tool out there. Created for global payment acceptance, 2Checkout presents you with a safe and compliant gateway in 87 currencies and 15 languages. It allows both online and mobile payment platforms, as well as features like hosted checkout, recurring billing, fraud protection, and integration with the most popular online shopping carts. You can receive all PayPal, major credit cards, and bank or wire transfers.”
Owned by Chase, WePay is a solid option for eCommerce marketplace businesses.
“Based on my vast experience, the best payment processing tool for an ecommerce business that I’ve come across is WePay,” says Peter Schoeman of Thedogadventure.com. “It is a payment processor that can be fully integrated into the look and feel of your business site.
That does not sound like a big deal, but this executes an extension of your brand.
With WePay you can customize everything from checkout forms, customer support emails, confirmation emails, credit card statements, and mobile transactions.
Additionally, WePay provides on-the-go payment ability with a mobile SDKs, mobile chip card reader, and fulfillment service so that you can set payments into a single mobile app for a more complete and seamless user experience.”
If you are looking for ease of use or your eCommerce business skews towards Gen Zers, then Venmo’s eCommerce solution could be a decent option.
In fact, Yurii Brown of Coffee Geek Lab, switched from PayPal to Venmo.
“I have been using PayPal for a long time but when Venmo soared in popularity, the switch helped my business especially during the pandemic because it allows sending money directly to the recipient with fewer worries about transaction fees,” says Brown. “It’s availability on mobile devices made it easier to proceed with the transaction. I think Venmo is practical for independent merchants and small businesses that cater to millennials. For large-scale online businesses, PayPal is the best payment processing tool because it offers high transaction limits, accessibility, fraud protection, and other security features.”
Another PayPal alternative is TransferWise. This option has lower fees on average and is particularly useful for businesses that process a large volume of international transactions.
Nicolas Tranchant of Vivalatina Jewelry Brand says, “The easiest processing tool to set up is PayPal, easy and well known, it is also the most expensive.
We have been using it for 7 years before switching to others and PayPal’s fees are really too high compared with other competitors in the market.
The less expensive one that we use today is TransferWise. It is so cheap for their payment processing fees as well as for their conversion fees, this is the perfect one in my point of view.
But it is harder for online customers to make a wire transfer than paying with their credit card, so this is not the best choice from our customers’ point of view.
We have been using this one for one year and a half now.”
Adyen is a Dutch payment solution that aims to be an all-in-one solution for eCommerce, POS, and mobile payments. They have a bunch of high-profile tech and retail customers, including Uber, Pinterest, Tiffany & Co, Tory Burch, Crocs, and Bonobos.
“The best payment processing tool for an eCommerce business is Adyen,” says Mohd Faizan Fahim of ServerGuy. “With 350 payment methods and 150 global currencies, Adyen offers many valuable features for the large stores that deliver the product worldwide.
The most critical function is the ability to analyze the transaction data. Data-rich insights help to improve consumer behavior & experience.
My favorite features of Adyen are:
Moreover, Adyen built its software from scratch. They don’t lean on third parties and have total control over security.
There is a reason Microsoft, Uber, and Pinterest are using this option”
Sezzle is one of the newest payment gateways since it was founded in 2016. It is most often used as an alternative payment method for when you want to offer shoppers installment payments.
“Sezzle has been a very helpful tool for us,” says John Frigo of Best Price Nutrition. “While our average cart value is probably around $70, we do have some expensive supplement stacks that run into the hundreds of dollars.
When we first brought on Sezzle financing I didn’t think many people would use it, however, we’ve been pleasantly surprised at how well it’s been used and how much its upped our average cart.
I’ve even noticed some people financing $8 items which makes me wonder whether that was done intentionally or by accident, but we do about $20,000 a month in sales on each of our three sites just through sezzle.
While there are similar services with lower costs in terms of processing rates Sezzle has the highest approval rating for customers and the most name recognition so we’ve stuck with it.”
In sum, one of the first things you’ll need to figure out is how to accept payments for your eCommerce business.
Depending on where your business is located, the products you sell, and your gross margins, one or more of these options might be a good fit.
In general, we recommend integrating at least 2 payment gateways on your site.
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